Liquidity Pools typically have higher APR than single-sided yield through lending or staking.
But the risks are also much higher...
Here are the dangers of LP yield farming in a bear market π π§΅
But the risks are also much higher...
Here are the dangers of LP yield farming in a bear market π π§΅
1. Bear market LP yields are much lower.
This is because:
β’ reward tokens are 1/10 the price they used to be.
β’ trading volume β so trading fees also β
This is because:
β’ reward tokens are 1/10 the price they used to be.
β’ trading volume β so trading fees also β
3. High-APR LPs require you to hold riskier assets
Even large caps like BTC and ETH are bleeding terribly.
Everything else is getting absolutely destroyed.
Even large caps like BTC and ETH are bleeding terribly.
Everything else is getting absolutely destroyed.
Most alts underperform ETH even in bullish times.
In a bear market, alts may go down 80% just because ETH had a bad weekend.
And there aren't enough altcoin buyers with conviction to bring altcoin prices back up once they fall.
In a bear market, alts may go down 80% just because ETH had a bad weekend.
And there aren't enough altcoin buyers with conviction to bring altcoin prices back up once they fall.
https://twitter.com/shivsakhuja/status/1514067536056266755?s=20
4. Unwinding leverage can cause violent price swings.
This makes borrowing or leveraged strategies even riskier.
And it also increases your Impermanent Loss risk.
This makes borrowing or leveraged strategies even riskier.
And it also increases your Impermanent Loss risk.
5. The APR you're getting is not what you think it is
https://twitter.com/shivsakhuja/status/1503662894960967682?s=20
6. No more Ponzi yields
In a bull market, you can farm for yield even on ponzi farms.
But in the bear market, protocols are collapsing every day, and you don't want to have anything to do with the ponzi farms.
In a bull market, you can farm for yield even on ponzi farms.
But in the bear market, protocols are collapsing every day, and you don't want to have anything to do with the ponzi farms.
The bear market separates sustainable farms from unsustainable ones.
95% of DeFi yields are unsustainable.
I've written before about this.
95% of DeFi yields are unsustainable.
I've written before about this.
https://twitter.com/shivsakhuja/status/1530712622374342658?s=20
When the ponzis disappear, and you're only left with 5% APR, it's hard to get very excited.
But if you're still set on earning yield without as much risk...
Single-sided staking / lending strategies on reputable protocols is probably your best bet.
But if you're still set on earning yield without as much risk...
Single-sided staking / lending strategies on reputable protocols is probably your best bet.
If you're more adventurous, you can also try:
β’ Low or no IL yield farms (transient, usually not worth it)
β’ Option vaults (only if you understand them)
β’ Low or no IL yield farms (transient, usually not worth it)
β’ Option vaults (only if you understand them)
Adjust your strategies to fit the market conditions.
Personally, I'm finding the yield opportunities to be quite sparse right now, so I'm focused on building and protecting my downside, rather than trying to squeeze out an extra few %
Personally, I'm finding the yield opportunities to be quite sparse right now, so I'm focused on building and protecting my downside, rather than trying to squeeze out an extra few %
If you found this thread helpful, follow me @shivsakhuja for more.
Would also greatly appreciate β€οΈ / β»οΈ on the original post.
Would also greatly appreciate β€οΈ / β»οΈ on the original post.
https://twitter.com/shivsakhuja/status/1546381472222744577
I'm curious - what's your yield strategy for the bear?
β’ β’ β’
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