010: Community Investing

Welcome to CloutTrends – your must read for BitClout trends.

TL;DR

1. Community Investing Projects
BitClout has something for creators and investors alike. Early on in April there was a lot of focus on the investing side and there was speculation in creators that had yet to prove themselves. Now the focus has shifted to the creators adding value and there has been a substantial decrease in creator coin(CC) transaction volume. It is time to reignite the investment side of the platform so creators can be supported.


Let's Go Deeper

Community investing projects are both by the community and for the community.

Let’s start with @GoatInvesting which was created by @GoatTrade. The project makes investment decisions based on consensus from the coin holders and reinvests profits. This “crowdsourcing” is done through a private Discord server.

A few benefits of getting involved in @GoatInvesting:

  • Newcomers can learn how to invest in creators, research, find value, and collaborate with peers.
  • The group consensus helps avoid scams as there are more eyes on each investment and combined due diligence.
  • Investing in the @goatinvesting CC is a quick way to diversify since its holder many creator coins and reinvests profits.Okay but what are the normal rules? Basically, all gains (the amount in excess of what you paid) are taxed.

So to summarize – learning, diversification, and scam avoidance. The great thing is anyone can participate and you can be as active or passive as you desire. 


Also, @GoatInvesting helps support the creators by promoting their post for broader reach. And this is no pump and dump, it is about finding great creators with powerful and consistent content. I have seen first-hand that the community has an eye for finding undervalued creators.


The private Discord also provides broader discussions that can help you improve your own CC investments and even more --> now there is stock talk!


Let’s look at some of the trends that might serve as tailwinds for @GoatInvesting :


The biggest tailwind at the moment is that it was founded and is run by @GoatTrade who is co nsistently mentioned and reclouted on the BitClout(courtesy of @prosperclout ).

Teen Social Media Preferences

Also, there is continued investing interest with about 300 posts mentioning “investing” or “invest” over a rolling 24h period(@cloutavista). And there are likely more investing related terms that we could include like “buy CC” but even at this is about 1% of the roughly 30k daily posts(@cloutgate). 


Final word, @goatinvesting is an active investing community and that supports investors and creators alike.


Next we will discuss passive investing on BitClout.


Passive investing has rose to fame with funds that track popular indices like the S&P 500 and the NASDAQ. The value proposition is a single instrument buy and hold strategy while still being diversified across the constituents.


But most of these passive funds have a few rules they follow that echo a strategy and not purely buy and hold. The first is that they are market cap weighted and the second is the rebalance.


The market cap weighting acts like a momentum strategy with growing market caps receiving increasing representation(weight) in the portfolio and dwindling market caps receiving a reduced weighting.


However, positions only enter or exit on a rebalance(often monthly or quarterly) but when the constituents remain the same the rebalance is solely to adjust the weights per market cap . But the frequency at which this done has a relatively large impact on performance(and taxes).

The above graph represents the hypothetical outperformance of $Clout50 and $Top50 compared to the NASDAQ and S&P 500 over the coming year.

Ok now for the two passive investing BitClout projects - @Clout50 and @Top50. Both are very simple on the surface. Buy $Clout50 to inve st in the top 50 creators on BitClout. Buy $Top50 to invest in the top 50 community projects on BitClout(as defined by @bithunt). 


Both these projects rebalance monthly rather than quarterly to remain more dynamic to BitClout’s rapid evolution. These projects also present a new use case for BitClout – trying to reflect the value of wallet holdings in the CC price. Since there is no technical solution for this at the moment some creative trading is used to get the CC price to track the index performance and there will be some tracking error over the short-term.


The biggest long-term tailwind for these index projects is the rise of passive investing and the simplicity it offers new users to participate in the BitClout ecosystem upside.These cases are perfectly simple and easy to distinguish. In a free hour, when our power of choice is untrammelled and when nothing prevents our being able to do what we like best, every pleasure is to be welcomed and every pain avoided.

That’s it folks.


Potential topics for next week:

  • Reconciling CC cap table with Startup Equity
  • Unconventional NFT use cases


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