Chasing 300% APY on DeFi and Failing as a Digital Nomad

The landing page for the Arcadia website.

The Allure of High-Yield Crypto for Digital Nomads

The idea of funding your travel with automated crypto returns is a dream for many digital nomads. Imagine earning 300% APYs while you fly to new countries, learn new languages, and meet new people. That dream led me to Arcadia Finance, a DeFi which appeared to offer massive returns on crypto investments. I am always trying to find ways to make money online, so when I started setting up an account to automate investments and pump unbelievable returns it felt like was entering the digital Wild West, panning for gold in the river of online income. While I didn't exactly strike it rich with Arcadia, the journey was certainly an adventure, and one I'm here to share.

In this blog post, I'll dive into Arcadia Finance, demystify DeFi for fellow travelers, recount my personal experience setting up and funding an investment strategy, and reveal the surprising outcome of my experiment. Consider this your fellow explorer's firsthand account of navigating decentralized finance.

What is Arcadia Finance and How Does it Work?

Arcadia Finance positions itself as a smart tool for managing your crypto investments on decentralized exchanges (DEXs). Think of them as marketplaces for cryptocurrencies. It aims to simplify the often-complex process of setting up and automating what are called "liquidity provider" (LP) positions on popular platforms like Aerodrome, Uniswap, and Alienbase. For digital investors on the go, this means potentially being able to manage, leverage, and automate their crypto portfolios with features designed to maximize returns, such as auto-compounders (automatically reinvesting earnings) and rebalancers (adjusting your portfolio to maintain your desired asset mix).

The platform boasts curated yield strategies – with names like pseudo delta neutral, bullish, and bearish – offering varying levels of risk and potential annual percentage yields (APYs). Arcadia emphasizes giving users control over their investment strategies, highlighting features like fine-tuned liquidity management, security that has been audited, and the ability to earn income without needing to actively manage your investments daily or lock up your funds for extended periods. It's backed by teams considered reputable in the crypto world and is trusted by experienced DeFi users. They also claim to offer a user-friendly interface and plenty of resources, building a community on platforms like Discord and Twitter.

Decentralized Finance (DeFi) Explained for Travelers

Decentralized Finance (DeFi) is revolutionizing how we think about investing, offering unprecedented freedom and opportunities that go beyond traditional banks and financial institutions. By using blockchain technology, DeFi cuts out the middleman, allowing for direct, peer-to-peer transactions, automated lending and borrowing, and innovative new ways to earn money online. For digital nomads and those seeking location independence, this democratization of finance is particularly appealing. It theoretically breaks down geographical barriers and lowers the hurdles to entry, giving individuals more control over their assets and the potential to online earn from anywhere in the world. This emergence of DeFi is a major shift, sparking innovation and challenging old-school investment models. However, it's also important to remember that with these new opportunities come new considerations, especially around managing risk and understanding the ever-evolving regulatory landscape.

My First Steps into the Arcadia App

While Arcadia Finance has a standard website, the real action happens within their web3 application. For those unfamiliar, a web3 application is one that interacts directly with the blockchain, and to use it, you typically need a crypto wallet – think of it as your digital bank account for the decentralized web. As a digital nomad always on the lookout for new ways to potentially make money online, I decided to load a modest $9.96 worth of USDC into my web3 wallet and dive into the Arcadia app. The interface looked sleek and listed all the major cryptocurrencies, but I'll be honest, navigating it was overwhelming.. While I have some familiarity with web3 apps, the world of advanced crypto investing, especially the exotic strategies offered here, was largely uncharted territory for me. It turned out there were three main types of investment opportunities, each with an overwhelming list of different digital assets you could invest with.

Exploring the Investment Tiers on Arcadia

Arcadia Finance categorizes its DeFi yield opportunities into three tiers, designed for users with different levels of crypto experience, risk tolerance, or other needs:

• Lenders: This is the most straightforward option. You essentially lend your cryptocurrency (like USDC, WETH, or cbBTC) to lending pools and earn a passive APY through interest and potential liquidation penalties. It's a bit like putting money in a savings account, but with crypto. While you avoid the complexities of actively managing trading, you still face risks related to the smart contracts (the code behind the platform) and the possibility of bad debt. This might appeal to digital nomads looking for a relatively hands-off way to potentially generate some income.

• Strategists: This tier is for those looking for slightly more involved but still simplified yield opportunities. You choose from pre-designed strategies (like "Delta Neutral," "Bullish," or "Bearish") to participate in automated market maker (AMM) pools using stablecoins and major cryptocurrencies. You earn from trading fees and the platform's own token emissions. However, you face a broader range of risks, including smart contract risks, market volatility, impermanent loss (a unique risk in AMMs), and risks associated with leverage (borrowing funds to potentially increase returns).

• Farmers: This level is for experienced DeFi users who want complete control over their strategies. You can customize trading ranges, automate actions, and use leverage to try and maximize your returns from AMM pools. As you might expect, this comes with the highest level of complexity and the same risk profile as the Strategists.

My Attempts to Strike Gold

While browsing the investment options, I saw some impressive estimated returns. I was seeing APYs of in the 20 - 50% range. I kept scrolling and saw one of the products estimated an APY of over 300%. I immediately called bullshit and decided I was going to test it, you know, for you the reader. Plus the idea of potentially tripling my money in a year was pretty convincing.

I tried to fund this ridiculously high-yield investment with my shiny new USDC, and that's when the fun really began (note the sarcasm). Every time I tried to deposit my money into the 300% APY opportunity, the app kept throwing an error message. What was even more irritating was that each failed attempt cost me a small transaction fee of a few cents. I tried a couple of other investments with similarly unbelievable yields, and they all failed in the same way. I was about ready to label the app as garbag, but my journalistic curiosity (or maybe just the thought of making money) kept me going. Eventually, I somehow ended up opening a margin account under the Strategies products (to be honest, I'm still not entirely sure what that entails), and finally, it accepted my funds. The predicted APY here was barely above 40%, which still felt outrageously high, but I had the account and investment live and decided i would ride it out for a while.

The Earnings Reveal: Did I Get Rich?

The moment of truth has arrived. You've followed my journey, witnessed the initial excitement, and endured the technical trials. Now, the burning question: how much money did I actually make or lose by entrusting my precious crypto to this web3 DeFi app promising those astronomical APYs? Well, it is kind of complicated so let me give the short answer and then the long one.

I lost $3.40 resulting in an ROI of -%34.

It is hard to see how this investment would return 40% APY when it was down 34% in just two months, but crypto is volatile so it might be possible. Let me go into a little more detail so you understand how I arrived at these numbers.

1. I started by swapping $10 of ETH for USDC which incurred a $.04 fee

2. I took my $9.96 in USDC and made a few failed attempts at creating a new investment. Each failure costing a few cents.

3. I finaly found a strategy that did not fail. The specifics are unclear, but it seems that it used my USDC as liquidity and rewarded me with AERO for my kindness.

4. When I cashed out of Arcadia and took my funds back to my wallet, I had to pay a small feel.

5. Then I had to pay more fees to convert my USDC back to the original ETH.

6. In the end, I have $6.31 in ETH and and $.28 in AERO I cannot trade because the value is too low. Essentially the AERO is useless, but considering my wallet calculates the value of the ETH and AERO at $6.60, that is what I am reporting.

There is one more thing to mention. I also accumulated points from the Arcadia App for "participating in the protocol." I diligently scoured their website and any available information, hoping these points might be spendable somewhere. Like when you go to chuckee cheese and spend way to much money on games and in the end you have a stack of tickets that buys you a plastic whistle. I thouht maybe I would get a virtual whistle. It seems like the points are just for show though. There is a leaderboard, but that is the only place the points seem relevant.

So, I lost money and have a bunch of virtual points that don't do anything, and I am still confused about how the whole process works. That's the big earnings reveal!

Insights from Exploring Crypto

So, what did I actually learn from this? Quite a few things, it turns out, and hopefully, these insights will be valuable for other digital nomads considering venturing into similar territory.

Firstly, it became glaringly obvious that my understanding of advanced investment strategies, especially within the complex world of DeFi, is limited. I'm not even entirely sure if the financial products offered on platforms like Arcadia are simply crypto-world equivalents of traditional investments or something entirely new and experimental. This highlights the importance of continuous learning, especially for those of us trying to manage our income and grow our money while traveling the globe. Perhaps it's time to dust off those investing books or explore some online courses specifically geared towards crypto and DeFi for beginners. Or more seriously, ask ChatGPT.

Secondly, timing in the market is everything, or so they say. Almost immediately after I invested my small sum, the crypto market experienced a significant downturn. This makes it difficult to pinpoint the exact cause of my losses. Was it my own lack of expertise, a flawed product offering on Arcadia, the broader market slump, or a combination of all three? This uncertainty underscores the volatility inherent in the cryptocurrency market and the importance of being aware of macroeconomic factors that can impact your investments.

Another crucial takeaway, and one I'm glad I heeded, is the importance of testing the waters with a small amount of capital. My $10 experiment, while resulting in a loss, prevented a potentially much larger financial hit. This is a golden rule for anyone exploring new and potentially risky investment opportunities, especially in the fast-paced world of online earning.

Finally, from a purely practical standpoint, the Arcadia app itself left much to be desired. Frequent crashes and a confusing user interface made the experience less than smooth. While this was just one platform, it reminded me that not all web3 applications are created equal. I've seen other similar platforms with much better user reviews, and perhaps those will be worth exploring before I completely dismiss the potential of the DeFi sector for generating remote income.

Final Thoughts: DeFi and the Traveling Investor

Bringing it all together, my foray into Arcadia Finance was driven by a genuine excitement to explore new technologies that could potentially help fund my travel adventures as a digital nomad. The promise of high yields in the DeFi space is certainly alluring for those of us seeking financial freedom and the ability to earn income from anywhere in the world. While my personal experience with Arcadia resulted in a small loss and a fair amount of confusion, it served as a valuable learning experience.

Reflecting on the overall experience, I'm left with a healthy dose of skepticism coupled with a continued curiosity about the potential of DeFi. It's clear that this is a complex and rapidly evolving landscape that requires a significant amount of research and understanding before diving in.

In conclusion, my brief foray into Arcadia Finance was a stark reminder of the complexities and risks involved in the world of DeFi. While the allure of high-yield opportunities can be strong, especially for digital nomads looking to boost their income while on the move, it's crucial to approach these platforms with caution and a healthy dose of skepticism. The reality of investing in DeFi is that it requires a significant amount of research, understanding, and a tolerance for volatility.

Ultimately, the goal is to make informed decisions about how you fund your adventures. My experience highlights the importance of continuous learning and careful consideration when exploring new financial technologies.

And as always, remember this is not investment advice, or any type of advice for that matter. I'm just sharing my personal experience.

Adventure on!