Cryptocurrency: DeFi, Farming, and Staking Megathread

[LifeOnMars]

Tulip forum.

you could set yourself up for life up in few years time even on a nurse's salary, the gains you see in crypto are unlike anything else the average person has access to. first heard about BTC in the early half of lest decade and thought the same thing, bullshit
take some of that money you've got parked in that savings account netting .01% a year and put it to work

 

[casa_mugrienta]

you could set yourself up for life up in few years time even on a nurse's salary, the gains you see in crypto are unlike anything else the average person has access to. first heard about BTC in the early half of lest decade and thought the same thing, bullshit
take some of that money you've got parked in that savings account netting .01% a year and put it to work

I don't think it's bullshit.

I just think when the guy at the bus stop has stock tips it's time to sell.

 

[PRCD]

Seems like the Feds can just shut down Coinbase and we'd all have a huge problem. While we'd still have our wallets, there'd be few ways to convert it back to fiat for use unless this getswype.io thing works out.

 

[Chee-to]

I don't think it's bullshit.

I just think when the guy at the bus stop has stock tips it's time to sell.

The guy at the bus stop is suggesting you buy assets that may go down in value. I'm suggesting that you don't buy the assets and instead generate return with US dollars that will remain $1 each regardless of what the market does. Feel free to ignore any of it you want.

 

[Chee-to]

Seems like the Feds can just shut down Coinbase and we'd all have a huge problem. While we'd still have our wallets, there'd be few ways to convert it back to fiat for use unless this getswype.io thing works out.

Shut down Coinbase for what? It's a publicly traded, fully licensed exchange. That's like worrying that the Feds could shut down NASDAQ.

A few of those ways would include Binance and FTX's US licensed exchanges, Gemini, Kraken, Poloniex, BTC ATMs, moving to El Salvador... Crypto is too big and too entrenched for the US government to wreck it.

 

[grapedrink]

I don't think it's bullshit.

I just think when the guy at the bus stop has stock tips it's time to sell.

Best to listen to this guy instead, he's never steered anyone wrong

 

[PRCD]

Shut down Coinbase for what? It's a publicly traded, fully licensed exchange. That's like worrying that the Feds could shut down NASDAQ.

A few of those ways would include Binance and FTX's US licensed exchanges, Gemini, Kraken, Poloniex, BTC ATMs, moving to El Salvador... Crypto is too big and too entrenched for the US government to wreck it.

IDK man the printing press is the source of their power. Did you see how Congress grilled Faceberg when he tried to create a Facebook currency? Nevertheless, you're right - it's becoming too entrenched:

Why Mastercard is bringing crypto onto its network

By directly supporting select digital assets, we are enabling many more merchants to accept cryptocurrency and giving people more ways to save, store and spend money.

www.mastercard.com

I'm on the fence as to what's going to happen to it. Lots of people are looking to diversify from their country's fiat, but governments will not like this.

 

[SurfFuerteventura]

Seems like the Feds can just shut down Coinbase and we'd all have a huge problem. While we'd still have our wallets, there'd be few ways to convert it back to fiat for use unless this getswype.io thing works out.

What's the erBB brethern for yo?

Plenty of us post up in here, ranched out for life, in enough international locations and assorted surf spots, that surely there'd be at least one erBB brother willing to help the rest in getting their funds back out.

 

[Chee-to]

More on LPs

With LPs, you usually have to deposit both sides of the pool. For instance, if you're putting money in a USDC/USDT pool, you have to deposit both USDC and USDT in equal amounts. Some (and more and more) pools allow single-sided staking.

Examples:

Non-single side staking. I have $10K USDC. I want to LP USDC/USDT. I trade half for USDT and deposit $5k of each.
Single side staking. I have $10K USDC. I want to LP USDC/USDT. I deposit $10K USDC in the pool and it adjusts for me.

What To Look For

The key to LPs is balancing return versus divergence and market risk. You can lose money in two ways with an LP: either because the asset you're depositing in the farm goes down, or because the two assets you're depositing diverge wildly in price.* (*Impermanent loss isn't really a loss so much as an opportunity cost compared to holding the asset, but it's something to remain aware of.)

Stay away from native project token pools, especially native token/stablecoin pools. They have the highest farming rewards rate, but the token will usually peak early and then dwindle, often faster than the rewards make up for.

What you want are highly correlated pairs that either increase in value or stay flat. The clear choice is stablecoin-stablecoin pairs, but other pairs may also fit.

There is a worthwhile counterstrategy, though, that I call

Sharecropping

Sharecropping is farming with borrowed assets. Let's look at two Solana projects: Raydium and Mango.

Mango lets you deposit USDC or USDT and borrow ETH, SOL, BTC, and RAY, among others.

Right now, you can deposit USDC at 13.81% (down from the 18+% a few hours ago - like I said, it's volatile) and borrow SOL at 0.08%, BTC at 0.12%, and ETH at 1.25%. Basically free money.

Raydium has a bunch of farms, like BTC-mSOL, ETH-mSOL, ETH-RAY, etc.

You can get these farm rewards while staying market neutral by sharecropping. Deposit your USDC on Mango, borrow ETH and SOL (convert to mSOL through Saber or Mercurial), and deposit those in the Raydium farm.

If the crypto market takes a huge sh!t, you don't care - you borrowed X ETH, you pay back X ETH. If ETH is $4k or $2k it's all the same.

With any borrowing protocol, you do need to watch your collateral ratio so you don't get liquidated. If you borrow SOL and SOL moons, you may end up undercollateralized.

Depending on how sketchy the farm is, you've lowered your exposure of a rug pull too, because you can't borrow your full collateral. However, the non-stable farms usually compensate better, because they have to price in market risk. So sharecropping means you can get the same or better return on less capital risk.

Example. Project Y has a USDC/USDT farm returning 10%, and a FIN/BOARD farm returning 30%. Lending protocol Z is averaging 5% APY on USDC deposits. You have $10k USDC. You don't want to buy FIN and BOARD, because they're shitcoins and they'll dump soon.
If you put all $10k into Y, you get $1k annual returns.
If you put all $10k into Z, you get $500 annual returns.
If you put all $10k into Z and borrow $3k each of FIN/BOARD, you get $500 from Z + $1,800 from Y = $2,300 annual returns, AND, because Z is probably safer than Y, you lower your risk of getting jacked from $10k to $6k.

Real world example you can use: Mango and Raydium. USDC deposits have averaged 14.1446% over the past 30 days. SOL, BTC, and ETH borrow costs are basically nothing - 0.07% for SOL and 0.33% for ETH over last 30 days. Raydium's BTC-mSOL farm is returning 21.28% and ETH-mSOL is returning 27.63%. BTC, SOL, and ETH are probably correlated enough to minimize divergence costs on the strategy.

Let's look at sharecropping into ETH-mSOL.

$10k USDC into ETH/mSOL (60% LTV borrowed) would be:
$10k USDC Mango returns 1,414.46 annual
-(interest costs on $3k SOL borrowed) (2.13)
-(interest costs on $3k ETH borrowed) (10.14)

Returns from Mango: 1,402.18 annual

$6k into ETH-mSOL 1,657.80 annual

Total return 3,059.98 or 30.5% on the original $10k.

 

[LifeOnMars]

Seems like the Feds can just shut down Coinbase and we'd all have a huge problem. While we'd still have our wallets, there'd be few ways to convert it back to fiat for use unless this getswype.io thing works out.

coinbase is a publicly traded company, it ain't getting shut down. they went though all the regulatory stipulations to be worthy of being the chosen exchange for US residents

 

[santacruzin]

@Chee-to thank you for taking the time to post all this

 

[lruc]

Well done Che , but perhaps its easier to say that defi is a leveraged trade supporting nose bleed yields.

 

[Chee-to]

Well done Che , but perhaps its easier to say that defi is a leveraged trade supporting nose bleed yields.

That's not really accurate. Defi is, at its core, simply lending liquidity for permissionless use. You can make leveraged trades for nosebleed yields, but that's a small part of the pie.

 

[stringcheese]

Well .... Yeah that's a lot of insider bullshlt jargon. Im just going to buy whatever the popular dog related not-actual-coin of the moment on Reddit is and try to sell it all before a different dog becomes popular

 

[afoaf]

Well .... Yeah that's a lot of insider bullshlt jargon. Im just going to buy whatever the popular dog related not-actual-coin of the moment on Reddit is and try to sell it all before a different dog becomes popular

have you ever heard of Shiba Inu.....?

 

[stringcheese]

have you ever heard of Shiba Inu.....?

Psh, old news. Have you gotten in on laberdoodle yet?

 

[lruc]

Chee, defi s core has produced speculation and rehypothcation. 100 x leverage lending against different platforms while paying folks 8 percent on borrowing your coins, what could possible go wrong ?

 

[Chee-to]

Chee, defi s core has produced speculation and rehypothcation. 100 x leverage lending against different platforms while paying folks 8 percent on borrowing your coins, what could possible go wrong ?

You're talking about perpetual futures trading, which has been around forever and is overwhelmingly used on centralized exchanges. When that goes wrong, the people that bet wrong get liquidated and the market adjusts. Happens in all markets, and not that infrequently in crypto.

What I'm referring to is a separate investment product and should be much more insulated from those downturns.

 

[lruc]

Should be more insulated, but is it ? If I may add sir 100 x leverage trading has not been around forever. No one questioned Madoff paying 12 percent a year but hey thats what makes markets.

 

[Rlacey111]

This thread is great, and thank you for taking the time to do it, I've definitely learned something here.