Share this page!

korpi Profile picture
Twitter logo
11 Apr, 14 tweets, 6 min read
Let me ELI5 what happened here so that everyone could admire the power of @iearnfinance v2 vaults.
$YFI
1) Yesterday a new farm appeared on Ethereum: app.thisistheway.finance. It doesn't even matter what it is. The most important fact is that it rewards farmers with a token $BAG for staking $ETH, $WBTC, $USDC or $DAI. So it's passive earning opportunity.
2) "But sir, it's a new farm, it must be risky!" Is it? The farming contract is a slightly modified version of MasterChef - a well known and battle-tested contract on Ethereum. The only change is that it applies an exit fee on your stake if you leave early.
3) Yearn devs reviewed the contract and decided it was safe to park some funds from ETH, WBTC, USDC and DAI vaults into it. This is the biggest strength of v2 vaults - funds can be deployed into multiple strategies at the same time so that the yield on the vaults is optimized.
4) For example, 30% of 47k ETH from ETH v2 vault is farming $BAG. The rest is deployed into other protocols, e.g. Curve or Maker (borrowing DAI to earn in DAI v2 vault).

The allocation of funds can be checked here: yearn-hub.vercel.app/vault/0xa9fE46…
5) So 30% of ETH in v2 ETH vault is currently earning 80-90% APR from $BAG farming but it was 300-400% when funds were deployed. Yearn devs were extremely quick to spot a new farming opportunity, check the contract and deploy a strategy to farm it.
6) As @bantg mentioned in his tweet, they were even able to find a way to circumvent early withdrawal fees (by harvesting yield first and then using emergency withdrawal function which doesn't have exit fee). How cool is that?
7) Now tell me. Can a regular farmer really compete with @iearnfinance money robot? Finding a farming opportunity, making sure it's safe, taking advantage of its bugs to avoid withdrawal fees - this requires a team of professional devs / farmers.
8) And this is just one strategy. Tomorrow, a new farm may appear and a portion of funds from the vaults will go there. And you, as a depositor into the vault, can just relax and enjoy high yields without spending ETH on gas to move your funds from one farm to another.
9) It's not surprising that TVL in @iearnfinance has been going parabolic since v2 vaults went live early this year. It's already at $2.6B and doesn't show any signs to stop.

You can monitor TVL here: yearn.science
10) Not only regular farmers, who don't want to chase the farm of the week every time, are attracted to Yearn vaults. Other projects with a lot of idle funds (e.g. USDC from @fraxfinance $FRAX, DAI from @AlchemixFi $ALCX) see the benefits too. It's not really surprising.
11) Why would they reinvent the farming wheel, if they can park their funds into well-oiled @iearnfinance machine? Many DeFi protocols have huge treasuries - it won't surprise me when big part of them will eventually start earning yield with @iearnfinance.
12) What does it mean for $YFI? I don't know. Market is driven by speculation and sentiment but I see a lot more positivity now. 1 $YFI = 1 $BTC has always been programmed but can we see 1 $YFI = 4 $BTC as at the top of DeFi summer? I can't wait :)
There are many questions about APY displayed on the Yearn site. This is realised APY - a reliable indicator of historical performance of the vault. Current farming activities will likely affect this in some time.

• • •

Missing some Tweet in this thread? You can try to force a refresh
　

Keep Current with korpi

korpi Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!

PDF

Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

More from @korpi87

korpi Profile picture
5 Apr
1) It's been a while since my last bullish thread on $BNT but @Bancor Team keeps building and it deserves some commentary. Let's talk about a new addition to $BNT tokenomics, Vortex Burner, which puts deflationary pressure on circulating supply of $BNT.
2) Let's start with a quick reminder how @Bancor works. In contrast to other AMMs like $UNI or $SUSHI, in Bancor, you can provide liquidity with a single token. You don't have to pool your token with other asset which often leads to impermanent loss (IL).
3) Whitelisted pools in Bancor are fully protected from IL. It works by bundling an array of pools into one bucket. Some pools have high IL, others don't and fees they generate are used for IL compensation. It shifts IL from single-pool risk to a risk spread across many pools.
Read 19 tweets
korpi Profile picture
27 Mar
1) I really like experiments. Especially the ones which can disrupt what we are currently used to. DeFi is the best example - an attempt to disrupt TradFi with a code. AMMs are already disrupting centralized exchanges and constantly evolve. What about the final form of AMM?
2) This is what @IntegralHQ tries to achieve - the final form of AMM, the one that eats other exchanges' liquidity. Sounds like a dream, doesn't it? So let's dive into it deeper. It's complex and I won't pretend I fully understand all the technical docs but I'll try to ELI5.
3) How will @IntegralHQ suck in all the liquidity? Technically it won't. But it will act as if it would have. This is due to its unique combination of AMM with orderbook (OB-AMM design). It allows them to mirror liquidity from other exchanges to become the cheapest one to trade.
Read 24 tweets
korpi Profile picture
24 Mar
1) While I, as active liquidity provider, am excited about sophisticated options for LPs in $UNI v3, I'm also concerned that too much complexity will only serve few in the know and leave the majority of (passive) LPs behind.
2) Although I haven't conducted a survey to justify my thesis, I'm quite convinced that the majority of current LPs don't actively manage their pools. This is based on my observations and pushed me to share a set of "advanced" strategies for active LPs:
3) Uni v3 feature to provide liquidity only for a given range (+ other options) will be useful for professional market makers who will likely eat lunch of passive LPs. If passive LPs earn less, they may look for alternative simple solutions.
Read 8 tweets
korpi Profile picture
18 Mar
1) What is the most popular term in DeFi which you have never heard of in traditional world? Probably aping but let's assume it's impermanent loss (IL). Every liquidity provider in AMM suffered from IL. But do you know that you can beat it? Read this thread to find out how.
2) Let's start with a quick definition of IL. It's a difference in value between your current assets in liquidity pool (LP) and assets you would have if you hadn't added them to LP. In other words:

IL = current assets at current prices - initial assets at current prices
3) Why current assets are different than initial assets? Because this is how AMM works - each trade changes the amount of both tokens (x and y) in LP so that their product remains constant (x*y=k). It's like automatic rebalancing of your portfolio consisting of tokens x and y.
Read 26 tweets
korpi Profile picture
13 Mar
1) If you don't like reading long blog posts with project updates but prefer to get a bullish thread with a summary of news pumping your favourite token, I'm here to serve. It's $BNT time again after the March release of Bancor Progress Update. blog.bancor.network/bancor-progres…
2) "In the last month, the total value locked in the Bancor Protocol has more than doubled, exceeding $1.6 billion. Bancor broke into the top 10 projects by TVL and now generates the fifth highest revenue of any protocol on Ethereum." - no commentary is needed - bullish $BNT.
3) $BNT circulating supply reported by CoinGecko & CoinMarketCap is overstated. When you deposit single-sided liquidity, @Bancor mints BNT into the pool to match it. This BNT is protocol-owned, largely remains in the pool earning fees and is eventually burned.
Read 19 tweets
korpi Profile picture
6 Mar
1) Although in a bull market narratives drive prices more than fundamentals, it's always wise to look at your portfolio from a bear market perspective and pay attention to traditional valuation metrics adapted to DeFi. @tokenterminal is a place to go. Let's play a bit with AMMs.
2) The most common metric used to compare protocols is Price to Sales ratio (P/S). It's a relation of a protocol's market cap to its revenue so it indicates how the market values the asset relative to its revenue and expectation of future growth.
3) In terms of AMMs revenue represents total fees paid by traders to liquidity providers. In other words it's the amount users are willing to pay to use the protocol. For better comparison market cap is fully diluted (FDV), i.e. it assumes all tokens are in circulation.
Read 14 tweets

Did Thread Reader help you today?

Support us! We are indie developers!

This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Too expensive? Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal Become our Patreon

Thank you for your support!

Follow Us on Twitter!

Like this author's thread?

Get emails when @korpi87 has new unrolls!

Check out other threads from @korpi87!

Read all threads by @korpi87