1.
Day 5/30 of @THORChain threads
Subject : Liquidity providing, using your assets to generate revenues
Day 5/30 of @THORChain threads
Subject : Liquidity providing, using your assets to generate revenues
2.
I will give a random @ThorGuards from my vault among everyone who retweets the first part of the thread.
I will give a random @ThorGuards from my vault among everyone who retweets the first part of the thread.
3.
Liquidity providing on @THORChain is a good way to put your assets to work and earn yield on them.
In the traditional world, the banks and financial services provider use your assets as collateral and generate extra yield on it.
Liquidity providing on @THORChain is a good way to put your assets to work and earn yield on them.
In the traditional world, the banks and financial services provider use your assets as collateral and generate extra yield on it.
4.
Example : The stock platform you are trading on likely loans your stock to short traders, generating interest and keeping it, in blatant conflict of interest. The borrower sell it on the market and creating negative pressure on the asset you hope accrues value.
Example : The stock platform you are trading on likely loans your stock to short traders, generating interest and keeping it, in blatant conflict of interest. The borrower sell it on the market and creating negative pressure on the asset you hope accrues value.
5.
In Thorchain's ecosystem, the liquidity provider is a first class citizen.
Big exchanges custody hundred billions in users deposits that could be generated to earn yield in smart contracts. Thorchain fixes that.
In Thorchain's ecosystem, the liquidity provider is a first class citizen.
Big exchanges custody hundred billions in users deposits that could be generated to earn yield in smart contracts. Thorchain fixes that.
6.
DEFI allows you to cut the middleman and generate yield from your assets
Another advantage : you trust code instead of human beings
There is a history of wrongdoing with crypto custodians.
Thorchain fixes this by creating an overcollateralized decentralized node network
DEFI allows you to cut the middleman and generate yield from your assets
Another advantage : you trust code instead of human beings
There is a history of wrongdoing with crypto custodians.
Thorchain fixes this by creating an overcollateralized decentralized node network
7.
In this case, depositing your liquidity in Thorchain allows you to collect trading fees and protocol emissions.
Exchanges are collectively valued at 100s of billions, mainly from generating theses fees. Thorchain redistributes them to users.
In this case, depositing your liquidity in Thorchain allows you to collect trading fees and protocol emissions.
Exchanges are collectively valued at 100s of billions, mainly from generating theses fees. Thorchain redistributes them to users.
8.
Providing liquidity on @THORChain is quite easy.
You can do it on one of the interfaces.
Here are a list of them :
I suggest @THORSwap because they have accessible Discord 1/1 support.
Providing liquidity on @THORChain is quite easy.
You can do it on one of the interfaces.
Here are a list of them :
https://twitter.com/THORmaximalist/status/1505266607274266628?s=20&t=dwlcmNZ4Q5wKWXygYppnfQ
I suggest @THORSwap because they have accessible Discord 1/1 support.
9.
You can enter the pool 50-50 or with one asset.
When adding liquidity to @THORChain, your position is always held 50-50 between $rune and your preferred assets. Single sides deposits are rebalanced under the hood
One exception is synths, they are not yield bearing yet.
You can enter the pool 50-50 or with one asset.
When adding liquidity to @THORChain, your position is always held 50-50 between $rune and your preferred assets. Single sides deposits are rebalanced under the hood
One exception is synths, they are not yield bearing yet.
10.
If you deposit 1 $btc in the liquidity pool, 0.5 $btc is automatically "sold" to buy $rune. You now hold 50-50.
$rune as a liquidity pair is necessary as it secures the whole network and keeps it over collateralized. A thread will be published about the security design.
If you deposit 1 $btc in the liquidity pool, 0.5 $btc is automatically "sold" to buy $rune. You now hold 50-50.
$rune as a liquidity pair is necessary as it secures the whole network and keeps it over collateralized. A thread will be published about the security design.
11.
Your LP position is represented as percentage of pool share.
Yield and emissions are directly deposited in the liquidity pools, users get an equal share based on their pool ownership.
Your LP position is represented as percentage of pool share.
Yield and emissions are directly deposited in the liquidity pools, users get an equal share based on their pool ownership.
12.
In most jurisdictions, LP deposits are a non taxable event.
You can deposit single side and withdraw single side. Your asset is your asset.
- There is no sales or buying, only deposits
- There are no deposit tokens, you are trading one asset for another.
In most jurisdictions, LP deposits are a non taxable event.
You can deposit single side and withdraw single side. Your asset is your asset.
- There is no sales or buying, only deposits
- There are no deposit tokens, you are trading one asset for another.
13.
You are only realizing your gain at the moment you redeem it, only at that point you might incur a gain or loss taxable event.
ThorFI will allow you to borrow against your yield generating asset soon, creating "self repaying loans".
Borrowing is a non taxable event.
You are only realizing your gain at the moment you redeem it, only at that point you might incur a gain or loss taxable event.
ThorFI will allow you to borrow against your yield generating asset soon, creating "self repaying loans".
Borrowing is a non taxable event.
14.
The yield is currently generated in 3 ways :
- Transaction fees
- Slippage fees : The slippage fee is based on the size of the swap relative to the depth of the pool. A proportion of each slip allocated to liquidity providers yield.
The yield is currently generated in 3 ways :
- Transaction fees
- Slippage fees : The slippage fee is based on the size of the swap relative to the depth of the pool. A proportion of each slip allocated to liquidity providers yield.
15.
- Emissions : The numbers of emission is based on 2 variables, the incentive pendulum and emissions rate.
Current emission rate is reserve / 8 years.
A high level of speculative multiplier on $rune leads to a higher APY.
- Emissions : The numbers of emission is based on 2 variables, the incentive pendulum and emissions rate.
Current emission rate is reserve / 8 years.
A high level of speculative multiplier on $rune leads to a higher APY.
16.
The addition of ThorFI later this year will benefit liquidity providers and generate higher yield for them.
LPs will capture a bigger proportion of fees generated from ThorFI assets used outside of the ecosystem.
eg synth $btc on IBC
The addition of ThorFI later this year will benefit liquidity providers and generate higher yield for them.
LPs will capture a bigger proportion of fees generated from ThorFI assets used outside of the ecosystem.
eg synth $btc on IBC
17.
Here are some current APYs as of writing this :
$btc : 23%
$eth : 25%
$busd : 83%
$bnb : 47%
$usdc : 39%
$usdt : 48%
Here are some current APYs as of writing this :
$btc : 23%
$eth : 25%
$busd : 83%
$bnb : 47%
$usdc : 39%
$usdt : 48%
18.
Incentive pendulum
The ratio of fees and emissions is split between node operators and liquidity providers. It varies based on collateral vs liquidity ratio.
@Bitcoin_Sage explains it :
medium.com/thorchain/the-…
Incentive pendulum
The ratio of fees and emissions is split between node operators and liquidity providers. It varies based on collateral vs liquidity ratio.
@Bitcoin_Sage explains it :
medium.com/thorchain/the-…
19.
Impermanent losses protection is very simple :
At deposit, the system notes of the two-sided value of what you would get, if you redeemed immediately, 50% $rune / 50% preferred asset.
It doesn't matter if you deposit symmetrically or asymmetrically.
Impermanent losses protection is very simple :
At deposit, the system notes of the two-sided value of what you would get, if you redeemed immediately, 50% $rune / 50% preferred asset.
It doesn't matter if you deposit symmetrically or asymmetrically.
20.
The protection grows 1% a day until full protection is reached after 100 days.
Additional withdrawals and deposits reset this protection to day 1.
This means that if you LP 50/50, you will withdraw at least the same amount of tokens you put in.
The protection grows 1% a day until full protection is reached after 100 days.
Additional withdrawals and deposits reset this protection to day 1.
This means that if you LP 50/50, you will withdraw at least the same amount of tokens you put in.
21.
Example if you LP 100% in one token :
If the value of $rune to $thor ratio is 5:1
You deposit 100 $rune, you are guaranteed to withdraw minimum 50 $rune $250 $thor after 100 days.
Example if you LP 100% in one token :
If the value of $rune to $thor ratio is 5:1
You deposit 100 $rune, you are guaranteed to withdraw minimum 50 $rune $250 $thor after 100 days.
22.
There is never any bullish forms of impermanent losses, it can never be beneficial for the LP and eats into your profits.
@THORChain so far has been efficient at creating enough yield to cover impermanent losses without needed protection.
There is never any bullish forms of impermanent losses, it can never be beneficial for the LP and eats into your profits.
@THORChain so far has been efficient at creating enough yield to cover impermanent losses without needed protection.
23.
This system could be under stress when $rune price is depressed but has passed the hacking and stoping of the network with flying colours :
The sum total paid out so far is equivalent to 5 days of block rewards.
The maths add up, it's sustainable for years.
This system could be under stress when $rune price is depressed but has passed the hacking and stoping of the network with flying colours :
The sum total paid out so far is equivalent to 5 days of block rewards.
The maths add up, it's sustainable for years.
24.
If you need support in your journey as a liquidity provider, you can go on @THORChainLPU's Discord. They have learning material and 1/1 support.
@THORSwap also offers very good 1/1 technical support for the interface usage in their Discord, reach out if you have questions.
If you need support in your journey as a liquidity provider, you can go on @THORChainLPU's Discord. They have learning material and 1/1 support.
@THORSwap also offers very good 1/1 technical support for the interface usage in their Discord, reach out if you have questions.
25.
You can always visualize your returns on the @THORYieldApp website or app. The version 2.0 was released yesterday, on time for the $luna integration.
V1 used to be quite buggy, but the @THORSwap team worked very hard with the Midguard engineers to make this work.
You can always visualize your returns on the @THORYieldApp website or app. The version 2.0 was released yesterday, on time for the $luna integration.
V1 used to be quite buggy, but the @THORSwap team worked very hard with the Midguard engineers to make this work.
@THORYieldApp @THORSwap 26.
If you have any questions, feel free to ask them I will try to answer all of them.
If you like my content, please delegate to my 0 fees $luna node :)
For more threads about @Thorchain and $rune, click here : linktr.ee/thormaximalist
If you have any questions, feel free to ask them I will try to answer all of them.
If you like my content, please delegate to my 0 fees $luna node :)
For more threads about @Thorchain and $rune, click here : linktr.ee/thormaximalist
@THORYieldApp @THORSwap @THORChain 27.
One more thing :
People are promoting complex strategies with symmetrical and asymmetrical entries that are based on miss-conceptions about the impermanent loss protection.
Impermanent loss protection is always 50-50 on both assets.
One more thing :
People are promoting complex strategies with symmetrical and asymmetrical entries that are based on miss-conceptions about the impermanent loss protection.
Impermanent loss protection is always 50-50 on both assets.
@THORYieldApp @THORSwap @THORChain 28.
I suggest not to overthink it with this one.
Entering a pool asymmetrically creates slippage, as the assets are rebalanced. Pools with deeper assets will have less slippage, so it's often beneficial to buy $rune in the $btc liquidity pool and deposit 50-50.
I suggest not to overthink it with this one.
Entering a pool asymmetrically creates slippage, as the assets are rebalanced. Pools with deeper assets will have less slippage, so it's often beneficial to buy $rune in the $btc liquidity pool and deposit 50-50.
@THORYieldApp @THORSwap @THORChain 29.
There's no genius economic advantages.
You're always long both assets in the liquidity pool and exposed to their price action on a 50%-50% basis.
I believe teaching theses complex strategies has been counter productive and made everything more complicated for users.
There's no genius economic advantages.
You're always long both assets in the liquidity pool and exposed to their price action on a 50%-50% basis.
I believe teaching theses complex strategies has been counter productive and made everything more complicated for users.
30.
One of the biggest problem with liquidity providing is the impermanent losses eating into your yield.
IPLs are a bit complex to understand.
Thorchain kinda solves it for users in two ways : with this protection and with the upcoming synths + thorsavings.
One of the biggest problem with liquidity providing is the impermanent losses eating into your yield.
IPLs are a bit complex to understand.
Thorchain kinda solves it for users in two ways : with this protection and with the upcoming synths + thorsavings.
31.
I don't know how to explain ILPs easily but I'l try in a tweet :
If both assets start at 1-1 ratio and one goes up in value 500% while the other stays the same (1-5 ratio), IPLs will be 20% of your tokens of your winning side. This is value taken out by arbitrage bots.
I don't know how to explain ILPs easily but I'l try in a tweet :
If both assets start at 1-1 ratio and one goes up in value 500% while the other stays the same (1-5 ratio), IPLs will be 20% of your tokens of your winning side. This is value taken out by arbitrage bots.
32.
They are impermanent: if the value of both tokens regain the same ratio, you do not suffer any losses.
While you are protected from downsides, they can still eat into your yield & profits.
Here is a video explaining them :
They are impermanent: if the value of both tokens regain the same ratio, you do not suffer any losses.
While you are protected from downsides, they can still eat into your yield & profits.
Here is a video explaining them :
33.
The easiest way to think about profits is the different if you just held the assets versus having them in the pool. @THORYieldApp shows you that clearly in form of the HODL vs LP metric.
If it's in minus, the impermanent loss will cover that.
The easiest way to think about profits is the different if you just held the assets versus having them in the pool. @THORYieldApp shows you that clearly in form of the HODL vs LP metric.
If it's in minus, the impermanent loss will cover that.
I just want to correct a mistake I made :
partial withdrawals does not reset impermanent loss protection.
partial withdrawals does not reset impermanent loss protection.
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