@prism_protocol - strategies 101
S02E06 - Auto-compounding with @ApolloDAO and @SpecProtocol
π§΅π
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S02E06 - Auto-compounding with @ApolloDAO and @SpecProtocol
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Auto-compounding at @ApolloDAO and @SpecProtocol is simple:
β‘ You deposit a yield-bearing token (e.g. LP)
β‘ Yield is collected and protocol fee deducted
β‘ With remaining yield more tokens are bought, paired and staked back into LP
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β‘ You deposit a yield-bearing token (e.g. LP)
β‘ Yield is collected and protocol fee deducted
β‘ With remaining yield more tokens are bought, paired and staked back into LP
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That's how APR (no compounding) is turned into APY (regular compounding, e.g. daily). Could be quite a difference, especially with higher APRs and with hourly compounding of @ApolloDAO / @SpecProtocol.
BTW, here is a tool to convert APR<->APY:
aprtoapy.com
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BTW, here is a tool to convert APR<->APY:
aprtoapy.com
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Another feature available on @ApolloDAO is the Farmer's market.
Yield from your tokens is used to buy a new/launching token at a predetermined price.
Only @angelprotocol launched this way. I have a feeling though we will see more...
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Yield from your tokens is used to buy a new/launching token at a predetermined price.
Only @angelprotocol launched this way. I have a feeling though we will see more...
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What's common across all of the above is that only yield is used and the core (principal) of any deposited token is not used in any way.
That's a bit of waste if you ask me, but for now there is nothing we can do about it.
I smell opportunity to improve on that.
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That's a bit of waste if you ask me, but for now there is nothing we can do about it.
I smell opportunity to improve on that.
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Enter: @prism_protocol
Prism can split any yield bearing tokens - LP, liquid pylon pool, staked tokens - into their yield-barding part (YT = yield token) and principal part (PT = principal token).
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Prism can split any yield bearing tokens - LP, liquid pylon pool, staked tokens - into their yield-barding part (YT = yield token) and principal part (PT = principal token).
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With this, I can see 2 new auto-compounding implementations possible:
1οΈβ£ Provide YT and buy YT only
2οΈβ£ Provide YT and buy both YT and PT
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1οΈβ£ Provide YT and buy YT only
2οΈβ£ Provide YT and buy both YT and PT
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1οΈβ£ Provide YT and buy YT only
Capital efficiency! With the same amount of $UST you can buy more YTs, each giving same yield as the original token.
More YTs = more yield = better auto-compound.
Your yield ($-amount) can ramp up quite quickly, provided APR does not fall...
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Capital efficiency! With the same amount of $UST you can buy more YTs, each giving same yield as the original token.
More YTs = more yield = better auto-compound.
Your yield ($-amount) can ramp up quite quickly, provided APR does not fall...
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2οΈβ£ Provide YT and buy both YT and PTΒ
Still more efficient than providing whole tokens - you can by more YTs with the same amount of $UST.
This time, yield would be used to buy both YTs and PTs. YTs would be auto-compounded, while PTs - ready for claiming anytime.
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Still more efficient than providing whole tokens - you can by more YTs with the same amount of $UST.
This time, yield would be used to buy both YTs and PTs. YTs would be auto-compounded, while PTs - ready for claiming anytime.
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There are a couple of reasons (risk-management-related) to possibly do that:
β‘ When APR falls, YT falls too, but PT increases. Having some PTs as well will hedge the risk of APR falling to an extent.
β‘ Using PTs elsewhere is a way to diversify your investment strategy.
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β‘ When APR falls, YT falls too, but PT increases. Having some PTs as well will hedge the risk of APR falling to an extent.
β‘ Using PTs elsewhere is a way to diversify your investment strategy.
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Some ideas for PT use:
π‘ Lend against it - waiting for @mars_protocol
π‘ Put it on AMM (@astroport_fi, @loop_finance, @terraswap_io) once they offer PT - $UST or better yet: PT - $aUST pairs.
π‘ Pair it with UST and use to buy token bonds ( @OlympusDAO style).
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π‘ Lend against it - waiting for @mars_protocol
π‘ Put it on AMM (@astroport_fi, @loop_finance, @terraswap_io) once they offer PT - $UST or better yet: PT - $aUST pairs.
π‘ Pair it with UST and use to buy token bonds ( @OlympusDAO style).
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Some examples of protocols on their way to Protocol-owned liquidity (PoL) and bonding mechanisms:
$MINE from @pylon_protocol
$WHALE from @WhiteWhaleTerra
$PSI from @NexusProtocol
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$MINE from @pylon_protocol
$WHALE from @WhiteWhaleTerra
$PSI from @NexusProtocol
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As you can see not much of the above would be possible without Prism.
Yet another reason to be excited about it launching soon!
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Yet another reason to be excited about it launching soon!
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I enjoy writing these threads. If you enjoy reading them, please hit the like button and RT the first tweet so more people can have fun. π
Next up:
S02E07 - Keep/use collateral airdrops at @anchor_protocol
Full list of episodes:
/14-end
Next up:
S02E07 - Keep/use collateral airdrops at @anchor_protocol
Full list of episodes:
https://twitter.com/AgilePatryk/status/1448951059402137611
/14-end
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