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"Free" Crypto: The Only Free Cheese Is in the Mousetrap — The Full DCA Cycle

Video · 3 min.

Free crypto coins: the full DCA cycle

Ella buys the same 100 euros of one coin every month and writes every purchase in a notebook. After six months she has put in 600 euros at an average price of 38.67. When the position is worth double, about 1,200 euros, she sells half and gets her 600 euros back; the other half are the so-called free coins. Then the trap: a friend suggests a new token with leverage, a neighbor promises the money back with extra. Where the recovered money goes, how tax changes the 50% (about 54% above the yearly allowance in Lithuania), and why a new cycle needs a new notebook.

Narrated, with light music

The full lesson with numbers and rules is below.

Watch on YouTube

CAUTION

What you'll learn

This lesson invents nothing new. It joins what you have already learned separately into one full cycle (what lesson 1-11 calls a round): the recurring buy (1-12), the average price and the 2× trigger (1-11), taxes (2-8) and lending protocols (3-3, 3-6). We walk the whole cycle with one made-up character, Ella. At every step you will see what has to be decided, what it costs and where the risk hides. At the end you will have your own cycle plan written on paper.

"Free coins" is a nice name. When the price rises to double your average and you sell half, you get back all the money you put in, and the remaining coins feel as if they came for nothing.

But the only free cheese is in a mousetrap. You already paid for those coins in three ways:

Capital. For months your money was at risk and could have shrunk by 80% or more (0-6).
Time. Sometimes you wait years for the 2×, and sometimes it never comes.
Risk that never goes away. The remaining coins have a market value and can lose all of it.

And the trap snaps shut not on the day you buy, but on the day you sell. That is when you have to decide where the money you got back goes and what to do with the remaining coins. This is where many people turn a good cycle into a bad one: they push the recovered money back into risk, and the "free" coins into even more of it.

The full DCA cycle

Recurring buy

fixed amount, one coin

Diary

average price after every purchase

Price at 2× average

sell 50–56%, depending on tax

Money recovered

bank, euros, or USDC on a protocol

Remaining coins

hold, staking or lending

new cycle: new average price, separate records

Ella's cycle: the start

Ella has a job and an emergency fund, and decides to put €100 into crypto every month. Not "invest everything", but an amount whose total loss would not change her life.

She picks one coin in advance, one she would want to hold for a long time even without any rule. It could be one of those we covered in lessons 0-2 and 0-3, but here we simply call it coin X. The prices in the example are made up to be easy to calculate (it is the same example as in lesson 1-11). It is not a specific coin, not a forecast and not a suggestion to buy anything.

Step 1: The recurring buy

Ella sets up a recurring buy on Revolut X: €100 on the first day of every month, the whole amount into coin X. How to do it step by step is in lesson 1-12. Three things are worth knowing before you start:

Cost. A Revolut X recurring buy executes at the market price at that moment, so in practice the 0.09% taker fee applies: for Ella's €100 purchase that is 9 cents. The main Revolut app has a recurring buy too, but it charges the larger of two amounts, a minimum fee or 1.49%, and adds a price spread (usually 0–3%) on top.
Not enough funds means the purchase is cancelled. The schedule continues from the next period, but nobody repeats the missed purchase.
Who holds the coins. In the EEA, Revolut's crypto services are provided by Revolut Digital Assets Europe Ltd (Cyprus, CySEC MiCA licence No. 001/2025). A licence means supervision and rules, not protection against a price drop.

One €50 recurring buy: what it costs

Revolut X

≈€0.05 (0.09% taker)

Main Revolut appminimum fee on a €25–100 purchase

€1.99 (≈4%) + spread 0–3%

Amounts from Revolut's fee documents, checked on 2026-10-22. Always check the fee of an executed purchase in your statement.

Step 2: The diary, with the average price after every purchase

After six months Ella's notes look like this (coin amounts have three decimal places, so 2.000 is exactly two coins):

Month	Price	Coins bought for €100
1	50	2.000
2	40	2.500
3	25	4.000
4	32	3.125
5	45	2.222
6	60	1.667
Total	—	15.514

She has put in €600 and holds 15.514 coins. Average entry price: 600 / 15.514 = 38.67. Why it is lower than a simple average of the prices (42) is explained in lesson 1-11.

Where to keep the records

One option is the diary. It is our (DeFi Risk OS) tool, currently free. It is not a wallet, it does not connect to your accounts and it buys nothing: you enter the purchases by hand, and it calculates the average price, shows the sell triggers (you can set +100% and a sell share of 50%), sends alerts and keeps a log. It works in English and Lithuanian. You can do the same without it: in a spreadsheet (Google Sheets, Excel) or a notebook with columns for date, price, amount in €, number of coins and average price. What matters is not the tool but that an entry appears after every purchase, and that you keep your exchange statements: you will need them for taxes.

Step 3: At 2× the average, you sell (about) half

Before the seventh purchase, coin X rises to 77.34, which is 2 × 38.67. Ella's 15.514 coins are now worth about €1,200.

The trigger is calculated from the average price

Selling half brings back the full €600. But a sale is a taxable event, even if it feels as if you merely "took your own money back" (2-8). So the exact answer to "how much should I sell?" depends on tax. The rates below are Lithuanian; other countries have different rates, allowances and rules, so replace them with your own.

Situation	You sell	You get	Tax	Recovered	Coins left
All of that year's gains from other assets fit within the €2,500 relief	50% (7.757)	≈ €600	€0	≈ €600	7.757
Relief already used up, 15% personal income tax (GPM)	≈ 54.1% (8.386)	≈ €649	≈ €49	≈ €600	7.128
20% rate	≈ 55.6% (8.619)	≈ €667	≈ €67	≈ €600	6.895

Ella's gain from this sale is about €300, and she had no other sales that year. That fits within the €2,500 annual relief, so selling 50% is enough for her. If the relief is already used up, the 15% rate applies to gains up to €27,745.80 a year, and above that, together with your other income, 20% or more. Then you need to sell a bit more than half. Check your own numbers:

Calculator

How much to sell to get your money back?

Based on average cost. An illustration, not tax advice — your exact cost basis comes from your own records.

Total invested, €Price vs. your average×

Tax on the gain

Sell of your coins

54.1%

Coins left

45.9%

current value €919

You receive

€1,081

Of which gain

€541

Tax

€81

Rates and the relief follow Lithuanian rules (VMI, 2026); other countries differ. The relief covers the sum of all such gains in the year. FIFO cost basis can give a slightly different figure.

The strategy's average price is not necessarily the tax cost basis

We use the average price for the trigger. For tax, the Lithuanian tax authority (VMI) does not prescribe a specific method for crypto (FIFO or average cost), and in practice tax tools apply FIFO. Pick one method, apply it consistently and keep your documents: an undocumented cost basis is treated as €0. With FIFO, Ella's gain from selling half would be about €319 rather than €300 (still within the relief), and at 15% she would need to sell about 54.4% rather than 54.1%. The return is due by 1 May; from 2026, licensed exchanges report transaction data to VMI themselves (DAC8).

Step 4: Where to put the money you get back

The point of selling half is to take capital out of risk. Whether it is really out depends on where the €600 ends up. Three common routes:

Where	Protection	Yield	What you need to do	Main risks
Bank account or term deposit	Deposit insurance up to €100,000 per person per institution	Depends on the bank and account type	Transfer the euros to a bank account	The lowest of the three; the money earns little or nothing
Euros in the exchange balance	Do not treat it as an insured deposit: that is not confirmed	—	Nothing	Convenient, but the money stays one button away from a new purchase
USDC on a lending protocol: Kamino SOL or Jupiter Lend SOL	No insurance; lending on a protocol is outside MiCA	4.56% / 5.07% (2026-10-22, changes daily)	Buy USDC, withdraw it to your own wallet (withdrawal fee), deposit it into the protocol	Protocol or smart-contract risk, stablecoin risk, wallet risk; the EUR/USD exchange rate

An example, not advice. Which route fits depends on your goal, your experience and when you might need this money.

The third route deserves a closer look, because it resembles "interest" but is neither a deposit nor savings:

Why not on the exchange? The EU's MiCA regulation (Art. 50) does not allow licensed exchanges to pay interest on e-money tokens such as USDC. That is why EU exchanges offer no USDC interest, and Revolut offers only staking, not lending. Lending USDC happens in DeFi: your wallet → the protocol (1-4, 3-3, 3-6).
How much would that be? If 4.56% held for a whole year (it will not, it changes daily), €600 would earn about €27 before tax. Interest is taxed without the relief (15% or more in Lithuania), and before that you pay withdrawal and network fees. So you risk €600 for a few tens of euros a year.
USDC is a dollar, not a euro. When you come back to euros, the exchange rate can work for you or against you, and the conversion itself counts as a sale for tax purposes (2-8).
Selling coin X straight into USDC is also a taxable sale: swapping one crypto for another is treated as a sale and a purchase.

Ella wrote down: the recovered €600 goes back to her bank account. Her reason is personal: she may need this money within a year, and she started the cycle to take capital out of risk, not to move it into another kind of risk. Someone with a different goal and experience might choose differently. What matters is that the decision is written down before the day of the sale.

Step 5: What to do with the "free" coins

Ella has 7.757 coins left, worth about €600. There are three options, and each later one adds a new layer of risk:

Each step adds risk

Hold on the exchange

price and custodian risk

Revolut staking

+ slashing, lock-up, fee changes

Your own wallet

+ full responsibility for the keys

Native staking or lending

+ validator or protocol risk

A. Hold, and follow a rule written in advance. These are the rules from lesson 1-11: A, sell a quarter every time it doubles; B, fixed levels (e.g. 3×, 5×, 10× the average); C, a permanent core that you never sell. This is the simplest option, with no extra risks beyond price and custodian risk.

B. Revolut staking. It is available only for some coins: ETH, DOT, SOL, ATOM, ADA, KSM, INJ, NEAR, ALGO, XTZ. If your coin is not on the list, this route does not exist. What to know:

Revolut advertises a 0% platform fee ("100% of rewards"), but its fee document allows it to deduct 0–50%, plus a validator fee of up to 3%. The APY shown in the app is already net, so check it every time, because the terms can change.
Risks that Revolut itself discloses: slashing (if a validator breaks the rules, part of the locked coins can be lost), lock-up (withdrawing takes time: a few days for SOL, longer for ETH, and the app shows the period), the APY is not guaranteed, and crypto is not covered by investor compensation schemes.
In Lithuania, staking rewards are taxed as "other interest" (15% or more), without the €2,500 relief; in practice they are valued at the moment of receipt.

C. Your own wallet: native staking or lending. More control, more responsibility: the seed phrase (2-1), the right network and address (1-8), and permissions granted to protocols (2-4). For example, if the coin were SOL, on 2026-10-22 native staking paid about 5.09%, and SOL deposited in Kamino SOL paid 4.12% (both change). Withdrawing from Revolut X costs the equivalent of GBP 1 (for SOL and a few other coins) or GBP 3 for the rest, plus the network fee.

The house money effect

The researchers Thaler and Johnson (1990) described how people who have just won take on more risk with the "won" money than with their own. Free coins easily turn into "play money": a new token, leverage, "just this once". But 7.757 coins are worth exactly as much as any other €600, and are taxed the same way. So the rule for them has to be written in advance, and it should be at least as strict as the trigger.

A few weeks later, Ella's friend suggested putting the "free" coins into a new token with leverage: "they didn't cost you anything anyway." Ella opened her sheet of paper. It said: rule A, no leverage. The conversation was over.

Step 6: A new cycle

The recurring buy never stopped. The seventh purchase starts a new cycle with a new average price, calculated from zero. If the prices over the next six months were 80, 50, 40, 40, 40 and 80, Ella would get 12 coins for €600: a new average price of 50 and a new trigger of 100.

The old 7.757 coins are not part of this calculation. In the diary or spreadsheet they are tracked separately: "Cycle 1 (closed)", "Cycle 2", "Free coins". If you mix them up, the average price becomes meaningless and the trigger stops working.

What can go wrong

The 2× may never come. Then you simply have a plain DCA position with no exit. Continue only with what you could afford to lose.
After the sale, the price falls 80%. The value of the remaining coins falls 80%. The recovered capital is safe only if it sits where a crypto crash cannot reach it. On a USDC protocol it shares the risks of the crypto world.
Taxes change the 50% arithmetic. Above the relief you need to sell 54–56%, and staking and lending rewards are taxed without the relief.
Small amounts are expensive. The main app's minimum fee on a small purchase is several percent, and a fixed withdrawal fee on a small amount is even more.
Nothing insures crypto. Neither the coins nor USDC are deposits: deposit insurance does not apply to them.
"Free" is a feeling, not accounting. The house money effect pushes you to take more risk exactly when it seems you have nothing to lose.

Template: my cycle

Coin (one, chosen in advance): ______
Amount: ______ €     Interval: ______     Where: Revolut X / app / other
Records: diary / spreadsheet / notebook
Trigger: 2× average entry price
I sell: 50% (relief) / ~54% (15%) / ~56% (20%)
Recovered euros go to: ______ (and why)
Rule for the remaining coins: A / B / C / staking: ______
After the sale: new cycle, separate records
Review date: ______

Practice task

0 / 8

Write down your full-cycle plan

A paper exercise. Fill it in now, while the price neither excites nor scares you: this is the only time when your head decides, not the market.

This is a plan on paper, not a transaction: do not buy or move anything just because of this exercise. The risk begins when you change the rule on the very day it should trigger.

This is learning, not investing — use only small amounts you treat as tuition.

Quick check

The price has reached 2× your average. The annual €2,500 relief is already used up by other sales, and 15% personal income tax (GPM) applies. How much should you sell to get back what you put in?

Now you see the whole cycle, not just its pretty half: when to sell, how much to sell after tax, where to put the recovered money, and why "free" coins demand the strictest rule of all.

Summary

The full cycle: recurring buy → average price in the diary → at 2× you sell enough to recover your capital → you decide where the euros go and what to do with the remaining coins → a new cycle with separate records.
Nothing is free: you paid with capital, time and risk, and the 2× may never come.
Taxes: if the gain fits within the €2,500 annual relief, 50% is enough; above it, about 54% (at 15%) or 56% (at 20%). Swapping crypto for crypto is also a sale. (These are Lithuanian rules; other countries differ.)
Recovered money: in a bank it is insured up to €100,000; on a USDC protocol it is not, and it sits outside MiCA, even though the yield (4.56–5.07%, 2026-10-22) looks attractive.
Remaining coins: you hold them by rule A/B/C, or use staking or lending. Each step adds risk, and the reward is taxed without the relief. The house money effect is real.

Sources

Revolut and Jupiter sources are given as plain text, so they are not confused with affiliate links:

Revolut X fees: https://www.revolut.com/en-LT/legal/crypto-exchange-fees/
Revolut recurring buy: https://help.revolut.com/en-LT/help/wealth/cryptocurrencies/crypto-exchange/growth/question-what-is-recurring-buy/
Revolut app crypto fees: https://www.revolut.com/en-LT/legal/exchangingcryptocurrenciespersonalfees/
Who provides Revolut's crypto services: https://help.revolut.com/en-LT/help/wealth/cryptocurrencies/understanding-revolut-cryptocurrency/crypto-safety/who-provides-revolut-s-crypto-services/
Revolut staking: https://www.revolut.com/en-LT/crypto/staking/
Revolut crypto-asset risks: https://cdn.revolut.com/terms_and_conditions/pdf/cryptoasset_specific_risks_f23c87a1_1.0.0_1766757174_en.pdf
Jupiter Lend Earn: https://api.jup.ag/lend/v1/earn/tokens

Taxes, yields and fees were checked on 2026-10-22 and change over time. Tax figures are Lithuanian. This is educational material, not investment, tax or legal advice.

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