# The Crypto Flywheel

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

Stack more. Earn more. As prices rise and fall. Published by Luminary One. The full model is in [The Crypto Flywheel Whitepaper](https://cryptoflywheel.com/whitepaper/).

## The three Layers

- Core: Stacks more units. Holds digital assets (like BTC), used as collateral.
- Engine: Accumulates units and earnings. Holds strategic positions like liquidity pools.
- Reserve: Maintains liquidity and resilience. Holds stable assets and hedged positions.

## How it works

### 1. Your capital has four jobs.

- Growing: To increase in value over time
- Earning: To generate an income
- Liquid: To be accessible when the Plan requires it
- Resilient: 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. [Read more](https://cryptoflywheel.com/whitepaper/#problem).

### 2. Your Flywheel has three components.

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

The Layers support one another so that the portfolio can pursue all four jobs. [Read more](https://cryptoflywheel.com/whitepaper/#engines).

### 3. Your Plan comes first.

- Horizon: The period the Plan covers before the next decision
- Objectives: What it is intended to achieve, in measurable terms
- Ratio: How your own capital splits between Core and Reserve
- Thresholds: 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. [Read more](https://cryptoflywheel.com/whitepaper/#example).

### 4. Your earnings and gains power the Flywheel.

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

Reinvested, they buy more units. Paid out, they are cashflow. [Read more](https://cryptoflywheel.com/whitepaper/#earnings).

## What each Layer does in each market

| Market | Core | Engine | Reserve |
| --- | --- | --- | --- |
| Rising | Increases dollars | Generates profit and earns fees | Refills the Reserve and earns fees |
| Falling | Increases units | Generates units and earns fees | Supports Engine and Core |
| Channeling | Maintains dollars and units | Earns fees | Earns fees |

## Live Flywheels

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

- [Torque](https://cryptoflywheel.com/f/torque): Thirteen assets, trades, and Turbo assets: the force that spins a wheel up. ([Markdown](https://cryptoflywheel.com/f/torque.md), [JSON](https://cryptoflywheel.com/f/torque.json))
- [Inertia](https://cryptoflywheel.com/f/inertia): Three assets and no trades, turning on its earnings. ([Markdown](https://cryptoflywheel.com/f/inertia.md), [JSON](https://cryptoflywheel.com/f/inertia.json))

## 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](https://cryptoflywheel.com/whitepaper/), or [download the PDF](https://cryptoflywheel.com/crypto-flywheel-whitepaper.pdf).

## A note from our founder

We want more people using the Crypto Flywheel.

When more people run one, they win. When they win, the Flywheel grows. When the Flywheel grows, we grow, and so do our competitors. That's the goal.

It's why the whitepaper is free and the method is public. Every Flywheel that runs makes crypto stronger.

P.S. It's almost like it's a Flywheel 😉

Jake Call, Founder, Luminary One

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This is the Markdown version of https://cryptoflywheel.com/. Also available as [JSON](https://cryptoflywheel.com/index.json). Published by Luminary One. Site guide for AI assistants: https://cryptoflywheel.com/llms.txt