- A HEX token holder has posted online that he has locked up $3.4 million worth of HEX tokens for over five years
- The holder is leaving his job and plans to live on the monthly payouts
- The plan has been questioned by members of the crypto community
A HEX holder has caused debate in the crypto community over his decision to lock up $3.4 million worth of the controversial token for over five years and live off the monthly payouts. Reddit user Yobleed posted on the site for advice over how to deal with the tax and social implications of his huge monthly windfall, but the discussion soon moved onto the prudence of leaving so much money locked up in an unproven cryptocurrency for such a long period of time.
Crypto Volatility Doesn’t Suit Long Term Planning
Yobleed told Reddit that he planned to quit his job and live on the €20,000 ($23,300) monthly payouts from his $3.4 million HEX investment, entrusting everything into the scheme that many have labeled a scam:
HEX has a poor reputation due to the fact it has one single function – to increase in value. Investors can only earn payouts if they lock up their tokens for long periods, with a staggering 40% APY available for those who commit to the longest term. This is what Yobleed has done, with the resultant payouts.
However, while the APY may be locked the value of the payouts isn’t, being dependent on the value of the token at the time. Fortunately for him HEX has enjoyed an incredible run since April, jumping from $0.016 to $0.19 this week, but calculating monthly payouts on a coin that can jump (and fall) over 50% in a week is at the very least impractical if not impossible.
Added to this is the fact that the lockups aren’t weeks or months but years in length. HEX holders swapped ETH for their tokens, so while creator Richard Heart is sitting on the pile of ETH that he can cash out at any time, HEX holders are left holding their purposeless coin through cryptocurrency’s notoriously volatile bull and bear markets.
HEX Not Casting a Spell Over Crypto Community
Reddit and Twitter users were quick to point out the multiple risks involved in leaving everything in the hands of such a volatile one-dimensional project:
dumb af.
He could make more staking than into stables without the lock up period.— The Crypto Monk ⛩️ (@thecryptomonk) August 18, 2021
20k per month until the value of hex dumps 95% in the next bear market at which point he’ll be earning 1k per month and holding absolute trash wishing he put his millions into stablecoins instead.
— 🇦🇺⚡✝️ AusNat (Taliban Respecter) MD, PhD ✝️⚡🇦🇺 (@BasedNatAus) August 18, 2021
In theory there is nothing wrong with putting a small amount into such a venture, but quitting job job to rely on income from a sketchy coin, knowing you can’t sell the principle for over five years, is a recipe for madness. Of course it could turn out to be the most magnificent play of all time, but the risks involved are monstrous.
In his defense, Yobleed posted that he could live from the profit even if the coin dropped 90% from its current price, so perhaps it’s not such a big risk for him after all.
