Thread by @TheBootMex

Soo.. why I market swapped (in batches) $2mil into @QuickswapDEX token (market buying #matic in $0.41-$0.43 range en-route to the AAM to swap matic->quick) and not looking to sell any time soon despite being in 60-70% profit already?

First of all, have to recognize that we are in the wide crypto bull market.

One of the best performing sectors is #DeFi.

Ethereum-based DeFi lead the move, with BSC being the primary blockchain contender with its PancakeSwap and BurgerSwap AAMs due to the high fees of Ethereum.

#BinanceSmartChain is EVM-compatible with Ethereum but cannot communicate to Ethereum base layer directly and is also not pure DeFi but CeDeFi.
What network could be the next one to gain momentum in the DeFi field? I think it’s Matic/Polygon.

@0xPolygon is a working Ethereum L2 that was recently rebranded and is gaining popularity quickly. In the two popular DeFI dashboard I use – @ApyVision and @zapper_fi Polygon is only the third one to be added after Ethereum and BSC.

And while #matic token is probably a very interesting play by itself (indirectly I pumped it’s price by 5% in just a few minutes) I think a much better r/r play is its main AMM protocol just like @Uniswap was outperforming Ethereum for a while. Welcome @QuickswapDEX

So, what’s so good about quickswap, the fork of uniswap? Let's analyze volume. With $125m 24h volume it is already a #6 AMM DEX based on @CoinMarketCap after we discard MDEX, since it has transactional mining.

This means the AAM volume to Circulating Market cap ratio is 20-25x better compared to @Uniswap, about 5x better compared to @SushiSwap, 12x compared to @PancakeSwap, 25x compared to JustSwap (that runs on Tron, xDD), 120x compared to L2 competitor Loopring

Keep in mind that only 16% of tokens were distributed, so fully diluted market cap (against fully diluted of competitors) is less but still overall very favorable. But being that early in the token distribution process means there is lots of time for LP incentivization.

But is there even a need for LP incentivization? With 230m LPs, $125m 24h volume and 0.25% fee to LPs it means that LPs currently earn 125*0.25%/230 = 0.135% APR *on average*, depending on the specific pair, just on fees.

One can earn 70% APR on USDC-USDT LP with no Impermanent Loss risk. And because the fees on @0xPolygon are practically non-existent you can reinvest every day and turn that into about 100% APY. Sounds crazy?

But there is Liquidity Farming on top of that which makes your APY go crazy. I am LP farming myself but I realize those APY/APRs won't stay forever.

What this means is that the platform will rather sooner than later gain a lot more LPs further boosting the platform's recognition and reducing slippage for swappers.

Now, how do you decide if you farm LP or buy the token?

The juicy part for Quick holders is that just a few days ago quickswap launched "Dragon's Lair" which allows to stake Quick and receive your share of the 0.04% of the total AAM volume collected fees.

Which effectively turns it into a yield-generating asset similar to a stock yielding about 0.1% per day at the moment.

Now, if we, very boldly, assume that the volume is going to stay constant forever, that would make it's P/E ratio around 3 when the norm in stock market is about 15 (lower is better).

Which means that by a lot of metrics, for me @QuickswapDEX is very, very, very undervalued. I wouldn't be surprized for it to go up another 5x from where it is right now.

Bear in mind, its is not even listed on ANY CEXes at the moment, and when it does demand for the token could accelerate quickly. And it is likely to be listed soon since daily volume on Quick token reached $60m

What are the risks?

Risk #1 as always with any lowcap crypto is potential rug-pull. I do not know much about the team and found complaints on reddit - reddit.com/r/defi/comment…

Risk #2 Security. Not too risky, unless intentional rug-pull, it's an unchanged fork of core Uniswap contracts so you can even assume quickswap being audited too.

Risk #3 Uniswap v3 is also going for L2 solution with rollups but based on @optimismpbc, probably ready mid-summer. With all the improvements of Uv3 like concetrated liquidity hidden under new Business License, there is a risk quickswap won't be able to keep pace on their own.

Risk #4 any risks of @0xPolygon , e.g. it loses the L2 Ethereum battle to Optimism, Loopring. Built-in Ethereum scaling is a risk, but a very very very long-term one.

Disclaimer: This is not a financial advice. I own large quickswap holdings from prices much lower. All the calculations were approximate and with volatile prices, volume, liquidity, could change very quickly.