Thread by @rektdiomedes

Thread: How Should A Humble Farmer Navigate Risk-Off Mode?

So with the market getting beat like a red-headed stepchild and @CryptoHayes going all @DoombergT on us... the question of "risk-off" is front and center, even for us humble yield farmers...

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To wit, it was the distinguished @TaikiMaeda2 that popularized the "humble farmer" archetype, back in the 13th year of our Lord Satoshi (aka 2021), and I think its a great heuristic.

The idea... (cont)..

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...is that we can't know for certain which assets are going to go up, what side of the coffin Jerome Powell will wake up on today, what the crazies in DC will screw up next, etc.

We can however control our YIELD FARMING.

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As I mentioned yesterday, huge VC funds are incentivized to pour billions into competing for L1 domination, and we can make good money just by providing liquidity to their L1 attempts and earning extremely high apr's.

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Not that I think that is the only source of yield in crypto- the utter efficiency also provides for it as well.

If TradFi could get rid of all the mindless paper-pushers and angry HR ladies they could probably pay double digit dividends too.

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But, the question is, if the Fed fears voters being angry over inflation right now and is determined to raise rates/print less, we'll presumably have an equities crash, and crypto could follow (as our good friends like @cobie always remind us :) ).

So, what do we do?

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Thoughts:

One: As @LukeGromen has been so eloquently pointing out, the gov HAS to keep printing $.

Social security, Medicare, and debt interest already = 110% of tax revenue, with more Boomers retiring every day.

They'll never default on those programs and thus...

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..they have no choice but to keep printing... as the stock market drives tax revenue... so any pivot from dovishness is only temporary as long as our debt/gdp ratio is sky-high.

(+ do we really think Nancy is going to let her bull calls expire worthless? I don't think so)

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But trying to time this stuff is hard... extremely hard...

Two: There are still good assets that do well even while market trending bera...

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As @noahseidman always states, assets built on cashflow that pay you to hold them are positioned to do extremely well in deflationary impulses, at least on a relative basis...

And that's what we're seeing with $CRV, $CVX, $DOPEX, $LQDR, $JEWEL, etc.

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Three: The logical idea would be to switch to farming more stables.

I've been doing this myself, however, I would suggest a contrarian take on this position as well...

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This would be the idea that the biggest risks in crypto are from exploits, wallet security, rugs, etc... and that I would rather earn 16% in non-crypto assets than 20% in stablecoins, if I have that choice. (yes... I know... x,y,z counter-points... is just an observation)

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Especially with the USD being debased by 12-20% per year (in Fed Balance Sheet terms, h/t @RaoulGMI), farming stables at 20% isn't that attractive (although still wonderful compared to tradfi yields obviously)...

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Four: As a result, I would argue that farming Stable/Volatile pairs may be the best option from a pure farming standpoint, as they tend to have apr's closer to Volatile/Volatile pairs vs Stable/Stable pairs.

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...ie instead of x dollars in USDC/UST earning 20% and the same amount in AVAX/SPELL earning 160%, I'd rather have AVAX/USDC and SPELL/UST earning 90% each... which still mutes volatility downward (though also upward of course)...

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Five: Finally, I would also reference the fat that high apr's compound to extraordinary amounts, and if you are truly doing dedicated full-time yield farming and earning great returns, you can out earn a whole lot of market decline.

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The average crypto participant has $BTC and $DOGE sitting on Coinbase earning 0%...

While the 1% of crypto who is actively yield farming can earn extraordinary returns purely from the nature of compounding...

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As our favorite gigabrain farmer @Cryptoyieldinfo often points out, 1% per day compounded equals 3800% returns per year.

Conclusion: I certainly don't claim to know what the right answer is, but wanted to put out some thoughts on it...

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...would love to hear any feedback, and if you found this interesting plz rt and follow :)

Also... don't discount delta-neutral strategies a'la @Route2FI and @phtevenstrong, and brilliant smallcap Fantom plays a'la @rektfoodfarmer and @Prof_Crypto_B!

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Oh and then h/t to @hkuppy re: the Nancy Pelosi reference above lol...

Can't find his tweet but re this:

nypost.com/2021/12/30/nan…

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TL/DR on above... I think yield farming is a once in a lifetime opportunity and I intend on going hard at it no matter what happens to the market... just trying to get right mix of positions to weather volatility, gov idiocy, asset value deflation, and impermanent loss :)

End/

Additional: Got asked about finding good tradi yield/investments...

Rec's: Jamie Keech/Resource Insider, the aforementioned @hkuppy, my man @radigancarter and @LynAldenContact for macro outlooks, and all the Mobile Home Park/Storage bro's here on Twitter.

And then for more info on yield farming also check out my man @Ceazor7 ... all the aforementioned dudes above... + @blocmatesdotcom, @FarmerBrownDeFi, @beefyfinance, @LiquidDriver, @takegreenpill, @technovikingeth, & @BillyBobBaghold...