I thought so when I heard about 1% daily returns provided by the DRIP network and their buddy referral system. I neither wanted to be a part of another network marketing team because of my prior bad experiences nor had the appetite to lose money through Ponzi schemes or scams. I ignored DRIP network and continued my research for the next altcoin that would fetch me 800% plus return.
I have been writing on the Medium for a while and had selected cryptocurrency as one of my interests. Since DRIP network is considered a cryptocurrency, Medium used to display some articles based on DRIP on the homepage. One such article titled "is DRIP a scam" caught my attention thinking that the author was sharing my views. This article in contrast answered my pressing question about how DRIP generates income to distribute 1% daily to its investors. Being a real estate investor, I understand the value of compounding and was super excited about the possibilities of earning 1% compounded daily. However, I was still not convinced about the idea of locking my investment ( I cannot withdraw my capital once invested) and can withdraw only 1% of my available payout possible at any given point in time. So, with these mixed thoughts, I decided to do more research to decide to invest. Below are the questions that I had and I will walk you through how I found answers to my questions.
Is DRIP a legit token?
Is DRIP a ponzi scheme?
Is DRIP Network marketing
Are the transactions expensive?
is there a possibility of losing my capital?
Photo by Luis Tosta on Unsplash
Is DRIP a legit token?
DRIP Network cryptocurrency is a token based on the BEP-20 Binance blockchain standard. In the official white paper of this project, they introduce themselves as a new token with scarcity capabilities and negative inflation. The Drip token has limited supply and they have also developed a tax mechanism for withdrawal tokens from the platform to control whale behavior ( Selling huge amounts) and create a more decentralized community than other cryptocurrencies. Their biggest feature is offering ways to earn money through Drip tokens with low risk and high rewards.
DRIP is currently listed on CoinMarketCap and Coingecko and has a market capitalization of 8 million. Price of the token has been rising steadily and is in 80's.
DRIP blockchain
DRIP developers believe there are enough blockchains available to users and they have abandoned the development of another blockchain. They have since developed their tokens under the BEP-20 Binance blockchain standard and are using the great features of this platform. Currently, there are no plans in place to be interoperable on other platforms.
DRIP Smart Contracts
DRIP currently supports 3 smart contracts
Fountain
Recommend exchange for trading DRIP and can be found directly under the swap tab of the platform website. DRIP can be exchanged even with other decentralized exchanges such as PancakeSwap. However, it is recommended to use this exchange to avoid 10% tax on swaps and provides the lowest prices and highest liquidity resulting in less slippage for larger trades.
Faucet
As per the company website, Faucet is a low-risk high-reward contract that operates similar to high yield certificate of deposit by paying out a 1% return on daily investment up to 365%. People who invest in this contract are considered as players and these players can compound and extend their earnings through deposits, compounding ( DRIP community uses hydrate for compounding) rewards as well as through team-based referrals.
Reservoir
The contract enables the price of the DRIP network to be stable by providing liquidity. As with any DEx, DRIP shares the income earned through taxes with liquidity providers. In addition, they are also paid LP tokens named Drops (DRIP/BNB pair) in proportionate to the amount of BNB invested. Liquidity providers are provided the options to compound their earned income as well as to claim their earned income.
DRIP Network Wallets
The DRIP Network is a decentralized app (DApp) and is compatible with the most popular online wallets such as MetaMask, WalletConnect , Binance Smart Chain Wallet, etc
More information about DRIP can be learned through their whitepaper
Since DRIP had their smart contracts well defined, had a decent website, supported trusted wallets, and was listed in CoinMarketCap and CoinGecko with more than 8 million market cap, I felt the token was legit and had the potential to survive in the coming years.
Is DRIP a Ponzi scheme?
As per the dictionary, a Ponzi scheme is defined as "a form of fraud in which belief in the success of a nonexistent enterprise is fostered by the payment of quick returns to the first investors from money invested by later investors".
To see if DRIP is a Ponzi scheme, let us see how investors make money on DRIP. There are three ways investors make money
Staking using the faucet contract on the platform
Investors earn a 1% return of DRIP daily up to a maximum of 365% passively when they deposit DRIP into the faucet. 1% compounded daily gives a whopping 3778%. How is DRIP able to pay 1% and also give the ability to compound 1% back? It is unreal. This looks like a Ponzi scheme. These are the exact thoughts I had in my mind.
On further research, I learned that DRIP has been built to be sustainable, due to its built-in taxes system, and its robust ecosystem with many new DRIP projects ( manor is already alive) coming on board. DRIP sustains through
Initial deposits that cannot be withdrawn. Investors can at most claim 1% of their available payout displayed on the faucet page at one time.
All buy and sell transactions on the DRIP faucet page are taxed at 10% and hydrate (compounding) transactions are charged at 5%.
Initial deposits and taxes are sent to the DRIP reservoir which is used to manage the DRIP price stability by maintaining liquidity and paying claims initiated by investors. 1% daily compounded interest provided by DRIP is enticing for people to use to grow their investments. people hodl (hold on for dear life) their DRIP longer, and thus the system has more people hodling than claiming which creates a continual sustainable system of value.
Providing liquidity to the reservoir
DRIP shares a portion of the taxes charged on the Faucet transactions with the investors providing liquidity. Investors can also earn income through Drops( LP tokens with DRIP/BNB pair) for staking DRIP. Unlike Faucet, the investment is not locked and can be claimed at any time.
The main purpose of maintaining the reservoir is to uphold and support a stable price point for DRIP. The more liquid it is, the more drops you add to the reservoir, the more you replenish the reserve.
For instance, if the reservoir is worth $100,000, a withdrawal of $50,000 would lead to a massive decline in price and shake the pricing floor. However, if the reservoir was worth $1 million, the withdrawal would barely make an impact and the price would be least affected.
Bonus rewards through referrals
Investors do get some incentives for referring investors to the DRIP network. I will be talking more about it in the network marketing section As mentioned in the reservoir smart contract section, more deposits provide more stability to DRIP price even when a large number of claims are made.
In a nutshell, DRIP is the only deflationary ROI token that pays stakers and referrers based on taxes on transactions and not on inflation. Looking at their model, I truly believe it is sustainable as it strives to always have more than enough deposits ( 10% taxes and initial deposits) in the reservoir to pay the claims ( at most 1%) and is in no way a Ponzi scheme.
Is DRIP Network Marketing
Drip recommends building teams through referrals and provides incentives for referring investors. Unlike network marketing where members at the top are most benefitted, I found out that DRIP is decentralized and follows a round-robin approach.
DRIP is decentralized as it recommends joining a team to participate in 1% fixed dividends provided by Faucet. DRIP also mandates having enough br34p tokens in your wallet to get the referral benefits. These tokens can be purchased from the DRIP network page through PancakeSwap.
As per this approach, it means if my direct referral deposits (stakes new DRIP), I , the team leader would get 10% of his first deposit, and then it goes in a round-robin fashion to the team leaders above me. Similarly, if my direct referral hydrates, I would get 5% if I do not have a team wallet else 3.75% ( 5 or more buddies referred is considered a team wallet) of his hydration, and then it goes in a round-robin fashion to the team leaders above me.
The round-robin system makes it so the referral system cannot be gamed through self-referring or any sort of referral loops.
Also, there is an option of Airdrops available for teams to send DRIP to their direct and indirect referrals.
we do have the choice to not participate in referrals and continue to get 1% fixed dividends from the faucet.
Are transactions expensive
In addition to the taxes, there will be transaction fees associated with the transactions. I initially thought the transactions would be expensive as I have been hearing about gas fees on Ethereum Mainnet. Since DRIP is on Binance blockchain, it is recommended to connect your wallets to BSC (Binance smart chain). I connected my Metamask wallet to DRIP through BSC and was pleasantly surprised to see the transaction fee so less expensive on BSC ( around 10 cents).
Can I lose my capital?
So far, I was convinced that DRIP was neither a scam nor a Ponzi and is not network marketing. The last thing, I wanted to see if this crypto token is kind of a rug pull or pump and dump.
I researched the developer of DRIP network, Forex Shark. Unlike some crypto tokens whose developers are unknown, this developer is real and has done a lot of interviews on youtube and is available on Medium too.
He understands that he needs to build an ecosystem for increased usage of the DRIP. Drip is only the tip of a whole new ecosystem that will include NFT battle game, yield farming contracts, DRIP/BNB liquidity pool, and many new staking options, taking Drip far beyond just another meme token. As promised, a project named Manor farm was released recently that provides an opportunity to earn yield/income passively.
DRIP is limited in quantity and is burnt whenever deposits are made. This creates scarcity and causes a price increase. As DRIP usage increases, more DRIP is burnt and thus the price will keep increasing. Since DRIP network team is working diligently on creating new projects that increase DRIP usage, there is a remote chance that the price might fall considerably though we may see the fluctuations.
I always do due diligence before I invest and am convinced that DRIP is here to stay But, as with any investment, It is wise to invest what we can afford to lose.
How did I invest in DRIP
I decided to invest in DRIP on Dec 18, 2021 after being convinced about DRIP potential. The price of the DRIP was around 55 at that time and I started with 158 DRIP. Below is the snapshot of my DRIP account as of Jan 11, 2022.
This is the screenshot of my DRIP on Jan 12, 2022. I am at 200 DRIP currently due to the power of compounding ( hydrating every 2 days). I am more excited about the income I.can generate 8 months from now. Here is spreadsheet to get an idea about how much you can earn over the next three years. Also, it gives you an idea of when it is ideal to pull your deposits out for the maximum yield
How to start:
Buy BNB from a crypto exchange such as Binance or Crypto.com
Setup a crypto wallet such as MetaMask, copy the account address, and then in Binance (or other exchange) withdraw to that wallet address you copied.
If you are happy to use my buddy address then go to drip.community/faucet?buddy=0xBEE4b95b13Bfc5d8CC40e270c06A0D8097F206Bf and then click to connect your crypto wallet.
Then click the “buddy detected” button, and then click “update” to save and you will be asked to confirm.
Then click the “Swap” menu and exchange BNB for DRIP, ensuring that 0.1 BNB is kept in your wallet to pay for transaction fees.
You’re set up on DRIP. Get ready to receive 1% daily! But, do come back daily to hit that hydrate/re-compound button!
Telegram Group: https://t.me/+yEzJzIWmm6E5YmE1
Drip Whitepaper: https://drip.community/docs/DRIP_LIGHTPAPER_v0.8_Lit_Version.pdf
DRIP CONTRACT LINK — https://bscscan.com/token/0x20f663cea80face82acdfa3aae6862d246ce0333
NOTE: The amount Deposited cannot be withdrawn. In exchange, you receive 1% of that staked amount on a 24 hr basis for the next 365 days, which can be rehydrated/compounded, or claimed.
Disclaimers: Under no circumstances should any of this information be taken as financial advice. I’m not a finance professional. Mileage may vary. While I think the numbers are accurate and the principles and equations are sound, there could be mistakes in the spreadsheet or other factors I haven’t considered. If you find any major errors, I might just send you some DRIP as a thank-you.