Thread by @Crypto04196713

1/ A contribution to @egld_initiative.

xExchange 2.0 has been announced and along with that, a new MEX 2.0 tokenomic! Members from #ElrondCommunity quickly jumped on it and we now have many threads discussing the history, overview, and details of xExchange and a new $LKMEX 2.0.

2/ For the OGs of xExchange 1.0, many have been yield-farming since day one and are now holding a huge bag of $LKMEX 1.0. Some new folks seeing the great 2.5x factor when swapping $MEX for $LKMEX have also grabbed a sizeable stash.

3/ $LKMEX 2.0 will will be released on Dec 8 and if you are holding a decent bag of $LKMEX 1.0 you have some decisions to make...should you convert to $LKMEX 2.0? How much energy should you charge your $LKMEX 2.0 battery? Is it all worth it?

4/ And if you are lucky to have a very large bag, you may think locking that much $LKMEX for 4 years may be too risky for you. Well, this is where we can learn something from TradFi...called CD Laddering!

5/ In TradFi, there is a yield instrument called CD (Certificates of Deposits). Essentially you deposit your money into a bank for a specific amount of time to lock in to a fixed interest rate. The longer you deposit, the higher the fixed interest rate.

6/ If you withdraw early, you pay an early withdrawal fee. Sounds familiar, huh?

Well, it may not a good idea to make one big deposit into a CD because that's a lot of money being locked up for a long time. You may need it earlier or interest rate may rise and you miss out.

7/ So a strategy to use is CD laddering where you spread your money out in sequential time periods so that when one period ends, your money is return to you and you can use it. If you don't need it, then you can create a new CD at the fixed interest rate at that time.

8/ Lets see how laddering would work for $LKMEX.

$LKMEX 2.0 allows charging of the battery using 3 durations: 1 year, 2 years and 4 years.

Assume we have 90,000,000 $LKMEX. We divide our 90M $LKMEX into 3 batteries of 30M each and charge them using the 3 durations allowed.

9/ Our batteries would look as follows:
Batt. A: 30M charge for 1 year
Batt. B: 30M charge for 2 years
Batt. C: 30M charge for 4 years

After year 1, Battery A will be convertible into $MEX. If we need liquidity, then we can use it. Otherwise, we recharge it for 4 more years.

10/ Lets recharge it for 4 more years. Our three batteries now look like this...
Batt. B: 30M charge remaining 1 year
Batt. C: 30M charge remaining 3 years
Batt. A: 30M charge remaining 4 years

After year 2, Battery B will be convertible into $MEX. Lets recharge 4 more yrs.

11/ And now we get the following setup...
Batt. C: 30M charge remaining 2 years
Batt. A: 30M charge remaining 3 years
Batt. B: 30M charge remaining 4 years

12/ Because $LKMEX 2.0 doesn't have a 3 year option, we are left no depleted battery to recharge in year 3! So now, we have this situation:
Batt. C: 30M charge remaining 1 years
Batt. A: 30M charge remaining 2 years
Batt. B: 30M charge remaining 3 years

13/ But since we have been farming the $LKMEX, we could use the farmed $LKMEX for charging up another battery.

Assume we have another 15M of $LKMEX from our farming activities, we can now charge another battery for 4 years...

14/ Which will give us 4 batteries...
Batt. C: 30M charge remaining 1 year
Batt. A: 30M charge remaining 2 years
Batt. B: 30M charge remaining 3 years
Batt. D: 15M charge remaining 4 years

15/ Now, we have 4 $LKMEX batteries that are charged in series giving us annual convertible $LKMEX every year. We have the option to use it w/o paying removal fees or keep recharging at max level of 4 years!

16/ I hope @ElrondNetwork will consider adding a 3 years charging option so we can set up a 4-yr $LKMEX ladder!

I hope you find this information useful and thank you for reading! 🙏⚡️

#ElrondInitiative

17/ Update...
You may set up each battery size differently for your situation...i.e. set up smaller size battery for 1st yr, medium size for year 2, and large size for year 4 to maximize benefits.

Or you can reverse it where the larger battery is charged with 1 year and so on.

18/ Also keep in mind that while these battery are charged up and depletes as time progresses, we are earning more $LKMEX.

If we need liquidity, we can simply discharge them early while leaving our core batteries untouched and keep recharging them to get residual income!

19/ The description of recharging battery states...
"To regain benefits from your LKMEX, you can increase its energy up to 1 year, 2 years or 4 years of energy."

Perhaps we can create a 3yr battery by charging a battery for 2 years, and then recharging that for 1 year.