Have you heard the rumors of HectorDAO? Is this the number one play for big profits in 2021 and 2022? Should you invest in this project? What is HectorDAO all about? How can a project like this run with such high APY as HectorDAO? Isn’t this simply too good to be true? Does that make it a scam that it is currently operating with an APY exceeding 100,000% in one year? Would you like to learn more about HectorDAO and to find out whether you should invest or not, keep on reading!
We all want to get rich, and we all want to get rich quickly. Even Netflix dealt with this topic in their series named Money – Explained! If you are interested, make sure to watch the first episode dealing with how we as human beings are programmed to want to get rich quickly, and how we are programmed to want to believe that this is a brilliant opportunity, even though it might be too good to be true.
However, I do not want to judge HectorDAO before we have taken a closer look at the project. Keep on reading, and know that you are responsible yourself for your money, so this is not financial advice, I am simply sharing some of my thoughts about HectorDAO. Let us start at the very beginning.
What is HectorDAO all about? How can they operate with such a high APY?
In order to understand HectorDAO, we need to understand a few things about money first. Number one… if you went back in time to 1950 and found one dollar and hid it under your bed… what would you find under your bed today? You would find a lot of dust, and one dollar. But, what has changed? Back in 1950, you could buy quite a lot of stuff for that dollar, but today, it is worth way less… even though it is exactly the same dollar. This is because of the inflation of the currency, which causes the actual value of the currency to drop (and the prices to rise).
So, if we return to the world of cryptocurrencies… why would you want to peg the value of your cryptocurrencies to the USD, which isn’t stable at all? That is the main thought behind HectorDAO and all the other OlympusDAO clones that have been created in 2021. Besides OlympusDAO, the most famous OHM fork is Wonderland, a project running on Avalanche and led by the charismatic leader Daniele Sestagalli.
The thought behind these projects is that we shouldn’t peg the value of the currency to the USD, but to a treasury that is backed by all sorts of cryptocurrencies.
This sounds extremely complicated! How does it work in reality?
When you visit the HectorDAO website, you can stake your tokens on the platform and enjoy the outstanding APY currently available for stakers. But, how should you buy the $HEC tokens in the first place? You can buy them on SpookySwap, or you can buy them directly on the HectorDAO website through bonding. When you buy a bond, you are actually giving away your money to HectorDAO, but in return, they will mint some brand new $HEC tokens to you at a discounted price. In other words, this is a win-win situation for both you and HectorDAO.
You can buy bonds with standalone currencies such as $MIM, $USDC, and $DAI, or you can buy HEC and add those HEC tokens combined with either DAI or USDC to a liquidity pool on SpookySwap and then use your liquidity pool tokens for minting. The end result is that you will get HEC tokens at a discounted price, while supporting and strengthening the platform. How does this happen?
When you purchase $HEC tokens through bonding, you are giving HectorDAO your money/crypto in return for HEC tokens. These funds are added to the HectorDAO treasury. If you buy $HEC with liquidity tokens, you are once again giving these to HectorDAO, and now they own the liquidity themselves, and they are also earning massive trading fees as people buy and sell HEC on SpookySwap (where HectorDAO owns more than 99% of the liquidity).
With all this money in the treasury, HectorDAO is actually backing the real value of HectorDAO. In other words, every single $HEC token is backed by a certain value based on the treasury balance of HectorDAO. If the price should ever fall below that level, HectorDAO will step in and buy back the tokens at that given price, thus creating a floor setting the lowest value the token can reach.
If you take a look at the image above, you can see that the actual price of HEC is $262. Then you can see that the backing per HEC at the moment is $70. In other words, if the value of the token should drop to below $70, the HectorDAO treasury will start working and purchase tokens in order to keep the price at this level, after all, the treasury is so big that it can guarantee that it can purchase every single HEC token in the world at that price level.
So, that is a little bit about HectorDAO and how it works. But, how can they run with such a high APY?
What about the extremely high APY? How is that even possible?
It is important to understand that it isn’t expected for the HectorDAO APY to stay at the current level for a long period of time. Considering that the backing per token is at $70, you are actually paying way above that price when you buy a token costing $270. However, this is a premium deal, because you can stake the tokens you own, and as a thank you for your investment, you can enjoy these giant APYs now during the start phase of the project. And with this APY, you can easily see that one HEC token will turn into 100 in one year, and thus, you will still be in a giant plus if the actual price of HEC should fall to $70, even though you originally paid $270 per token.
But once again, it isn’t expected to see the APY remain at the present levels forever…
What are the HectorDAO 4,4 bonds?
This isn’t important at all if you just want to find out whether to invest in the project or not. But, if you want to really understand an important principle of HectorDAO and one of the things that makes it different from all the other OHM forks, then it is the 4,4 principle. What is it all about?
Normally when you purchase a bond from HectorDAO, OlympusDAO, SnowbankDAO, or any other such project, you buy tokens and then you manually have to claim the tokens and stake them within the protocol. In other words, you are receiving the $OHM, $TIME, $SB, $HEC, or similar tokens at a discounted price, and then you have to claim and stake them yourself as they are minted (this normally takes five days).
With HectorDAO and their 4,4 bonding option, you are getting a little bonus. What is this all about? If you decide to spend something like 1000 MIM to buy approximately 3,7 HEC it will look like this.
As you can see, a 4,4 BOND has been bought with MIM, and it is supposed to be 3,8817 HEC. But, what is happening is that throughout the minting period, the tokens are already staked (sHEC), which means that you are enjoying the staking rewards from the first second. Normally, you can claim tokens after minting for five days, and you will only receive staking rewards for the tokens that you have actually claimed and staked. With 4,4 bonds from HectorDAO, the full number of tokens are staked from the first second, thus giving you rewards for the entire amount at once.
Here you can see that after 36 hours, my pending rewards have increased due to the fact that I am enjoying the staking rewards already, even though I am still not able to actually claim my tokens.
Let us now return to the project itself… is it safe? Is HectorDAO a scam? Should you invest?
Should you invest in HectorDAO? Is it safe? Is HectorDAO a scam?
If you have read through all the content of this article so far, you probably understand that the concept behind HectorDAO isn’t a scam at all, but rather the result of some brilliant minds with lots of insight an great understanding of the financial markets. The main concept is brilliant. But, even though a concept is brilliant doesn’t serve as a guarantee for anything, especially considering that similar projects to HectorDAO are popping up every single day, each and everyone coming with amazing APYs and promising quick profits! What should you take into consideration before investing in HectorDAO?
HectorDAO and the team behind it…
We do not know the actual members of the OlympusDAO team, the actual people that created the platform OHM, which later has forked into TIME, HEC, and lots of other tokens. In fact, Wonderland with its leader Daniele Sestagalli is one of few such forks that actually has a person being the actual face of the platform. So, we don’t really know the creators of HectorDAO, but we do know that Promotheus is a very important figure in the project (even though we have no clue about his real identity).
Some might call this a red flag that we do not know the team behind it, but the way I see it… it doesn’t have to be.
What I find to be more important is the fact that there are actual developers working with HectorDAO, something I don’t see clearly with many other OlympusDAO forks. Others often just copy the source code and then welcome investors. HectorDAO is working differently because they actually develop the platform, and thus they became the first such platform to introduce the BOND 4,4 concept. Besides this, they have also been writing about Hector Lend, Hector Borrow, and Hector PRO, three additional products that they want to launch within the platform. This all makes me feel as if there are actual people with skills and a vision working and running this platform, which gives it credibility (in my eyes).
It should also be mentioned that there is a quite vibrant community surrounding HectorDAO, and you can easily get in contact with the community and even the team at times in the HectorDAO Discord channel.
This article has been awfully positive so far – where’s the part coming with tiny letters?
Based on what I have seen, read, and experienced from HectorDAO so far, I am actually very positive about the project, just like I am positive about OlympusDAO and Wonderland. But, we all know that money is money, finance is finance, and crypto is crypto. Before the financial crisis in 2008, nobody believed that the real estate business in the USA would fall apart (or very few did), but it did, and it caused giant trouble. Based on what I see, HectorDAO seems to be a solid project with a solid team working constantly on the protocol and the platform.
But, anything can happen, especially in crypto. It can be as simple as a hack (which can happen even though it shouldn’t), or it can be produced if team members decide to remove the liquidity from SpookySwap and just leave with it all, or somehow create a loophole in a contract somewhere that would make it able for themselves or other to steal the funds. Of course, these would be completely stupid things to do, and I don’t expect any of these things will happen, but in crypto, anything can happen, and all investments should be considered high-risk investments. Of course, there are other projects offering passive income with lower risks levels than the popular DAO projects like OHM, TIME, and HEC.
So, the tiny letters do not really exist, except for the fact that all crypto projects are high-risk projects, and you can end up losing all your money very quickly. As a result, you should never invest more than you can afford to lose. Another piece of advice is to take profit regularly, something that will mean that you will still be in a plus if this or other crypto platforms should decide to disappear or go under in days, weeks, or months from now.
How can I buy HectorDAO tokens?
So, I have tried to share some of my thoughts about HectorDAO in this article. Have I scared you, or have I inspired you? I for sure hope that I have made you think and that you will have a better foundation for deciding about investing or not. If you have decided to actually purchase HectorDAO tokens, then I have already written an article on how and where to purchase HectorDAO tokens and how to stake your HectorDAO tokens. Click the link in order to check it out.
By the way, here you have the link to the HectorDAO website: https://hectordao.com/
Do you have any comments, questions, thoughts, or experience that you want to share?
I have tried to share what is on my heart relating to HectorDAO. If you have any further comments or questions, thoughts, or maybe you want to share your experience with the platform, please use the comment field below. I always try to answer questions myself, but I also appreciate if you read the comments of others and do your best to help others who might have comments or questions about the platform.