26th October 2022 > > BUSD Wealth.

tl;dr

BUSD Wealth is a Ponzi scheme.

Market Snap

Market Wrap

Nice to see $20k breached to the upside once more, though I will refrain from asking if this could be for the last time ever.

A big jump in the open interest for perpetual futures and a funding rate that reflects an imbalance to the short side suggest together that the market is susceptible to a material short squeeze higher. Any positive news flow could trigger that short squeeze, though it is by no means guaranteed to occur.

Curious Cryptos’ Commentary – Web based miners

On the 10th October 2022 the CCC began a small experiment with one of the many web-based miners that offer high yields simply in exchange for staking coins.

It is my strongly held belief that these websites are either outright scams, from which you can never retrieve your stake or the accrued interest, or they are simply Ponzi schemes.

Wanting confirmation of my suspicions, the CCC treasury made a 10 BUSD (Binance stablecoin) investment in BUSD Wealth:

https://busdwealth.com/

This iteration offers 1% daily returns at first, a figure which increases over time if the accrued interest is not removed or compounded.

There is a 5% tax charged on staking and a 10% tax charge for unstaking.

The eagle-eyed amongst you would have noticed from the screen shot accompanying the CCC on the 10th October 2022 that the TVL (Total Value Locked) was just shy of $29k with 160 users.

It is worth trying to unpack that statement a little.

TVL is a term often used in DeFi (Decentralised Finance). It is a measure of the assets that have been committed to a smart contract, expressed in dollar fiat terms.

BUSD Wealth was launched on 22nd September 2022, meaning that by the date of the CCC investment it had been functioning for 18 days.

With a minimum investment of 10 BUSD (worth $10) 160 users would have deposited at least $160k worth of BUSD. Accounting for the staking tax of 5% - which goes to the wallet of the website sponsor – that would take TVL to a minimum of $152k.

What this tells us is that at least $123k of BUSD assets had been removed by the date of the CCC investment. I think it is safe to assume that early investors had taken their 1% daily rewards, and removed their stake minus the unstaking tax.

In the days following the CCC investment I kept a close watch on the TVL, noting that it was dropping daily. Leaving it to the last minute – and a little too late as you will see – my intention was to test the hypothesis that this whole set-up was an outright scam by trying to withdraw the interest earned and the staked amount.

Yesterday TVL had dropped to $11. My staked amount was 9.50 BUSD and the interest earned was 1.35 BUSD. If there was no scam, that is a mightily impressive result. A 14% return in just two weeks annualises at 364% with no compounding.

To my surprise I successfully withdrew the accrued interest, as shown here:

Confident now that BUSD Wealth is not an outright scam, I went to withdraw my staked amount.

Unfortunately for me, someone else must also have taken out some accrued interest at the same time, for the TVL had dropped to $9 – too low for me to be able to unstake.

As of now TVL is down to $4 with 178 users:

Unless another mug gets involved, my 9.50 BUSD will remain locked in this contract forever.

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BUSD Wealth, like many other similar projects, is simply a Ponzi scheme.

It is possible to make money from such a situation. You must be in early, and hope that others follow. Though it is not illegal to participate in Ponzi schemes (it is illegal to run them as Bernie Madoff discovered when he was sentenced to 150 years in prison with no parole) it seems immoral to me to try to reap financial benefits from other people’s guaranteed losses.

It is even more distasteful to promote such schemes, as many people appear to do. Especially on Medium.

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Remember, if you cannot see justification for a claimed and high yield, then you are the yield.