I Sold a Mermaid…and Made a Big Profit

You just can’t trust a mermaid. 

I made a loan to one.  

It ended in default.  

But I got my revenge in the end. 

This particular mermaid was not real…although I feel like that might be stating the obvious. 

“She” was an NFT, a non-fungible token, a type of one-off, one-of-a-kind cryptocurrency that looks like a cartoonish picture but increasingly acts a lot like a share of stock in that there’s a real company running a real business behind the image.  

I write a lot about NFTs these days because of the opportunities in this corner of the investment universe, despite the sourness of the overall crypto market. The mermaid is a good example of what’s going on right now, and it shows that there’s still plenty of money to be made in a space that the mass-media has written off. (Spoiler alert: This market is the future, and by the way Fidelity and Home Depot just filed for patents and trademarks for NFTs, among other things). 

“Mermaid” is a one of the many varieties of a very high-profile NFT project on the Solana blockchain called ABC. The project has been around for about five months. I’ve shown this before, but this is what an ABC Mermaid looks like (I own this one, bought it for 5.75 Solana back in August, but more on that in a moment): 

Behind the elementary-school art is a real company running a website called Hadeswap, an NFT marketplace of sorts. I won’t bore you with the details because Hadeswap is a complex, financial marketplace that goes beyond the simple buying and selling of NFTs. 

Instead, I will tell you that holders of ABC NFTs will soon benefit from the revenues Hadeswap earns. As such, ABC has climbed the charts to become one of the most important projects on the Solana blockchain. 

For a few months now, I have been lending against high-quality NFTs.  

The idea, as I’ve written about in past dispatches, is basically the equivalent of an NFT pawnshop: NFT owners who want a temporary loan show up and post their NFTs as collateral in return for some amount of Solana. Based on the loan contract, they have a specified number of days to repay with a predetermined amount of interest…or they default and I get to keep their NFT and try to resell it. 

Well, an ABC Mermaid I loaned against defaulted. The loan was for 40.18 Solana. At that time, ABCs with the Mermaid trait were selling for about 42 on the secondary market.  

But ABCs had come down in price amid some ennui that had swept through the market. I suspected that was a temporary state of affairs. Mermaids had been selling for more than 100 and I had a gut feeling that they’d retest those highs. 

So, I listed the defaulted mermaid at 88.88…and I waited. 

Two months later, my intuition paid off and the Mermaid sold for my list price. I’d turned 40.18 Solana into 88.88 Solana…a 121% gain in just two months. 

In a bear market. 

But it turns out, I should have waited a couple weeks longer. 

ABC Mermaids today are selling at 220 Solana, a 5.5x gain in about 2.5 months.  

Side note: I used this strength in ABC to sell one of the three ABCs I personally owned, though not my Mermaid pictured above. In doing so, I turned a 1.5 Solana investment in August into a 198.23 Solana sale in January, a 100x gain in five months. 

Again I’ll say that all of this happened in a bear market…meaning hugely profitable opportunities clearly still exist for those who look past the negative media coverage and who learn about the NFT space. 

Granted, in dollar terms, my returns on the defaulted Mermaid and the ABC I sold outright are more tepid. I basically broke even on the Mermaid because Solana has retreated in the wake of a scandal that saw high-profile U.S. crypto exchange FTX collapse.  

But as I’ve written in the past, I look upon this downturn as an excellent opportunity to add quality crypto tokens and NFT projects to my portfolio, when prices are depressed. This is a moment to act with utmost greed, because when prices rebound (and they will), it will create generational wealth.  

Of course, I get that it’s a scary moment, because of the crazy volatility and the fact that crypto has retreated so far in the last year. Solana is down more than 90% from its all-time high. But that’s the best time to be a buyer of high-quality assets—when most of the world is cowering from the storm. 

Me, I’m dancing in the rain with mermaids in default.