Introducing - Crypto Tools

tl;dr; I created a calculator app which is intended for investors following the DCA (dollar cost averaging) investment strategy. Given the amount of assets you wish to transfer off an exhange, transfer fees, and the APY paid out by the destination platform, the app helps you determine the optimal transfer frequency.

Introduction

As a direct result of the latest crypto bull market over the past year, crypto has hit the mainstream.

With that, there's now an ever-increasing number of crypto instruments to choose from, exchanges are gaining popularity (see Coinbase IPO), and concepts once associated with traditional finance have now gained their crypto-equivalent.

One of such concepts is the ability to earn an APY (annual percentage yield) on your crypto savings. Whether that comes from staking, in the case of Cardano for example, or from having a savings account on platforms like BlockFi, it's now entirely possible to generate a healthy amount of passive income with your crypto assets.

Investment Strategy

If you have any experience in investment strategies, you would have come across the term dollar cost averaging. This refers to the strategy of investing a set amount of money per a unit of time (per week, per fortnight, per month...). The benefits of DCA are well-documented, and proof of that can be found all over the Internet.

The process I adopted was simple, schedule weekly purchases on an exchange and transfer my assets either to a wallet and stake it, or to BlockFi, depending on the asset.

Crunching the numbers however revealed a fatal flaw in my strategy. Transfer Fees. While I thought the earlier I transfer my assets off the exchange the earlier I start earning APY on them, the better performance I would achieve, I had failed to consider the effect transfers fees had on my assumptions.

Upon further examination, it seemed like it all came down to the frequency of transfers. Depending on the transfer fees, the amount transferred and the APY, we can optimize the frequency with which we transfer our assets off the exchanges.

What's the problem again?

Presenting two extremes scenarios might aid as to clarifying the problem at hand.

On the one extreme, imagine if we made daily purchases and transfers. While this will enable us to earn interest on our assets straight away, the transfers fees will quickly add up and far outweigh the interest gains.

On the other extreme, if we never initiate the transfers off the exchanges. in fear of the transfer fees, we will never earn any interest on our assets.

Intuition tells us that we should adjust the transfer frequency such that the APY interest compounded in the time interval between transfers, should be greater than the transfer fee incurred.

How does the app help?

Simply enter the amount you wish to transfer off the exchange, the transfer fee amount and the APY paid out by the destination platform, and the app will calculate how many days it will take for you to recoup the amount spent on transfer fees.

You can use this info to adjust the frequency with which you will initiate transers, such that the interest compounded in the time interval between transfers, is greater than the transfer fee incurred.

How to get it

The app was built using Xamarin.Forms, an open source cross-platform framework for building iOS, Android and Windows apps. However, as of this writing, only the Android version has been made available.

The app is available on the Google Play store. Get it here.