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Crypto Flywheel™
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Stack more. Earn more.As prices rise & fall.

The Flywheel is a rules-based digital asset allocation system designed to increase holdings and produce cashflow as markets rise and fall.

See how it works Read the whitepaper

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The original sketch, Sep 2024

How it works

How the Flywheel's components work together to build an efficient, productive portfolio.

  1. 1

    Your capital has four jobs.

    1. 1Growing: To increase in value over time
    2. 2Earning: To generate an income
    3. 3Liquid: To be accessible when the Plan requires it
    4. 4Resilient: To withstand declines without selling long-term holdings

    Holding a digital asset alone generates no cashflow, and leaves no stablecoins to buy more when prices fall.

    Holding does one of capital's four jobs. A Flywheel does all four.HoldingA FlywheelGrowsincreases in value over timeEarnsgenerates an incomeStays liquidaccessible when the Plan requires itStays resilientwithstands declines without selling long-term holdings
    Holding does one of capital's four jobs. A Flywheel does all four.HoldingA FlywheelGrowsincreases in value over timeEarnsgenerates an incomeStays liquidaccessible when the Plan requires itStays resilientwithstands declines without selling long-term holdings
    Section 2. The problem: holding a digital asset does one of the four jobs
  2. 2

    Your Flywheel has three components.

    1. 1Core: Preserves assets and serves as collateral
    2. 2Engine: Accumulates as prices fall, sells as prices rise, and earns trading fees
    3. 3Reserve: Preserves liquidity and resilience

    The Layers support one another so that the portfolio can pursue all four jobs.

    Each Layer feeds another, inside a written PlanThe PlanHorizon, Objectives, Ratio, Thresholds, ResponsesNew moneycash to the Reserveassets to the CoreCoregrowth, counted in unitsReserveliquidityEnginemore units, and earningsassets you holdspot purchasesunits boughtin a fallborrowedstablecoinsfunds positionsearnings, salesExecution standards: custody, keys, signing, protocol selection, monitoringdashed: only in a Flywheel that does not borrow
    Each Layer feeds another, inside a written PlanThe PlanHorizon, Objectives, Ratio, Thresholds, ResponsesNew moneycash to the Reserveassets to the CoreCoregrowth, counted in unitsReserveliquidityEnginemore units, and earningsassets you holdspot purchasesunits boughtin a fallborrowedstablecoinsfunds positionsearnings, salesExecution standards: custody, keys, signing, protocol selection, monitoringdashed: only in a Flywheel that does not borrow
    Figure 2. How the Layers feed one another inside the Plan
  3. 3

    Your Plan comes first.

    1. 1Horizon: The period the Plan covers before the next decision
    2. 2Objectives: What it is intended to achieve, in measurable terms
    3. 3Ratio: How your own capital splits between Core and Reserve
    4. 4Thresholds: Prices or levels to monitor, each with a pre-agreed response

    It records your decisions before capital moves, and is revised when market evidence changes your view.

    The example on one price scale: where it buys, sells, and would be liquidatedBTC price, rising to the right. IllustrativeAll-time high, $125,000The investor's view of the next high, about $130,000Intended average sale price, $112,000: a 40% target on $80,000Month one, $100,0000.6 BTC for the Core, $40,000 in the ReserveAverage price paid, $80,000, for 0.15 BTCThe $12,000 loan goes into Engine positions from $100,000down to $64,000, where the positions hold only BTCLiquidation at $25,000, on the Core's 0.6 BTC alone$20,000 once the Engine's 0.15 BTCjoins the collateral
    The example on one price scale: where it buys, sells, and would be liquidatedBTC price, rising to the right. IllustrativeAll-time high, $125,000The investor's view of the next high, about $130,000Intended average sale price, $112,000: a 40% target on $80,000Month one, $100,0000.6 BTC for the Core, $40,000 in the ReserveAverage price paid, $80,000, for 0.15 BTCThe $12,000 loan goes into Engine positions from $100,000down to $64,000, where the positions hold only BTCLiquidation at $25,000, on the Core's 0.6 BTC alone$20,000 once the Engine's 0.15 BTCjoins the collateral
    Figure 8. Buy ranges, selling targets, and illustrative liquidation pricesIllustrative
  4. 4

    Your earnings and gains power the Flywheel.

    1. 1Fees: From liquidity positions, when trades use their active liquidity
    2. 2Rewards: From staking or lending, like the Reserve's interest
    3. 3Gains: From units sold at their target

    Reinvested, they buy more units. Paid out, they are cashflow.

    Earnings and gains power more units and cashflowThe Plan sets the mix: in a fall, earnings buy units; in a rise, they refill the Reserve and pay cashflowEarningsFees on positions in rangeStaking or lending rewardsSome arrive as unitsGainsUnits the Engine bought,sold at the target$4,800 of profit on a $16,800 saleThe Plansets the mixThe Core: more unitsProfit and earnings buy units,or units earned go straight inThe Engine: compoundedEarnings compound in positions,though the Core comes firstThe Reserve: refilledKept ready for the next fallCashflow: paid outTo the investor, after interest
    Earnings and gains power more units and cashflowThe Plan sets the mix: in a fall, earnings buy units; in a rise, they refill the Reserve and pay cashflowEarningsFees on positions in rangeStaking or lending rewardsSome arrive as unitsGainsUnits the Engine bought,sold at the target$4,800 of profit on a $16,800 saleThe Plansets the mixThe Core: more unitsProfit and earnings buy units,or units earned go straight inThe Engine: compoundedEarnings compound in positions,though the Core comes firstThe Reserve: refilledKept ready for the next fallCashflow: paid outTo the investor, after interest
    Figure 9. Earnings and gains flow to the Core, Engine, Reserve, or investorIllustrative

Live Flywheels

Two of our Flywheels, running live on chain for you to see them in action. Click for the full dashboard.

The complete Flywheel model

The full model is set out in 13 sections, explaining how the Flywheel works, the problems it addresses, the risks involved, how those risks are managed, and how we assess its performance.

Read the whitepaper free to read and build on