DeFi Q&A #5
Q. Could you explain yields for pegged assets like FTM-TOMB, LUNA-bLuna, etc, ideally with a worthwhile APR.
A. When you provide liquidity to a pegged pair, there is theoretically no impermanent loss risk (typically, one of the main risks with LP strategies)
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Q. Could you explain yields for pegged assets like FTM-TOMB, LUNA-bLuna, etc, ideally with a worthwhile APR.
A. When you provide liquidity to a pegged pair, there is theoretically no impermanent loss risk (typically, one of the main risks with LP strategies)
[1/x]
3/
Since IL depends on the relative price movements between 2 assets, it should be negligible for a pegged pair.
Typically this means yields for pegged pairs, like $ETH - $WETH, $LUNA - $bLUNA are not super high, since it's a low risk liquidity pool.
Since IL depends on the relative price movements between 2 assets, it should be negligible for a pegged pair.
Typically this means yields for pegged pairs, like $ETH - $WETH, $LUNA - $bLUNA are not super high, since it's a low risk liquidity pool.
4/
However, if the peg is risky, then yields can be significantly higher as well.
For example, $TOMB - $FTM pays > 200% APY.
However, the @tombfinance peg is not without risk.
I outlined risks with the $TOMB - $FTM strategy is a previous Q&A post:
However, if the peg is risky, then yields can be significantly higher as well.
For example, $TOMB - $FTM pays > 200% APY.
However, the @tombfinance peg is not without risk.
I outlined risks with the $TOMB - $FTM strategy is a previous Q&A post:
https://twitter.com/shivsakhuja/status/1484361529713573893?s=20
5/
Typically, the safer the peg, the lower the APR you will receive on the LP.
Remember that if the pegged token goes to 0, so does your entire LP position.
So these pools are not exactly risk free, though they do shield you from IL if the peg holds.
Typically, the safer the peg, the lower the APR you will receive on the LP.
Remember that if the pegged token goes to 0, so does your entire LP position.
So these pools are not exactly risk free, though they do shield you from IL if the peg holds.
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