With some of the recent developments announced, and coming soon to Comdex, I have a new plan forming up that I'd like to share. Basically, I'm looking to get community feedback to poke holes in it.
The first part of this plan is something I already have well under way. Basically, build a solid sized stake of the CMDX token. This pays out staking rewards, currently at an APR around 45%. Staked CMDX takes 21 days to unstake. I already have this first part of the plan underway, and am more than half way to my short term target. CMDX under $0.20 is a bargain, in my opinion. Market cap is tiny, and even fully diluted valuation is only $40 million. If the team delivers on its plans, then I think this could be an amazing price to accumulate CMDX at, with a 1 - 3 year time horizon.
So once the CMST stable coin gets launched, It will be possible to deposit CMDX into a vault as the collateral to borrow some CMST. In my plan here, each day I will claim my staking rewards, and add them to my collateral vault. So, depending on price movements, I should be able to borrow some more CMST each day. So, this will give me a small, but growing daily amount of CMST I can borrow from the vault. I'd probably maintain a fairly overcollateralized position here, at least 200% and possibly higher, to minimize the risk of liquidation.
The thing I don't know at this point of the plan is what the costs associated with borrowing (minting) CMST will be. This would obviously affect the outcome of this plan significantly.
So the key risk here is liquidation. My thinking is that having a daily flow of funds to top up the collateral, and maintaining a well overcollateralized debt position should minimize this risk.
To learn more about Comdex's upcoming stablecoin, check out this post I made a few weeks ago.
At this point of the plan, I would take the CMST I just minted in step 2 to the Commodo platform also running on Comdex, and deposit it onto that platform. This is in effect lending my CMST to the protocol, which it can then lend out to other users. Just like a DeFi bank, and working along the lines of many other crypto lending and borrowing platforms. The CMST deposited here should generate some yield, in CMDX.
The main risk at this point would be the platform risk - some type of lost or stolen funds exploit. Another risk will be if the CMST deposits are locked for a time period. A De-pegging event would be a risk. Less critical risks would be that the yield becomes quite small, making this process not worth the effort.
So, after Step 3, I know have CMDX income from two sources, staking rewards and the yield from depositing the CMST into a vault on Commodo. This will obviously start out small, but grow as I add more CMST daily. So then, the plan is to simply add this new income flow to the staking rewards utilized in step 2. Each day this will all grow a little bit more, and by compounding this process every day, a growing asset base can be achieved.
In this overall plan, the assets I would have would be:
The Debt would be simply the CMST borrowed from the CMDX vault position.
Can you see any holes in this plan? Risks I have not considered?
Let me know in the comments below.
Cheers,
JK.
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