TCAP Index Token Strategies

Asymmetry of information and lack of understanding of how the myriad trading platforms function independently of each other serves as a barrier to entry for investors. Ultimately, though, what we all want to figure out is, "What's the best token and what do I do with it?"

Since investing isn't always as simple as buy-hold-sell, we will share some strategies for investing with the TCAP Index and $TCAP, the token that tracks the value of the index. Some strategies come from the Cryptex community, which you can join on Discord, and others from team contributors.

Three Scenarios from the Community

One of our community members devised a series of scenarios that $TCAP investors might want to study to take advantage of $TCAP in their trading strategy. To fully explain how to use $TCAP in the strategy, they used 3 scenarios that an investor may find themselves in.

TCAP is a collateralized token, meaning you must deposit collateral in the Cryptex vault to receive minted TCAP. With this in mind, one must remember that the original collateral is in the Cryptex protocol and the minted TCAP tokens must be burned to retrieve that collateral.

designer: Sucito

There are a few ways to leverage this system. We will use “Jack” as our sample user for these scenarios.

Scenario One: Riding the market and trading with TCAP and DAI

Jack senses that the market is currently overvalued. He decides to reduce his position in $TCAP since he expects the market value to drop in the short term. To do this, he burns his $TCAP and removes his DAI collateral from the Cryptex protocol to keep in his personal wallet. After the market indeed cools down and the total crypto market cap falls, Jack returns his DAI to Cryptex and mints more $TCAP than he had before the dip.

Scenario Two: Longing ETH while capitalizing on TCAP Gains

Jack senses that ETH is undervalued. He deposits ETH in Cryptex to mint $TCAP, then buys ETH on Sushiswap with his newly-minted $TCAP. Here Jack is longing ETH dominance - he believes that both the price and market dominance of ETH will increase in the short term. If his prediction is right and ETH rises, Jack will swap his ETH for a greater amount of $TCAP than he started with since his ETH buying power increased in greater proportion than the price of $TCAP.

Scenario Three: Yield Farming

Jack senses that the whole crypto market is overvalued. Instead of selling his ETH to catch the top, Jack chooses to deposit his ETH and mint $TCAP. He sells the minted $TCAP for DAI and uses DAI to participate in yield farming on another protocol. With this strategy, Jack takes advantage of the correlation between ETH and $TCAP price. If the market keeps trending up, Jack can maintain his exposure to ETH and enjoy yield farming profits with his DAI. Hopefully his yield is at least high enough to cover the difference in his DAI amount and $TCAP price. If the market is trending down, he can use his DAI to buy back a greater amount of $TCAP than he started with on Sushiswap and unstake his collateral.

designer: Sucito

Scenario Insights

The previous three scenarios are fairly foreign to crypto investors who have little to no previous exposure to DeFi borrowing, lending, and staking. However, in traditional investing, it is fairly common for savvy investors to take out a loan and purchase another asset in much the same way as one might invest in $TCAP.

On the flip side, we have to face the limitations of investing with $TCAP. The capital efficiency to use $TCAP in order to short or long the market is not that high. These previous scenarios come from over a year of experience in the DeFi ecosystem, where investors have learned to increase their capital efficiency through passive yield farming.

You may have noticed the absence of margin trading protocols in our scenarios. According to our community's observation, there are plenty of margin trading protocols in this market. Despite their high availability, they often lead to shorter-than-expected gains due to high gas fees and lower demand for their services.

Some examples of protocols that support margin trading are Kwenta, Lever, MarginSwap, and Synfutures.

Competitors May Adjust Investor Behaviors

Competitors with Cryptex will come out of the proverbial woodwork sooner than later. They will challenge the standards of investing in crypto which, if we zoom out some, have only been the standard for a short period of time.

Furthermore, we have noticed that compared with other DeFi indexes (such as the TCAP Index), the DPI Index has had little more than a marginal effect on user habits. The DeFi sector appears to be ripe for a shift.

The Cryptex community feels that the best overall strategy at this time could be introducing $TCAP to the right people who help share the coin and the index with the public. When the public realizes that $TCAP investing strategies are easily-accessible reasonable facsimiles of both traditional and DeFi strategies, it should attract more investors - like you!

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Disclaimer

Cryptex.finance is not a registered investment, legal or tax advisor or broker/dealer. All investment/financial opinions expressed by Cryptex.finance are from the personal research and experience of the owner of the site and are included as educational material. It is very important to do your own analysis before making any investment based on your own personal circumstances. You should take independent financial advice from a professional in connection with, or independently research and verify, any information that you find on our Website and wish to rely upon, whether for the purpose of making an investment decision or otherwise. Past performance is not a guarantee of future return, nor is it necessarily indicative of future performance. Keep in mind investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.

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