Why I would be careful investing in FortressDAO!

Have you read about FortressDAO, an OHM fork/clone running on the Avalanche blockchain? Would you like to invest and get rich quickly? Have you seen their amazing APY which is currently higher than 10,000,000%? It sounds too good to be true, doesn’t it? But, there are several other platforms operating in the same way, for example, Wonderland and HectorDAO… does that make them all dangerous projects? What about OlympusDAO, the mother of all these forks? In this article, I will share some of my thoughts about these projects in general, with a special focus on FortressDAO.

I really like the idea behind OlympusDAO and the concept of creating a treasury-backed currency. This stands in opposition to backing a currency with the Dollar, something that is “bad” considering that the Dollar is losing value every single day. That is why you can buy fewer and fewer products for 1 USD, simply because of inflation and the fact that it is losing value. The concept of creating a treasury based on different cryptocurrencies to back OHM, FORT, TIME, HEC, WAGMI, or any other currency is quite brilliant.

In other words, the concept here is really good. Whenever you buy a BOND (that is, FORT tokens at a discounted price), you are adding money to the FortressDAO treasury, which means that the treasury is growing, and thus, it will be able to back the value of the FORT token. The backed value is quite much lower than the market price of the token, but in return, you can enjoy the gigantic APY to “make up for your loss” until the APY will start to decline, and most likely also the price of the token.

what is fortressdao?

Above you can see a screenshot from the FortressDAO website, showing a current APY of 10,000,000%. This APY will only be valid if you actually buy and stake your tokens for 365 days, and it is important to understand that it is compounding interest. If you buy one token today, it will currently take you approximately 20 days for it to become 2 tokens. Then it will take 20 more days for it to become 4, so the gigantic multiplication and giant numbers will only show up after a while.

You can see “Next Reward Yield” in the screenshot below. This is also referred to as a “rebase” and it is happening three times a day. In other words, you will receive more than 1% in return per rebase, which means that you will grow your sFORT balance by more than 3% per day.

What is the Current Index on the FortressDAO website?

The Current Index is interesting data that you can find on the websites of all the OlympusDAO forks. It is simply a number that will show you how much you would own if you staked 1 token on day number one and simply kept it on the platform and staked it since then. As I am writing this article approximately 6 days have passed since the launch of FortressDAO, and the “original” one token would have turned into 1.21 FORT by now.

Why I would be careful investing in FortressDAO?

Maybe you have a clear understanding of the FortressDAO concept? Maybe you have trouble understanding it, but you are really enthusiastic about it as a way to make some big bucks quickly? No matter what, I would like to share some of my concerns about the project.

General concerns about investing in cryptocurrencies and OHM forks

  • Investing in cryptocurrencies is a high-risk investment, no matter what! Things change all the time, and what you buy today, can easily drop 50% in value in less than 24 hours. Relating to OHM forks, the value might drop 100% in 24 hours if a team should steal the funds, abandon the platform, or some similar action should happen.
  • There are dangers with all cryptos, but with the OHM forks we very seldom know anything about the teams behind the fork. As a result, they could abandon the platform and we would have no clue about who they really are (with a few exceptions like with Wonderland and some others).

Further concerns about FortressDAO

  • This is clearly a fork, and I do not see any high level of developing happening on the platform. In other words, there doesn’t seem to be any concrete plan or vision for this product, and they do not seem to develop it in any direction.
  • If you ask about the vision and goal for FortressDAO, you will hear that it wants to be a treasury-backed currency on Avalanche. That is fine. But, if you try to go further, then you might hear jokes about buying an actual castle somewhere (that is meant to be a joke only). However, it just seems to lack a goal and a vision, and I still don’t see anything pointing in the direction of stand-alone work on the FortressDAO protocol.

Some additional FortressDAO information

Since I first wrote this article, an AMA has been published in which we receive some further information about the FortressDAO team. It doesn’t make my worries disappear, but it is giving some further insight. Here I will sum up the most important information from the AMA.

  • There are currently 6 people on the multisig and I think that’s a reasonable definition of what constitutes the core Fortress DAO administrative team. You could also take a more expansive view and include additional devs, advisors, marketers, etc. and that perhaps gets you to 10–12.
  • On a question dealing with what makes FortressDAO stand out among all the OHM forks, the following answer was given: “We will distinguish ourselves by the quality of our work, the commitment of our team, and the kindness of our community. There are of course forks which are very respected (for good reason), like Wonderland; however, the mere fact that there are 10 new forks a day is not something I’m concerned about at all. 30% of them don’t materialize, 30% of them are hard rugs, 30% are soft rugs, and it’s only the remaining 10% or less which potentially evolves into a quality product.”

These are some interesting answers, and you can find the full AMA with more information right here.

These are just some of my thoughts and concerns about FortressDAO. I have still invested some bucks, just in case, but I feel like money in FortressDAO isn’t at all as safe as it would be indifferent DAO protocols like HectorDAO, Wonderland, or OHM, and it is very far away from safer investments such as Ethereum, Avalanche, and Bitcoin. But, of course, you will never see such gains with those coins.

What are your thoughts on FortressDAO? Is it a product worth investing in? Do you feel safe about your investment? Do you have any information about the team, the plans of the protocol, or anything else that would make me look a little bit brighter on this platform? Or are you even more skeptical than me?

Write a comment and let me hear your thoughts!

4 thoughts on “Why I would be careful investing in FortressDAO!

    • Thomas Stein says:

      Have to take a closer look at it. Just saw the website for one minute and then I moved on. Might take some more time and do research on it and write an article this coming week! 🙂

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