How Safe and Sustainable is Yieldnodes?

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Note: This review contains affiliate links, yieldnodes is a service I am invested in

Yieldnodes is a great service offering 8 to 10% monthly interest on invested amounts, a fantastic passive income source. But how safe and sustainable is Yieldnodes?

I’ve invested significant amounts of money in Yieldnodes, and I need to know how safe my funds are.

High rewards usually come with high risk, so let’s dig a little inside Yieldnodes, the team, the service, the Treasury, the Projects, etc…

I’ve compiled everything you could possibly find around security and sustainability of Yieldnodes.

Among the most interesting pieces of info comes from various videos:

What this review covers

This is crypto, that means high risk

Before we get any further, remember that this is crypto, hence very risky. The space is still so early.

Yieldnodes is neither regulated or insured, so you could lose all your funds.

Only invest funds you are 100% ok to lose.

That being said, this is not a trading service, so it is not dependent on the performance of any trader or investor. As I’ll explain a bit further down, this is more like a node rental service.

Let’s zoom in a little, starting with the team.

Who’s the team at Yieldnodes? Do we know where they are?

Here’s the team at Yieldnodes, they are all doxed, which is quite rare among Node and Defi projects.

It’s a small team, there’s only 4 of them.

Yieldnodes Core team

The team is based in Malta, so we know where they are, the auditors went there (more on audits below). This is very important, because, hey, no scammer or rug intent team would ever disclose its precise location publicly.

Stefan Hoermann (CEO and CMO), his background and was FAP Turbo a scam?

Stefan Hoermann has an affiliate background, he also ran forex bots, built apps, that’s how he met Urs S, his business partner.

He has been an entrepreneur for a long time, and if you get a chance to listen to him on one of his AMAs, come out as a thoughtful, reasonable and straightforward guy.

He is open and transparent about his background, including some controversial parts.

One of these revolves around FAP Turbo, a very successful forex bot, launched around 12 years ago.

At the time, and for security reasons, Stefan used a pseudonym (Steve C). Some people thought he was hiding from a shady past by changing his name, but on the contrary, he remains open and transparent about that period. 

There have been claims that this bot was a scam. So, what are the facts?

Stefan neither hides nor regrets any of this. He never stole anyone’s money, rug pulled or ran away with any funds.

The team remained proud of the bot and how it worked, even though some people might have questioned its performance.

Stefan says it was all part of his journey as an entrepreneur. In the end, the team just stopped the development and moved on.

FAP Turbo retailed for 149$, but you could always get a full auto refund from the e-commerce platform if you wanted to. They did not have the power to stop the refund and he never did. Stefan maintains that the bot was in no shape or form a scam.

The team just halted new versions of the product.

The rest of the team

Urs Schwinger the COO and CIO is the technical guy. He has been masternoding for a long time, and knows how to set up and run these (mostly Linux) masternodes. 

Urs and Stefan started a beta with handpicked clients, and seeing their success founded Yieldnodes.

The other two are Yegor V and Dima T, they are the devs.

The team is fully doxed, their Linkedin profiles are available, everyone can see what they did.

Yieldnodes is a Masternoding rental service, relying on (Proof of Stake)

Yielnodes is not a trading service. You should see it as a server rental service. Investor’s funds are used to rent servers that master-node and generate coins that the team sells (the rewards).

The Business Model of Yieldnodes : an 80/20

80% of the revenue comes from masternoding and staking

  • The team pools funds
  • They then exchange them for coins
  • Then put them on servers
  • These servers have a specific algorithms that dictate how many coins are minted
  • They receive these new coins and sell them to the market
  • They keep 15% of the proceeds and distribute 85% to the community (us investors)

20% of profits are made via smaller income streams

  • Fees from exchanges
  • Banner ads
  • Merchandise sales

At the end of the month the team gets together and decides how much it can distribute, and how much is sent to the reserve pool, saved for the future.

Now, a bit more on masternoding.

Masternoding

Masternoding is very well summarized on the yieldnodes website. You can also find some very interesting articles on Masternoding at Coinguides.

Masternoding

Masternoding provides high returns, it is one of the most profitable investments in crypto. The website masternodes.online monitors and tracks the RoI available from masternoding different coins.

Yieldnodes have invested in many tokens, to set up a sort of fund of masternodes. They have between 2000 and 4000 masternodes, providing computer power, storage space and special software. 

They are transparent on the projects they invest in, these can be found on the website. You can see the projects, the chains, the volumes.

Here’s the RoI some of these projects (source : masternodes.online) :

  • Sapphire : 55%. Their main project
  • Trittium : 73%
  • Birake : 38%
  • Kyanite : 78%
  • Jackpot (777) : 193%
  • Ultra Clear : 116%
  • Azzure : 193%
  • Dash Diamond : 285%
  • Cryptoflow : 81%
  • Peony : 306%
  • One world : 77%
  • Suvereno : 194%
  • Cryptosaga : 230%
  • Monk : 288%
  • Eska : 219%
  • Beacon : 251%

As you can see, some of these yearly rewards are very high. They are the main explanations to Yieldnodes ability to churn out a 10% monthly yield for such an extended period of time.

When you send your coins to Yieldnodes, the team will usually split these funds to invest in new masternodes. 

You can regularly check the status of these projects on coinmarkecap.com, following the value of some of their tokens such as Sapphire, Trittium,…..

The CEO is clear, they are not in a hurry to find new coins. There’s absolutely no rush for them to jump into any kind of spammy project.

How are Masternodes different from other Node project ?

You might be familiar with other famous node projects such as Strong and Thor (See my 1k$/month node passive income strategy). There are many other so-called Node projects.

Most of these node projects are different for several reasons:

  • These projects usually invest in RPC nodes,  which are uncompensated by the blockchain;
  • Masternodes on the contrary are more similar to Bitcoin miners, except that they operate on a Proof of Stake (PoS) mechanism. This Pos system rewards them via new tokens. This is usually more profitable, being also more complex.
  • Masternodes are full nodes, node servers within a network, they process transactions and store them. Master nodes operators have rights beyond those of a normal full node operator, managing more critical tasks, hence bringing higher rewards.

Are they investing in their own projects? What about Sapphire?

Well, yes, but they weren’t their projects originally, they bought them as they went.

Again Yieldnodes were transparent about this, saying they wanted to make these projects grow.

Sapphire is the main project, here are some stats :

Sapphire stats

The Sapphire website is up and running, shows roadmaps, rewards tables, links to the community, etc…

Here’s a chart on the evolution of the price of Sapphire, looking promising.

The Audits performed

Yieldnodes has been audited, to prove that the funds and protocols are real.

These were “Member-based audits”, so not audits from actual legal auditors but rather experienced users.Basically they invited people (super users) in Malta who looked at the wallets, the coins, did the math, checked it all. 

The audit reports are visible on the site, this is transparent, you can take a look at them here. 

A Feb 2021 audit was performed by:

  • Antony Kemble : the founder of an interesting website that follows and tracks Yieldnodes, yieldnodes.org. He did another audit on Dec-21.
  • Jonathan Platts from Tradewise
  • Graham Laurie from Cashmaster
  • Janna from JannaFX
  • Juergen Beppert from Expert FX

The conclusions and their reviews on Yieldnodes can be found on their respective websites.

An October 2021 audit’s goals were to prove that :

  • The company is well funded
  • The deposits and compound match the working capital held
  • That profits are truly being generated and that the coin networks and projects are flourishing

To select the auditors from their community, Yieldnodes had an open process. They had 50 candidates and ran an Audit Randomizer (you can see the actual video on the members section).

The members that were selected had interesting backgrounds in Banking, Cash Management, Treasury. One is the Director of a company, another one an algorithmic trader and the last one is an FX Expert.

Here are some of the checks performed:

  • Logging into the admin area of yieldnodes
  • Showing the general balance of deposits
  • Seeing compounds, withdrawals, number of active and registered users
  • They were shown wallets, staking balances, nodes at work, how much capital is allocated to the chains, the balancing
  • The auditors checked that balances held match and exceed the amount necessary to cover deposits and compounded profits

They found no wrongdoings and basically gave a “clean audit”.

The Trustpilot reviews

Yieldnodes has an outstanding profile on Trustpilot, with a 4.8 stars rating over 587 reviews, ranking “Excellent”.

Here’s how rankings break down.

Trustpilot rankings

And it’s interesting to read one of Steve’s replies to one of the bad comments saying they were just a ponzi. A calm and pondered, polite reply.

The historical performance of Yieldnodes, the track record

Yielnodes started as a Private pool one year before they launched their beta in Oct 2019. You can still see the track record from the beta period.

Since then, their track record has been stellar.

Yieldnodes track record

This track record is probably the single most important safety factor around this project. They have been around for more than 30months, which is way more than many other crypto projects. This is also something theorized by the Lindy Effect.

The team’s goal is a targeted 5 to 15% pure profit paid out every month, with an interesting twist: should that yield drop below 5% for 3 consecutive months, the rental payment will be returned along with any accumulated profits (if compounded).

Anti Whale system with max deposit

There is a max deposit amount of EUR 250,000 (minimum is EUR 500) which in a way prevents any large whale to come in and destabilize the whole service. 

Something important to consider as large whales are known to create strong dependencies on services.

Sustainability of Yieldnodes in a bear market

A few facts should be noted when it comes to withstanding the kind of rough markets we commonly have in the crypto sphere:

  • Yieldnodes have withstood bear phases and always kept delivering, even when BTC was falling from 69k$ to 29k$
  • But no sugarcoating the facts, they remain dependent on crypto prices and especially BTC
  • If BTC tanks hard, the other coins usually follow, so the overall sentiment of the market remains very important

Your can withdraw your funds, unlike other RPC node projects

Unlike many other node projects, at Yieldnodes you can withdraw your initial investment. 

That is a major plus for the project !

There is however an initial lockup period of 6months to prevent people from getting in and out for a quick buck.

In case of emergency, you even have an “emergency withdrawal” option to get your funds within 24hours, minus a 25% commission to cover the hassle for the team to decommission specific nodes, sell tokens or liquidate positions.

Legitimate concerns, things you should know

Here are my main concerns with yieldnodes, so that you get a balanced view :

  • The program is pegged to the euro, so if you’re holding BTC and bring them to yieldnodes you will not get exposure to a potential BTC upside
  • Sapphire is not a real mainstream coin, it could go down, and some of the coins could lose value quicker than they can generate new coins
  • There could always be a security breach, attacks can happen and hackers could hit
  • Laws could come in and regulate such services, Yieldnodes remains unregulated
  • The program remains a very risky participation model

The risk disclosure policy and terms & conditions are disclosed on the website, read them thoroughly before you invest.

Risk policy

Terms & conditions

Conclusion: safety is their highest priority

The team stated it clearly. It is their objective to build a service that withstands tough times.

Safety of your capital is their priority. They genuinely want to build a sustainable future for all, and the CEO has repeatedly said they might even close the service to new investors if they reach a point where they’re getting too big.

In the end, you judge.

To me Yieldnodes clearly provides one of the most secure environments in the Defi / Nodes sphere, and I’ve entrusted them with a share of my capital. But hey, as with everything crypto it could go away in a moment’s time. High yield always comes with higher risk, free meals simply do not exist.

Safe investing out there.

I hope this review will be helpful. If you want to thank me, buy me a coffee 😉

More crypto articles to take things further

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