GUTTER CAT GANG
Passive income in the context of NFTs is usually used to describe how holders of an NFT can earn rewards, just for having the NFT in their wallet. The phrase ‘passive income’ may be an overused buzzword as of late in the financial education sector, but the buzz is not hollow; there are some tangible gains to be made, especially in the cnft space, and some projects allow you to make a substantial passive income with your jpegs.
Although few projects in the CNFT space are offering the opportunity to stake your NFTs for passive income, we are going to take a deep dive into the first project that offers staking for a native token, and break down some of the strategy involved in choosing nfts that will earn you the best return on your investment.
On December 30, 2021, Cardano Croc Club NFT holders gained the opportunity to stake their NFTs on the CCC Dashboard to earn daily passive income in the form of the Cardano Croc Club Coin, aka $C4 tokens. These tokens are automatically delegated based on the rarity of the NFTs staked. The tiered rarity list offers more daily $C4 tokens to holders of rarer OG Croc NFTs.
To learn more about The Cardano Croc Club NFTs, and their upcoming point of entry: Baby Croc Breeding, as well as $C4 utility, the croc TertlFace has a great post here.
Below, I offer two major pieces of information and advice to make money with the Cardano Crocs Club NFTs:
Lets jump into the numbers and take a look at how staking Croc NFTs can earn you passive income.
OG Crocholders enjoy greater passive staking rewards based on their rarity compared to Radioactive crocs. However, both are lucrative and provide plenty of passive rewards for participating in Croc events and games like poker tournaments, baby croc breeding, and upcoming games like Croc Tanks. You can use CNFT rarity sites like cnft.tools for both OG croc rarity and RA croc rarity.
The CCC team released the tokenomics of C4 Token before staking was available, and described some of the benefits and future utility available. We are now at a point on the roadmap where we are approaching the first real utility for $C4, baby croc breeding, and that is, to say the least, pretty freaking exciting! Here are the official charts for OG and RA daily staking rewards, as well as the official tokenomics for $C4:
Tables showing the rarity rank charts for OG Cardano Crocs Club CNFTs and Radioactive Crocs CNFTs.
The amount of $C4 in circulation is extremely important if you are concerned about the current and future price. At the time of writing, I estimate that there is about 100 Million $C4 currently in circulation. How did I get here? This is based on:
I made some assumptions in my calculations, such as not accounting for the couple weeks of double staking rewards after each mint, and not accounting for the missed opportunity for $C4 for those who have crocs listed on exchanges instead of staking in their wallets. I estimate the latter to be about a 5% loss.
For the sake of transparency and for those interested, I have a document with all of my math here.
he bare minimum that you can mint a single Baby Croc for was announced to be 10,000 $C4, and you can purchase additional accessories to improve your baby crocs during each of 8 1-week breeding phases. Baby Crocs can be paired with your other Croc nfts on the dashboard to increase their daily $C4 earnings by a percentage.
There is a huge benefit to making a good baby: better baby crocs offer better percentage increases to your staking rewards.
To summarize: less $C4 in circulation means fewer baby crocs can be minted, and even fewer can be minted and accessorized to the max at each stage of breeding! By my estimates, the absolute maximum minted can only be at about 12,000 babies. ASung, one of our esteemed Moderators, more realistically pointed out to me that number may be lower, closer to 5,000-8,000 because many people will save $C4 to purchase accessories.
With those numbers in mind, we can be even more bullish in light of the fact that all $C4 spent on breeding will be burned by the founders! We can speculate with some confidence that the supply of $C4 will be burned to record lows, while the demand will be higher than ever, and therefore the price can be expected to skyrocket!
So, how can you take advantage of this? 2 ways:
Now that you understand how Crocs can be used to generate passive income with the $C4 token, how will you know which NFTs offer the best value? Lets learn, step by step, how to choose the NFTs with the most bang for your buck, so you can get your hands on the juiciest passive income returns in the cnft space.
You can estimate the return on your investment with some simple math if you have 4 numbers:
Use a marketplace like jpg.store to find a Croc NFT you are interested in. Note the price, a, which is the first number we need. An alternative method is to go directly to cnft.tools, search for a rarity class by the upper limit on the rarity tables, and sort by price. This will sort the cheapest croc first, so you can get an idea of the deals currently available on the market for that rarity category. Sometimes, I go through all of them, starting at 500, then working my way down the list, adjusting the rank to 1000, 2000, and so on. Clicking the price icon will then take you to the marketplace which lists that croc.
Screenshots illustrating how to sort crocs by price and rank to find the best bargains for returning passive income.
To do this we use a rarity tool website like cnft.tools. There are other platforms like https://www.cnftjungle.io/ but cnft.tools is the OG and the most accurate. What we do is lookup c, the NFT’s rarity rank.
CNFT.tools location for looking up crocs by serial number
Using the appropriate OG or RA rarity chart, you can use the rarity rank (c) to find the daily rewards (d).
Tables showing the rarity rank charts for OG Cardano Crocs Club CNFTs and Radioactive Crocs CNFTs.
Next, you can calculate the amount of Ada you would receive per day if you sold it immediately at the current price by multiplying the daily rewards (d) and the current price of $C4 in Ada (b).Ada/day= b * d
For quick reference, I like to get a feel for the cost/benefit of an NFT with a quick snapshot using a / d. This gives me a simple index, Ada/$C4/day, that I can compare croc deals with, regardless of the current price of $C4. A good cost/benefit (a / d) in the current market might be 4.5 or 4.75, whereas I might pass on anything above 5.5. These numbers will fluctuate with the market, however, so look at a couple deals and get a feel for a cost/benefit that feels opportune to you.
Find annual ROI for buying and staking the Croc NFT in question using the formula: ROI = Daily reward * $C4 value * #days in a year * 100% / cost of the NFT ROI = d * b * 365 * 100% / a
This final number, your ROI, is the percentage in profit you will earn in passive income over the course of a year.
The easiest way to get you into the simple math of choosing the crocs with the best returns is to take a look at a real example!
OG crocs, as the original mints, tend to fetch higher prices than RA crocs. As it stands currently, you can generally get more $C4 rewards per day with equivalent ada spent on RA crocs compared to OGs. For that reason, our example will look at an RA croc NFT.
Let’s look at the return on investment for a completely average croc listed on JPG.Store on 4/21/22:
Radioactive Croc#5272 was listed for 365Ada (a = 365) and has a rarity according to cnft.tools of rank 832 (c = 832), putting it in Category 2. Category 2's daily $C4 earnings are 80 $C4 per day. If we take the cost of the nft, and divide by the daily earnings, we get the cost in Ada for 1 $C4 token per day. For this nft, it would cost 365/80, 4.56Ada for 1$C4/day.
This number can then be extrapolated to find your ROI for the year if you take the Daily $C4 Earnings * the number of days in a year, 365, to get yearly earnings. 80*365= 29,200 $C4 per year.
Recently (May, 2022), the price of $C4 has been hovering consistently between .0037Ada and .0059Ada, but most often it sits at around .0047Ada. Assuming this number will stay the same is silly. Why? Because we speculate that $C4s utility will increase dramatically in the coming weeks as baby crocs and their accessories become available. Furthermore, the upcoming poker and croc-tanks games will offer even more utility for $C4. But for the sake of a hypothetical math problem, let’s use the current price.
0.0047 Ada per $C4 coin gives us an annual return of 137.24Ada by staking RA Croc #5272 for a year. That is an ROI of 37.6% per year, and you get to KEEP your NFT! I have found listings on jpg.store for crocs that offer a cost/benefit (a / d) of 2.8 Ada/$C4/day (I may have.. well, I definitely sniped those!!), which means I will get a calculated return of 61.27% per year staked, and that is if the price of $C4 stayed exactly the same.
At present, some of the best deals on the market can get you a 4.5Ada/$C4/day staking reward, with an associated 38% APY. Not too shabby!
What if the price of $C4 doesn’t stay the exact same? What if $C4 increases by 2x or 10x or 20x? Any of these targets are possible given the fact that the founders are burning all of the $C4 spent minting baby crocs and their accessories, potentially leading to a price squeeze. Let’s look at a hype-othetical example.
I see an RA croc on the market right now for 175Ada in Category 4: 39 $C4 per day. That is a cost/benefit of 4.48Ada/$C4/day. If the value of $C4 increases to 10x its current value, it will be worth a passive income of 1.95Ada per day, or 711Ada per year, which is an ROI of 382% this year, paying for the cost I paid for the nft in Ada almost 4 times over, and that’s just the $C4 income! With passive income at that level, just imagine what will happen to the demand for, and therefore price of, the Croc nfts you still hold! Again, just hype-othetical.
I am very bullish on this project. The math speaks for itself.
-RonnygoBOOM, Croc hodler and proud member of the Cardano Croc Club Community