LEVERAGE. ⚔️

It's a powerful thing that can be used to create generational wealth.

But MOST of the time it leads to liquidation emails.

How can we remain leveraged long whilst minimising this risk?

Some thoughts below... 📍The Liquidation Problem

Of the $2.4bn of deposits onto Hyperliquid, guess what total notional has been liquidated? (hint: image)

Basically, traders are losing their margin AND their unrealised gains.

How can we keep our gains when you have the right view?

Here's a statistical approach for thinking about pair trading ✍️

This framework might help you no matter what your strategy is.

Let's take a deeper look at $ARB / $LDO, and how you might profit from this... There are 2 ways of pair trading:

1) Narrative based
2) Statistical Arbitrage

Most trades on Pear Protocol are narrative trades i.e. you build a story why Asset A will outperform Asset B (in any market condition) and enter a long/short pos.

Here we'll focus on 2) Stat-Arb

wtf does this mean? and will it impact the price of $BTC?

some thoughts below...

https://twitter.com/EricBalchunas/status/1725559994995573086

1. If you, as a retail buyer want to buy $IBTC (the iShares spot bitcoin ETF), then you'd go to your broker/online platform and swap your $ for shares in the ETF. The broker would go and buy the shares on the exchange (Nasdaq) on your behalf. Easy.

These are the key dates and timeline for the BlackRock Spot Bitcoin ETF

This is how I'm positioning over the coming weeks... Recap: Grayscale sued the SEC last yr for not letting them convert GBTC to a spot ETF

The court decision is due out any time in the next few wks/months (the clock is ticking) and paves the way for a potential spot ETF *if* successful

BlackRock filing now is NOT a coincidence.

People don't really understand what Blackrock is, or what they do.

So let's go inside... But first a little about their founder and CEO Larry Fink, since it will be important later

Bull and Bear Scenarios (in fictional quotes):

🐂

"SVB depositors will be made whole" - FDIC/Treasury

"We have received the full $3.3bn" - Circle

"Due to recent events in the banking sector, we felt it was prudent to postpone this month's planned rate hike to April" - Fed 🐻

"50% 'advanced dividend' for uninsured depositors, rest later" - FDIC

"People were trading USDC in anticipation of profits, and thus it's a security" - Gary Gensler

"They are bailing out Big Tech and Silicon Valley with your money!" - Donald Trump

"Long" - Jim Cramer

Jamie Dimon's tradeoffs? (or any other major bank CEO)

+ve: buy SVB, apply discounts to the assets, limit withdrawals upon re-opening, perhaps bail-"IN" depositors (everyone takes a little %hit), get trading desk to make money managing the longer duration stuff +ve: agree with Fed that rates will be capped so that they can slowly unwind the longer duration book and/or agree with Treasury/Fed to buy those assets from them directly

so many bad takes here on CT.

- Circle foolishly put 8.25% of its USD reserves ($3.3bn/$40b) in a niche bank

- now Circle don't have access to those funds as SBV is technically "insolvent"

- i.e. SBV don't have enough cash or assets on hand to honor all requests for USD - On Monday the insured portion of SBV deposits will be available to depositors (up to $250k)

- For the rest, you have a few options:

1. A big bank buys out SBV and assumes the liabilities (needs to be soon)

OR

We pioneered the "FaaS" concept in DeFi.

The Reimagined Finance (ReFi) project was valued at >$100mm market cap for a number of weeks in 2022.

So what happened to $REFI and why did the project close down?

A thread..🧵 In Dec 2021 there was a lot of yield to be captured in DeFi - think back to OHM forks on Avalanche, incentivized pools on Fantom, and the launch of the first systematic call overwriting vaults on $ETH.

Heck, at 20% APY, Anchor was considered the "benchmark yield".

We've been buying $DEUS and will continue to do so. Here's why..🧵 There is quite clearly a narrative shift away from Centralised Exchange (CEX) trading to Decentralised Exchanges (DEX).

i.e. #NYKNYC

You might have seen people using Open Interest, CVD, and Predicted Funding rates to help inform a trading position. 📈 💻📉

So what exactly is this stuff? and how can you set it up yourself for free? But first, a real-time example from 15th September when we shorted $ATOM at $15.22

Here's the thesis we wrote out to short $ATOM.

What were these "few other indicators"?

One line shoutouts to all the builders in DeFi that I've connected with in the past 48 hours..

1. @millercwl from @fund_defi

> educates congress, writes written responses to regulatory developments, gives grants out to DeFi teams cracking the regulatory puzzle. 2. @zhangwins from @cega_fi

> leaves his YC-backed awesome lifestyle in SF, learns everything about financial derivatives, then builds out an exotic options protocol

We passed on this bond issuance below but still awesome to see @ribbonfinance issuing convertible bonds on Eth Mainnet using @porterfinance_

"Bonds For DAOs"

It's a thing.

https://twitter.com/porterfinance_/status/1533738150761115648

See, most of the large (DeFi) DAOs have their total treasury value in their native token. They can't really sell it (perhaps OTC), but they do need to a) diversify their treasury and b) raise cash for operational purposes.

Is DeFi dead?

TVL down, yields evaporating, depeg risk, protocol hacks, grave dancing on UST, and a terrible macro outlook.

A DeFi investor perspective.. 🧵 Total Valued Locked (TVL) has dropped from over $240bn into January to around $110bn today (-55%).

The end of my first week back after a much needed vacation.

Great to be back in flow with my farming team @_iammarkc and @juanbugeth and equally as much joy in connecting with various players in the DeFi space.

3 highlights from this week.. 🧵 1. @Instadapp where I can create #DeFi strategies such as collateral swaps, one-click deposit and borrow, and debt swaps all in one simple transaction.

gauging market sentiment: some tools we use:

1. Look at funding rates using

They help you understand positioning in the leveraged markets. Funding rates below 0.01% are bullish (green). Funding rates above 0.01% are bearish (red) coinglass.com/FundingRate
2. Aggregrated indicators for Open Interest (OI) and Cumulative Delta Volume (CDV). It helps understand the volume and direction of futures and options markets.
coinalyze.net/ethereum/open-…

FARMING UPDATE: 12 February 2022

ETH is down more than -8% since we reported yesterday. Our portfolio is -3.3%.

Escalating concerns over Russia & Ukraine has led to this marketwide selloff. Our thoughts and plan are below.. We have taken more profits on some trades in the high-risk bucket. Proceeds used to accumulate and stake some $PTP in order to accrue vePTP - so we can get some boosted yield on our stablecoin deposits on Avalanche. By Tuesday, the boosted APR on stables (USDT) should be 32.1%.

Tools of the Trade: Some of the things me and @_iammarkc use on a daily basis to help manage the $ReFi farming portfolio...

🧵 1. @nansen_ai to analyse wallet activity. E.g. look at the "smart money" inflow into $TOKE and $DYDX

Morning Diary of a Yield Farmer...a thread 1. After completing my morning routine (gym, meditation, gratitude), the first thing I'll do is check prices using @coingecko and @tradingview, and also check the MtM of our farming portfolio.

my latest stablecoin article too long?...here's a thread instead :) A. use of stablecoins go up

FARMING UPDATE: 17 January 2022.

"huf are you worried about $BTRFLY?"
"how down is the ReFi portfolio?"
"wagmi?"

answers in thread... 1/ We haven't deployed any NEW capital, and as such the portfolio will be down. That's part of being in the market.

However, the key question is how does $ReFi's farm performance compare to the broader market?