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Wading into DeFi


brianwalden
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Last weekend, I decided to jump in and try out PancakeSwap (Binance Smart Chain, AKA BSC) and perhaps stake some of my idle XRP and BNB tokens. Having gotten my first taste of pursuing this a few months ago in the Flare Finance (aborted) Beta test activities, it wasn't too confusing.

There is a workaround possible to move my BNB from Binance.us to BSC, and accessible thru my Brave browser's meta mask plugin. I was also able to acquire some CAKE token from Kucoin and directly "withdraw" it into my BSC account. 

It might not be obvious to newbies, but you can't directly stake non BSC tokens like XRP in pancakeswap. What one must do is to first trade your CAKE or BNB for what is essentially an IOU (or "wrapped?") token on the BSC. 

Once you have some tokens on the BSC, you can stake them individually (Liquidity pools) or in pairs (Farms) and earn some CAKE tokens. 

Since there are gains to be earned in this system, the realized value must some from other users whom have lost or paid out their own value (givers and receivers?). The mechanisms of separating capital value from the "givers" are not immediately obvious to the newbie. 

The crucial question I find myself wondering is, what are all the sources of utility that support the in-flow of capital from the "givers," so that the ecosystem continues to grow and self-sustain ?

Edited by JASCoder
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Posted (edited)

PancakeSwap.

I'm not a huge fan of Ethereum just because it eats you up with fees. PancakeSwap is the biggest DeFi app on Binance Smart Chain. One of the simplest things you can do is buy CAKE and stake it in PancakeSwap's CAKE auto syrup pool. You don't have to do anything to claim your yield. Just put it in and earn 95%ish APY (it's variable). You can start with that and then try the rest of their Dapps.

I'm not allowed to use Binance, but I would bet if you've got a Binance account there's an easy way to get access to PancakeSwap. I use Binance's Trust Wallet, it has a built in DEX and web browser to connect to DAPPs.

Edited by brianwalden
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I have started off slow and have been using Bancor. It allows single side staking and it also protects from impermanent loss. Now I am earning a solid return while I learn more about how this whole ecosystem works. 

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Posted (edited)

CeFi.

BlockFi, Celsius, and Nexo are some of the big names available in the US. Outside the US there's some Swiss companies that look interesting to me.

CeFi is nice because just like exchanges you've got customer support if you need it. Also, you usually don't have to worry about the volatility of a liquidity pool. It's like a high-yield savings account. You just deposit your crypto and earn interest. Usually you can buy the service's own token and/or lock your funds into fixed terms to earn higher interest rates.

The other big service that they offer is loans. You put up your crypto as collateral and take it a loan against it. Your collateral is always worth more than your loan, if the ratio between the two becomes too close your collateral, it will be sold off to pay for the loan. If you have good credit, the interest rates you get from traditional finance are usually better, but a crypto loan lets you spend money without causing a taxable event or asking your appreciating crypto assets.

CeFi may not be able to give you the rates that DeFi does, but it gives you an absolutely amazing return on your investments compared to traditional finance with much less risk than full-on DeFi.

Edited by brianwalden
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Posted (edited)

Terra Network's Anchor Protocol.

Here's an easy one. Buy UST, Terra's dollar stablecoin, deposit it in the Anchor Protocol https://app.anchorprotocol.com/earn and you'll earn 20% APY. That's it, you don't have to worry about the volatility of the asset you're holding.

The hardest part is buying UST. Terra lists its major coins (UST, LUNA, MIR) on both Ethereum and Binance. If you can get one of them, you can get a Station Wallet (Terra's wallet) and use their bridge https://bridge.terra.money to send the coins to your Terra wallet. Then you can use TerraSwap https://terraswap.io to exchange them into UST. Once you have UST, just deposit in Anchor.

Edited by brianwalden
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So from my point of view, my first foray into defi was towards the end of last year when I entered pools on Sushi (namely the Sushi-ETH and Sushi-AAVE) pools, and also stakes ETH on Alpha Homora and also entered an ETH-Alpha pool. I'm still in the Sushi pools I originally entered. The APY's are way down from what they were, but the prices of the underlying tokens has ballooned since then.

My approach has since been a bit spread thin, in order to minimise risk. So I'm farming/ staking in multiple ecosystems. I think with a lot of these projects you're investing in individuals rather than the actual technicals of each ecosystem (which are often beyond my knowledge anyway).

So the defi blue chips are no brainers. Aave, Sushi, Curve/ Convex, and Yearn is where I stake a lot of my crypto and stablecoins on eth network. But really they are investments in the individuals behind them, like Andre Cronje.

I'm in Anchor protocol because it's so simple and reliable, but really it's an investment in the guy behind it, Do. UST briefly lost its peg during the big crash but quickly got it back. So that gives a lot of confidence in a star like Do to get his shit together.

Any investment in Solana is kinda an investment in FTX Sam. So I'm balls deep in Sam coins (should have sold a lot prior to the crash but didn't) but farm a lot on Raydium, selling almost daily into stablecoins.

On BSC, my main farms are in Wault. The Wault tokens have lost shit loads of value in recent weeks but tbh I'd already taken so much profit on a daily basis from them in the several weeks preceding that, that I don't really care. I'm still in them, farming away.

Another long standing and very solid farm is the Alchemix-ETH farm, now on Sushiswap.

So I'd have the vast majority of your stablecoines and crypto you want staked in the solid, more boring places like Curve/ Yearn and Anchor etc earning 5-20%.

I then provide a certain proportion to degenerate farms, knowing full well that a rug pull will come at any moment. Recent experiences with those are in Titan and Malt. You could be earning hundreds of bucks every few hours having put in about 2k, and then you could wake up the next morning to find that the money you put in is now worthless or inaccessible.

Anyway I'll try to keep up to date with this club and write more later.

One last thing I'd say is, have a longer term plan. SO for me, the Sushi I earn or the CRV I earn will not be sold into USD, they'll be rolled into xSushi or whatever.

Whereas some of my other farms only exist to sell daily into USDT.

When the whole market is pumping, I'm selling yields into USDT and putting that into high yield stablecoin vaults like in Curve or Anchor. But in recent weeks, I've been selling yields into ETH or a bit of BTC, or any other altcoin which has taken a massive hit.

Anyway that's all for now.

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Just exited 75% out of the polywantsacracker farm I was in on Matic netowrk (I was in the lithium-matic pool). Not only has the price of lithium pumped over 20% today, but it just looks a little overextended to me, going up in a straight line for several days now.

I only joined the pool about 5 days ago. It's earning 1700% APY or something, so I was able to sell my generous lithium rewards daily into USDC, and then once exiting, sell the lithium I originally bought for a profit.

Sure, price could keep pumping up but I'm happy with my 5 days work. I've kept 25% in just for shits and giggles.

I only went in with a few hundred bucks total btw. So in total I've probably made about 50-60% profit. It wouldn't surprise me if it tanks huge at some point in the next few days.

Edited by djdhrubs
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A good play I can see right now is tricrypto2 on Curve.  But don’t stake fully in Curve. 
1. the pool is for USDT, WBTC and ETH. Impermanent loss applies. Put simply, if crypto goes up, and you put BTC or eth into the pool, you’re kinda selling it in the background into USDT. But you’re earning great percentage rewards…

2 . take whichever of those assets you want or a mixture and stick them into curve tricrypto pool 2. Deposit only. you then have the LP token for the pool.

3 . You then have a choice of what to do with the LP token. Either stake in curve itself (but your rewards will depend on how much CRV you’ve locked away there).

4. or you can take them to convex to earn higher rewards in CRV and CVX.

5. Or you can take the curve LP token and put it in badger to earn Badger and CVX and I think CRV rewards. How much you receive will depend on how much badger you have locked away. I’m currently earning 197% Apy with the maximum boost due to locking away a certain amount of badger.

6. no doubt other sites will offer other things, eg yearn etc. But the choices are many in defi.


 

 

Edited by djdhrubs
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8 hours ago, brianwalden said:

Damnit man, you're so far ahead of me. One day I'll comprehend what you're actually saying.

dumb patrick star GIF by SpongeBob SquarePants

Just think of it as all these different sites (Badger, Curve, Yearn, Convex, Stakedao etc) team up with each other and use each other's products.

So you're creating an LP token on Curve, but instead of staking it on Curve, you're taking it to another site where they have their own strategy for maximising gains.

For example, the purpose of Yearn is to take all the day to day management of your farm out of your hands and simplify things. So what they do is they are using Curve to stake an LP token, and they themselves sell off the rewards (CRV tokens) and put the rewards back into the pool, autocompounding your gains. This saves you the hassle of deciding when and if you want to sell the CRV yourself, and saves you the gas costs of your daily/ weekly transactions. That's what Yearn try to do for people. Take the hassle away and autocompound. You can set and forget.

Whereas Badger do things differently. They have their own strategy. They might sell some CRV, or stake some in one of their own vaults, then roll the earnings into another vault. More complex. Potentially higher rewards. And you're getting some Badger rewards too. So if you're bullish on Badger, it's a better play than simply going for Yearn, where you're just setting and forgetting.

Yearn and Convex are competing with each other in how they use Curve. Both are trying to attract punters to their site to lock away as much money in their vaults as possible. Convex are currently winning the battle. Badger, yet another site, are using Curve and Convex, but also applying their own strategy of providing Badger rewards.

Curve is very much a centrepiece for the action. Loads of sites use Curve. 

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3 hours ago, djdhrubs said:

Just think of it as all these different sites (Badger, Curve, Yearn, Convex, Stakedao etc) team up with each other and use each other's products.

So you're creating an LP token on Curve, but instead of staking it on Curve, you're taking it to another site where they have their own strategy for maximising gains.

For example, the purpose of Yearn is to take all the day to day management of your farm out of your hands and simplify things. So what they do is they are using Curve to stake an LP token, and they themselves sell off the rewards (CRV tokens) and put the rewards back into the pool, autocompounding your gains. This saves you the hassle of deciding when and if you want to sell the CRV yourself, and saves you the gas costs of your daily/ weekly transactions. That's what Yearn try to do for people. Take the hassle away and autocompound. You can set and forget.

Whereas Badger do things differently. They have their own strategy. They might sell some CRV, or stake some in one of their own vaults, then roll the earnings into another vault. More complex. Potentially higher rewards. And you're getting some Badger rewards too. So if you're bullish on Badger, it's a better play than simply going for Yearn, where you're just setting and forgetting.

Yearn and Convex are competing with each other in how they use Curve. Both are trying to attract punters to their site to lock away as much money in their vaults as possible. Convex are currently winning the battle. Badger, yet another site, are using Curve and Convex, but also applying their own strategy of providing Badger rewards.

Curve is very much a centrepiece for the action. Loads of sites use Curve. 

I get the concept. This is what they mean by money legos - you can combine the different services in different ways to build the type of portfolio you want.

I've learned that if I just start doing it, I figure it out. But that takes experimentation to see what works and what doesn't. And I'm not ready to experiment with all the fees on Ethereum just yet.

 

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