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19 May, 6 tweets, 3 min read
Today was a good opportunity to see if high volatility on the market, with stable coins losing their pegs, can impact leveraged farming of $MATIC rewards on $AAVE. Let's see what happened with my position. 🧵👇
The idea of leveraged farming consists in iterative lending and borrowing of the same asset. Using the same asset is supposed to protect the position from liquidation even if debt to collateral ratio (D/C) is very high and close to liquidation ratio.
I assumed earlier that liquidation of such position would not be possible even in case of oracle failure. Today stable coins substantially deviated from their 1$ peg. How did it impact my risky leveraged $USDC farm at 80% D/C (liquidation ratio at 85%)?
As predicted, it didn't. $USDC price deviation impacts the amount of USDC lent and borrowed in the same way so D/C stays the same. It's 80% regardless of the USDC price. So market may be on fire but you can still casually farm $MATIC on Polygon with almost zero liquidation risk.
Almost zero liquidation risk means that the risk still exists. But with small spread between borrow and lend APRs it would take a few years until your borrowed amount got large enough to pass the liquidation threshold. Nevertheless, monitor your position.
If you are new to the concept of leverage farming, use the spreadsheet I prepared. Make a local copy, change highlighted cells using the most recent data from Aave, input your deposit amount and number of iterations and you will get an estimate of APR. docs.google.com/spreadsheets/d…

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More from @korpi87

korpi Profile picture
14 May
1) I've been liquidity provider (LP) on Uniswap v2 long enough to understand that it was never an easy passive yield. If you didn't actively counteract impermanent loss (IL), it would most likely eat all your profits from fees. How does v3 impact life of LPs? Let's explore.
2) V2 didn't offer LPs any options to manage their liquidity pools. Each LP participated in the same market making strategy (x*y=k). To counteract impact of IL, LPs could merely average their entry prices to the pool and try to time their exit correctly.
3) V3 changes this dramatically. Each LP owns a unique market making (MM) strategy by defining a price range on which they wish to provide liquidity to. This way LPs can easily express their opinions on market movements and compete with other LPs.
Read 26 tweets
korpi Profile picture
2 May
I have no idea what $TRU is but its daily Volume / Liquidity ratio on Uniswap is at 37, which means 11% daily profit for LPs just from trading fees. Apparently $TRU can be bought cheaper on a bonding curve outside of Uni and is arbed heavily on Uni leading to such a crazy volume.
At current V/L ratio, LPs are in profit unless $TRU outperforms $ETH more than 170% in a single day which equates to impermanent loss of 11%. Price is dictated by the bonding curve and I don't know its shape but judging by current price action I bet it's a very low probability.
So if you hold $TRU and want to earn extra money, use the current opportunity of low gas prices and add liquidity to Uniswap. I'd do it but I'm a bit afraid to ape into $TRU after such price increase without knowing what it is and I'm too tired to look into it now.
Read 4 tweets
korpi Profile picture
30 Apr
One month ago I tweeted about the emergence of strong $OHM community. Since then circ. MC more than doubled (3x at the top) but price has been almost steadily increasing and haven't yet stress-tested the (3,3) meme. Will $OHM stakers prove their diamond hands now?
Although Coingecko reports a massive 57% decrease in price in last 24 hours which could suggest a sudden exodus, it's not a correct figure. There were some issues with incorrect price feed from Sushi which apparently haven't yet been fully fixed.
The correct 24h price decrease atm is 37%. Still substantial enough to draw attention. Of course, price is expected to go down because circulating supply gets bigger and bigger every day but sudden movements are always moments of truth. Let's check some on-chain metrics for $OHM.
Read 5 tweets
korpi Profile picture
24 Apr
I wrote a short thread on $NXM / $WNXM yesterday, planned to post it today but $WNXM price increased substantially and it's not valid anymore. I'll post it anyhow because this opportunity periodically comes and goes so it makes sense to keep an eye on it.

The original thread👇
I've already mentioned it a few times but it's free money so I will do it again. You can keep full exposure to $ETH price and get at least 35% extra by buying $WNXM now at 0.028 ETH and selling it when it goes back to 0.038 ETH (minimum).
@NexusMutual is the unquestioned leader in the decentralized insurance and I will probably have to write a long thread about them (spoiler: I will prove how massively undervalued the project is) but today I just want to mention a couple of facts.
Read 6 tweets
korpi Profile picture
21 Apr
70% APR on stablecoins with no impermanent loss, hardly any risk of liquidation and almost zero transaction fees. Sounds good, right? It's possible with leveraged farming of $MATIC rewards on $AAVE on Polygon. See how to do it👇
$COMP farming last year was probably the first time when DeFi users got paid for borrowing. Savvy farmers substantially increased their APRs by iterative lending and borrowing. The same can be done on $AAVE with transaction fees on Polygon so low that you can hardly feel them.
Iterative lending and borrowing works this way:
1. You have 1000 DAI and lend it on Aave.
2. You borrow 75% of your deposit, i.e. 750 DAI.
3. You lend borrowed 750 DAI on Aave.
4. You borrow 75% of your deposit, i.e. 562.50 DAI.
5. Repeat multiple times.
Read 8 tweets
korpi Profile picture
17 Apr
@n2ckchong's great educational thread on Aave inspired me to write a #CryptoTwitterManual. This is a useful guidebook to help all the new market participants navigate the Crypto Twitter (CT) minefield and avoid getting rekt by fomo.
The #CryptoTwitterManual consists of the real tweets I captured from many CT influencers with the explanation what they really could have meant. Don't be under a delusion that influencers publicly share alpha for the benefit of their followers. Most of them don't.
Not all CT influencers are mindless shillers though. Some really do care for their followers and try to educate them, not only force them to buy shilled bags. Be mindful of this fact, learn from others but not necessarily immediately buy what they shill.
Read 14 tweets

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