Step by Step Guide on How to Use a Defi Platform to Earn Passive Income

I, like several others, imagine the day that I can easily live off my financial investments as opposed to relying on a 9– 5 task. So when I first checked out Drip Network as well as placed a straightforward spreadsheet together to compute the prospective rewards, I couldn’t quit thinking about it. I remember strolling to satisfy my friend for dinner afterward with my mind fully taken in with what I simply read about– so taken in that I unintentionally strolled right into three various complete strangers in the process. So why did I discover Drip so wonderful? And also just how does someone turn it into a 6 number income?

What is Drip?

Drip Network is a decentralized platform on the Binance Smart Chain that provides 1% rewards in the ‘Drip’ token every day. Each day, you can either choose to claim your Drip and sell it, or reinvest your 1% reward back into your initial deposit. A quick example —

1. You have 100 Drip in you deposit account
2. Every day, you earn 1 Drip
3. You can choose to claim that 1 Drip and sell it into something else (BNB, USD, etc.)
4. Or reinvest it into your deposit, which will now have 101 Drip. You will now be earning 1% of 101 drip every day, or 1.01 Drip

Now the first thing everyone asks is — how is this sustainable? Every transaction with Drip (buys, sells, transfers, deposits, etc.) is taxed 10%. These taxes pay for the 1% rewards that are pushed out to everyone else with Drip in their deposit accounts. The only exceptions are buying Drip on the Drip platform (0% tax) or reinvesting your deposit (5%).

Sounds interesting, but how do I get to retire with that 100k salary?

Let’s get to the fun stuff. We know how Drip pays out 1% rewards each day based on our amount in the deposit account. We’ll now walk through the step-by-step of exactly how anyone can get to that salary (and possibly more).

Step 1: Buy Drip on the Drip Platform

So we have our $2,311 and have read everything we could about Drip. We’re ready to get started on our path to retire (or at least build a stream of passive income). The first thing we’ll do is convert our USD to BNB on the Binance Smart Chain and buy Drip within the ‘Fountain’ on the Drip platform (https://drip.community/fountain). Because we’re buying it on the platform, we do not have to pay a tax. At the current price ($10), we now have 231 Drip.

Step 2: Deposit Drip into the Faucet

The ‘Faucet’ is the staking rewards deposit account on the Drip platform. Once your Drip is in the Faucet, you will receive your 1% a day. Since depositing Drip into the Faucet requires a 10% tax, your deposit balance will now be 208 Drip.

Step 3: Receive your First Drip and Hydrate

Once our Drip is in the Faucet, it will start to generate the 1% daily rewards immediately (at the current price, we’re actually making over $0.01 a minute). Roughly 24 hours later, we will want to make our first reinvestment into the Faucet, or ‘hydrate’ — which is what it is called in the platform (you’re probably catching on to the water theme at this point). 1% of 208 is 2.08 drip, but we also pay a 5% tax for ‘hydrating’, which puts our new balance in the faucet at 209.98 Drip. (208 + 2.08*0.95).

Step 4: Hydrate Every Day for 364 Days

We’ll continue to hydrate every day for 364 days. On the 364th day, we will have 6,436 Drip in our ‘Faucet’ account ($64,366 at the current price of $10), which means that we are earning roughly 64.4 Drip per day ($611 at the current price of $10). We’re now making enough to retire on a 100k salary!

Step 5: Claim 4 Days a Week and Hydrate the Other 3 Days of the Week

So why can’t we just claim our 1% every day and live off of that? First of all, we need to keep in mind that the Faucet has a Max Payout of 3.65 times the deposit amount (see the Faucet screenshot above for a visual reference). This Max Payout is the maximum amount that can be claimed (taken out of the Faucet) based on the current deposit amount. So our Max Payout at a deposit amount of 6,436 Drip is 23,491 Drip. This means that if we claimed every day, our Max Payout would stay the same, and we would stop getting our 1% reward once we hit 23,491 Drip (when ‘Claimed’ = ‘Max Payout’). But if we hydrated some days and claimed others, our deposit amount would continue to grow as well as our Max Payout amount. What we need to know is — what is the maximum amount of times we can claim a week so that we do not hit our Max Payout? PeterPervis (fellow Cryptozoa team member) did an excellent analysis and already figured out the answer: if we claim 4 days a week and hydrate 3, we will not hit our Max Payout amount (until we hit the maximum-Max Payout amount of 100k Drip, more on that below). Here’s the link to PeterPervis’s article explaining how he came to his conclusion of 4 claims a week and if you want to learn more about Max Payouts.

Step 6: Retire

Regardless if you understand the last step, we now know that we should hydrate 3 days a week and can claim the other 4. So how does this math workout to a 100k salary? Let’s run it through the steps:

1. 6,436 Drip in the Faucet rewards 1% a day or 64.4 drip per day
2. 64.36 Drip per day works out to $643.60 per day at the current price of $10
3. There’s a 10% tax to claim Drip out of the Faucet, so $643.60 * 0.9 = $579.24 per day
4. There’s another 10% tax to sell Drip, so $579.24 * 0.9 = $521.32 per day
5. We’re claiming 4 days a week (as explained above), which works out to $521.32 * 4 = $2,085.28 per week
6. With 52 weeks in a year, 52 * $2,085.28 = $108,434 a year → we made it!

A Few Notes:

Of course, to perform this exercise we had to make the assumption that the current price of $10 would stay constant throughout the 12 months. Drip has seen a low of ~$2 and a high of ~$54 since the launch in April, so the price could fluctuate.

Additionally, after the 12 months, we would still be hydrating 3 times a week (increasing our deposit in the Faucet), so our salary would continue to increase over time.

I also mentioned above that there is a maximum-Max Payout of Drip at 100k Drip. Once the Max Payout in our Deposit reaches 100k (around 27.3k Drip in our deposit), it will no longer grow even if we add more to our deposit. At that point, we will want to claim every day and transfer our Drip to another wallet (to continue getting the 1% rewards).

How to get started with DRIP

1. Go to https://drip.community/fountain and exchange BNB for DRIP using your Meta Mask wallet or Binance Smart Chain wallet. You’ll need at least 1.2 DRIP if you want to deposit it later to earn the rewards.

2. Go to https://drip.community/faucet to deposit the DRIP that you purchased. You’ll need to enter a buddy address in the Referral section in order to make a deposit (clicking the ‘Buddy Detected’ button will automatically populate my buddy address in the field).

3. Deposit at least 1.12 DRIP to receive 1 DRIP in your faucet (Note: Make sure you have enough BNB to pay for the gas fees which are typical ~0.01 or less per transaction. I suggest you leave 0.1 BNB)

4. Once deposited you’ll start to receive 1% daily. Every 24 hours compound by clicking the HYDRATE (re-compound) button.

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