Thread by @the_smart_ape

How you can do 35.97% APY without being exposed to any coin volatility? 🔥

I show you how you can do this simply with a long/short strategy.

Level: Intermediate 🔰
Reading time: 3 minutes 📚
THREAD 🧵

#DEFI provides access to many opportunities and new ones appear every day.

In this THREAD I show you how you can make 36% APY without exposing yourself using a long-short strategy.

The strategy is based on the $AVAX token.

You will not be exposed to the price variation of this token, exposure is long but also short.

If the price increases your long position compensates for the losses of the short and if the price falls it is the opposite.

But how do you get to 36% APY?

To arrive at 36% APY we combine the return of our long position and the return of the short position.

Let's take a closer look at these two positions.

Long position:

The long position will be on @CIAN_protocol, CIAN is an open automation platform that allows you to easily compose and automate your blockchain tasks utilizing extensive automation tools.

We will use here an automated strategy based on $AVAX / $SAVAX.

By depositing your $AVAX, the protocol will loop to:
1 – Buy $SAVAX (7% APY)
2 – Lend $SAVAX
3 – Borrow $AVAX
4 – Repeat from 1

You can do it manually!

@CIAN_protocol just allows it to be done automatically.

This long position averages 25% APY as seen on @CIAN_protocol app.

The risk of liquidation is practically zero because the price of $SAVAX and $AVAX are correlated, they move in phase.

Short position:

The short position consists of betting short on @binance to compensate for the long position.

Doing this also generates a return called the Funding Rate!

The funding rate is a mechanism used in perpetual future contracts to maintain the price of the contract relative to the underlying asset.

Traders who are long pay a fee to short traders.

But how much do they pay?

This information is available on @Binance, for the AVAX/USDT pair the funding rate is on average 0.01% (including the interest rates paid by the trader on @binance). This amount is paid every 8 hours, which is 0.03% per day and therefore 10.95% per year

By combining the two positions, we arrive at 25 + 10.95 = 35.95% APY, which is rather interesting for a balanced strategy where we are not exposed to volatility.

Risks:

As with any investment, there are risks and it is important to understand them before jumping headlong.

1 – Smart contract risk on @CIAN_protocol
2 – Risk of depeg $AVAX / $SAVAX
3 – @binance CEX Solvency Risk

These risks are in my opinion quite low and there is little chance of occurring, but it is up to you to judge whether the risk is worth it given the returns offered.

If you like this kind of strategy, I invite you to follow @phtevenstrong who master this kind of strategy

Mention some interesting CTs:
@Crypt0Ricard0
@dazai_0x
@crypto_linn
@0xUnbased
@cryptocrushmia
@coinwithstereo
@ardizor
@nixnox_eth
@UtilityChad
@Donnadelcrypto
@GiuoNFT
@FarmerTuHao
@ayyyeandy

Tagging these gigachads who’s retweet would help engagements
@defi_mochi
@CryptoShiro_
@rektdiomedes
@Flowslikeosmo
@0xSalazar
@Deebs_DeFi
@DeFiMinty
@Slappjakke
@crypto_linn
@TheDeFISaint
@DeFi_Made_Here
@Louround_
@0xsurferboy
@CryptoKoryo
@WinterSoldierxz
@Chinchillah_

I hope you enjoyed it, don't hesitate to let me know in the comments, without forgetting to like and RT the first tweet of the thread!

Stay safe and learn 💪
#Cryptocurency #blockchain #THREADOR #staking #RealYield #DEFI #CEX #AVAX #Binance

https://twitter.com/the_smart_ape/status/1643281476669038593?s=20