Thread by @shivsakhuja

Here’s a DeFi strategy to stack more $LUNA

Low risk if you play it right.

I previously explained how to use @TeamKujira’s Orca protocol to get crypto at cheaper-than-market prices.

In this thread, I explain how you can loop that process to amplify your returns 🧵 👇

1/ For reference, here's the thread on how you can get cheap crypto using Kujira's Orca protocol:

https://twitter.com/shivsakhuja/status/1468635649473331206?s=20

Keep reading for the looping strategy that can boost your $LUNA stack.. ➿

2/ Here are the steps:

1. Bond $LUNA for bLUNA on @anchor_protocol

2. Deposit bLUNA as collateral on Anchor

3. Borrow $UST from Anchor (***)

4. Use borrowed $UST to snipe cheap $bLUNA on Orca

5. Withdraw bLUNA from Orca, and repeat steps 2-4 to increase your LUNA stack.

3/

*** Make sure your LTV is sufficiently low. I keep it at < 20-25%.

The amount of risk you choose to take is up to you, but don’t get too greedy, or you’ll be the one getting liquidated as we scoop up your crypto for cheap on Kujira.

See the LTV math below...

4/ At 60% LTV, your collateral can be liquidated ☠️

- At 20% LTV, bLUNA needs to fall by ~67%

- At 30% LTV, bLUNA needs to fall by ~50%

- At 40% LTV, bLUNA needs to fall by ~33%

- At 50% LTV, bLUNA needs to fall by ~16%

I would not go higher than 20-30% MAX.

5/ Here’s an example of how the liquidation math works:

Say you deposit $100 worth of bLUNA, and borrow $30 of $UST (30% LTV)

Now bLUNA falls by 50%, so you have $50 of bLUNA and $30 of borrowed UST ==> 60% LTV.

So, at a 50% drop in the price of LUNA, you could get liquidated.

6/ Remember, there are also other risks like bad price feeds from Oracles.

https://twitter.com/shivsakhuja/status/1469148127437287424?s=20

7/ If you don’t want to lose your hard earned crypto to liquidations:

– Keep your LTV very low

– Borrow only small amounts relative to your portfolio size.

Leverage can beef up your returns but it can just as easily wreck you.

Don’t get greedy. ygmi.

#WAGMI