If you’re not generating insane amounts of passive income in the crypto space, that’s on you!
Exhibit A, this tweet claiming they had a $100 in crypto passive income in the month of January, and in February it’s $4500 per month. And this is just the beginning.
You may be saying “what happens if they liquidated a ton of other assets, moved it into crypto?”. And they’re getting something like 10% on $600,000? That’s reasonable. And that may explain the jump. Valid point! And someone asked the reasonable question, how much capital was required to procure that monthly income? And the response? Uh, around $4,000…
$4,500 a month in passive income from $4,000 in investments. That is the greatest money glitch I’ve ever seen!
On that simple 113% monthly return, after twelve months, you can take that $4,000 and turn it into $33 million. No Biggie.
The point of this article is not to target these influencers. I think everyone knows what’s going on with the clickbait. Whatever. They’ll get destroyed by their own followers when the stuff doesn’t turn out to be sustainable.
But I do want to talk about the Nodes as a Service (NAAS) and how it can be legitimate versus when it comes to these new projects I see popping up. If we use something like Ethereum as an example of what a node and a client is, a node refers to a running piece of client software. A node is any physical device within a network or other tools that are able to send, receive or forward information.
If you want to support the network, you can actually run your own node, whether it’s full, light, or archive. You can actually get involved, with Ethereum.
I’m not going to get into the technicals of how nodes work, but nodes as a service would be the infrastructure that’s supporting different blockchains. And these nodes that are set up, get paid.
So there’s nothing inherently wrong with nodes as a service. It’s just I see these projects come in and you’re able to buy into these “nodes” and in return you get these ridiculous payouts. Let’s dive into one example that I was looking at “Thor Financial”.
When you go to the website, the first thing you’ll notice is that they talk about passive income a lot. They mention multi chain yield farming, unbeatable yield potential. They’re in diversified DeFi, accumulating passive income. Everything is about making easy money. And it never really explains how they actually pick the projects that they’re investing in (whether it’s DeFi, staking pools, NFTs). They just throw around a lot of buzzwords.
The big draw is buying nodes. You buy these Thor nodes and in return you get fixed returns on a daily basis. At first 1% doesn’t sound like much, but when you compound that return daily over a long enough time it turns into massive gains (of course if it doesn’t all come falling apart).
So it is a cutting edge node is a service that provides you an opportunity to own a blockchain node. That sounds great…
Passive income without the risk of rug pulls or scams. Wow, that’s really reassuring…
I mean, I don’t want to come off as a hater, right? I’m trying to be objective as possible, but these are definitely red flags. When I don’t really see how they actually make the money. Where are they getting the revenue to make these payments?
The other thing is there’s no team or faces associated with the project, which I never love because if there’s no faces attached to the project, if somehow it does turn out to be a scam, then who do they go after?
In terms of how it works, it’s one sentence. “Thor financial invests in a number of promising DeFi initiatives and allocates incentives to node owners by combining returns from protocol on liquidity with returns from DeFi protocols across many chains.” They don’t exactly say how they picked these projects, what the returns are. If the decisions of what to do with the money is being made by decentralized autonomous organization (DAO), what’s the point of these nodes? When I create a node, it’s not like I know it’s being set up as a Fantom validator node. I don’t know what they’re doing with the money, I just know I’m buying this node, and for doing that, I get Thor.
The second piece is that people can also stake AVAX and Thor tokens as a liquidity pair, and this is actually legitimate. With any token, it doesn’t matter if I create a Collin Coin, a Main Street Wolf Coin, and pair it with AVAX. If I’m a liquidity provider for that pool and people are buying Main Street Wolf Coin or Collin Coin, whatever, people can make liquidity fees from that. Of course, that’s not risk free either, because if the price of Collin Coin or Main Street Wolf Coin goes down, you deal with impairment loss. So usually the riskier, the asset within the pairing, the higher APR that’s required, or the higher fees that are expected to provide that liquidity.
The part that really sucks people in this whole thing is fixed income on a daily basis if you buy these nodes. So they have four different names, all related to kind of the Thor theme. If you buy a Heimdall for 1.25 Thor, you get .008 Thor per day. If you buy the most expensive one it’s 78 Thor, but then you’re earning 1.02 Thor per day. The more expensive ones have a faster return, which makes sense. They want people to buy the more expensive nodes.
I also found this flowchart someone put together. Unfortunately it’s really blurry, so I’ll probably just have to walk through it and just talk it out. In order to get involved, you first need to purchase Thor. You need to buy some AVAX, trade it through a liquidity pool, buy some Thor and launch the app, and then you have a choice. You can either go back and actually be a liquidity provider.
The main piece that I want to talk about though is the node payout and cost structure. With these rewards there’s also these monthly maintenance fees that say is for running these nodes (it does cost money). Based on the different node you need to make a certain payment. Logically, it kind of makes sense.
When you do go to claim your Thor that you’re getting on a daily basis. You need to choose between either just getting paid out in Thor, or you can compound, and you end up buying more nodes (compounding your money) and never taking it out of the system. What’s weird and a red flag for me is the fact that if you do claim your Thor, there’s a payment tax. It’s trying to persuade you to keep the money compounding and keep it in the protocol versus selling your Thor. Selling or people leaving may put downward pressure on the price of Thor itself.
They also say the amount of tax that’s collected is used for buybacks. This whole buybacks action is to stabilize price and prevent people from rushing out the door to make sure that there’s no huge liquidity crisis. For those of you wondering when the project came out, it was closer to December 2021, so it’s only been out for a few months. The price fluctuations have been massive. I mean, it went up to $400, down to $16, back down to $80. So depending on when you bought your node, if you bought a node for $400 per Thor, you’re probably having a rougher time than someone that bought it at $16.
The project hasn’t been around that long, so some people may say, well, it hasn’t failed yet… Maybe this thing is sustainable.
Well, your next red flag is the fact that they came out and said, we have to cut the rewards because we want the project to be sustainable. Well, if you’re cutting the rewards, aren’t they basically saying that they’re paying out more than they’re making? They’re basically saying that, but some people will swing it as, “oh, these guys are being good to us. They’re lowering the rewards because they want to be more sustainable.” It just means that they see the writing on the wall, so they need to claw back the rewards.
And if you bought a node earlier, all your rewards per day are going to go down. Obviously a huge flag.
The biggest flag for me, honestly, is that the rewards are fixed. If you are a node as a service project and you’re dishing out the rewards that you’re getting from investing in these DeFi protocols, acting as validators all the stuff that nodes can do, wouldn’t you think that the payout would be variable? Why is it fixed? It just doesn’t make any sense.
Let’s go over some of the red flags:
- There’s no team or faces I can find behind the project.
- You have to buy Thor in order to get involved.
- If you sell your Thor instead of compounding it and keeping in the system, you get penalized.
- They talk about the best returns, but they don’t really tell you how they’re getting those returns.
- The payouts are fixed and not variable.
You’ll still get people that were in early and they are making money who will probably comment I don’t understand it. It’s not a scam. And the same people said the same thing when I was talking about Wonderland when I was like $8000. Now it’s at like $300.
This stuff is a way to funnel money to people that are earlier into the project and the people that come in late or keep their money in the system because they make $5,000 a month then they invest $10,000, $20,000.Then one day it’s not worth anything. And then they say, “hey, how did this happen? I got scammed”.
So I see Thor playing out in a couple of ways. One, they can continue to reduce the rewards when they’re possibly running out of money and people will be upset they’ll leave this project go to something else that’s paying a higher rate. Whoever is kind of holding on to Thor ends up being, screwed. The second avenue is they stay with these rates that aren’t sustainable and one day they’ll just say, “guys, there’s no more money” and then it will crash and crash hard.
So this article is more the people that are kind of on the fence about these projects. If you look up on YouTube a lot of these are being promoted as easy money. For me, I just wanted to put out an article saying, “hey be cautious, this probably doesn’t work on the end.” We’ll see what happens a year out from now and see if Thor financial is still around. I can’t say 100%. It’s a scam but it’s most likely a scam.
I know this type of article rubs people that are involved in these types of projects the wrong way, but I think it is important to highlight the red flags for people that are newer in the crypto space and raise awareness around the risks! Someone has to do it right?
This article was generated from the following Youtube Video: