The arbitrage thread.

How kings are made. Arbitrage is the trading of mispriced things

Ex:

Imagine you buy pencils from Jim in Math class for $0.10

However, you can sell them to Frank in English class for $0.15

By buying from Jim and selling to Frank, you're arbitraging the price inefficiency between the two classes.

Let's talk about $PENDLE.

• Up 1,891% this year
• Up 71% in the past month
• Many upcoming tailwinds

But I'm not a trader. I'm a farmer.

So what can I do with @pendle_fi's asset?

That's the question that haunts me. First, Tailwinds:

• Coming to BSC
• Coming to OP
• Over three Liquid Lockers
• 25% of Circulating Supply Locked
• Hyper-Competitive Yields on ETH LSTs
• Rate Swapping is a >$4.5tn industry in tradfi

It's been a slow, down-only week in DeFi.

Here are some fun delta neutral plays to protect your capital while we wait for smoother seas. $pNEAR

Platforms: @LinearProtocol, @MEXC_Global
Instructions:
1) Long/Short on MexC
2) Send NEAR to Near Wallet
3) Bond on phoenixbonds.org for 77% APR

Total APR: 62.5% (2x Levered Short)

Note: You can also LP pNEAR-NEAR for 80% APR.

I've been training my whole life for this moment.

Delta Neutral Ponzi Season.

Let's talk about @RektARB. Similar to my post on $AIDOGE, this strategy:

• Avoids all buy/sell/swap fees
• Is considerably degen
• Utilized @MEXC_Global to neutralize delta

https://twitter.com/phtevenstrong/status/1648748488614633473?s=20

Okay okay, last time I'll promote @MEXC_Global.

But they literally allow you to 20X leverage USDC against USDT.

And the current funding rate is 200% APR.

Affiliate Link: promote.mexc.com/a/CalculatorGuy

Let's talk about a few strategies. 1. Neutral Play: Cash and Carry

Buy USDC spot on Arbitrum
Short same value on MexC

Annualized Yield @ 4x Leverage: 156%

Radiant v2 sacrifices Leveragers to save Lockers

How will this effect Radiant's value proposition?

A @RDNTCapital v2 Megathread

Major Changes
• Dynamic Liquidity Requirements
• Major Fee Distribution Changes
• Impact on Loopers
• RDNT's Omnichain Fungibility

Let's dig in v1 Problems According to Radiant:

►Unsustainable & inflationary emissions
►Insufficient runway
►Low incentive to provide on-chain liquidity
►Exit penalties were sub-optimal
►Fixed unlock periods create unnecessary FUD
►Mercenary capital is incentivized

In their own words:

You can get 41% on stablecoins on @ApolloX_Finance.

Let's do a mini-dive into the $ALP counter-party vault and the estimated yields and risks.

Basics:
TVL w/o Staking: $26M
TVL w/ Staking: $43M
Chains: BSC, Arb, ETH
Audits: Yes, Manually Reviewed ApolloX is a perpetual exchange primarily on Binance Smart Chain.

I've used it to short BSC and ETH because the funding rates history is accessible, and they're often pretty favorable for shorts.

Check out their historical funding rates here:
apollox.finance/en/futures/inf…

I want to create a protocol where you can farm volatile liquidity pools with zero delta exposure.

Partially because I want it to exist.
Mostly because people say it can't be done.

Here's why I think it's possible, and how it might work. 1. Create a proprietary dex.

This will be the backbone of the protocol. Make a solidly fork for all I care. This will provide the swapping, liquidity provision and the unique farming.

$GLP has become a Defi staple for allowing you to earn yields from trader losses.

But what if you wanted to diversity your bets against traders?

Let's "become the house" and take a look at some of the lesser-known counter-party vaults in defi. @ApolloX_Finance: $ALP

Protocol Type: Perp Dex
Vault Type: Stablecoin Index
Yield: 34%
Yield Denomination: APX
Chain(s): ETH / BSC / ARB
mCap: 22M

Let's talk🍞

These bots made 291% ROI in the past 208 days.

In a bear market.

And yes, the trades are verifiable.

Video Breakdown:

(I even made a calculator)

Thread 👇 @BreadBytes_ hosts three bots.

• Cinnamon Toast (ETH DCA)
• Short Bread (ETH Long/Short)
• French Toast (BTC DCA)

Cinnamon Toast is //by far// their most popular.

In past 208 days, it's had a base return of 58% ROI.

So where does the 291% come from?

Want to save your family $3000 per year?

STOP BUYING BOTTLED WATER.

Get a real water filter. Let's do the math.

Yes, I made a spreadsheet. This get's me heated. The average person drinks 182.5 gallons of water per year.

Here's a cheap 24 pack bottled water.

It costs $17 for 3.17 gallons.

That's $980 yearly per person for gross tap water.

Made by a company that thinks water isn't a human right.

It's been a year.

If you're still here, you've been through some shit.

Let's reflect on what we've learned to remind ourselves what to avoid for 2023. 1/

PONZINOMICS

How to spot a ponzi:

1) Prior investors rely on new investors to ROI
2) The investment is paid in itself (stake X, yield X)
3) You have to lock up or burn your initial investment
4) The protocol is a tokenomic gimmick

RIP:

OHM Forks
Node Forks
DRIP
TOMB Forks

Want to earn up to 20% yield on USDC?

Try this medium-risk strategy.

It involves minimal smart contract risks but can be a pain in the arse to unwind.

Let's dive in. Here's how it works:

First, collateralize USDC on @AaveAave.

USDC has a collateral factor of 80%, meaning you can borrow up to 80% LTV against it.

This alone currently yields 1.84%.

Want to earn up to 20% yield on USDC?

Try this medium-risk strategy.

It involves minimal smart contract risks but can be a pain in the arse to unwind.

Let's dive in. Here's how it works:

First, collateralize USDC on @AaveAave.

USDC has a collateral factor of 80%, meaning you can borrow up to 80% LTV against it.

This alone currently yields 1.84%.

If KuCoin stays alive until March, you can make a 20% return on $ETH.

This opportunity depends on three things:

‣ @kucoincom's solvency
‣ $ETH's Shanghai Upgrade
‣ Pool-X's redemption mechanism

Let's dive in 🏊‍♀️ ETH2 is Pool-X's ETH Liquid-Staked-Derivative (LSD).

After FTX, ETH2 went from 0.93 ETH to 0.64 ETH.

It recovered to 0.84 before @otteroooo posted a thread on KuCoin's potential insolvency.

Read More: tinyurl.com/otrfud

It's since recovered back to 0.8 ETH (20% discount)

There are rumors that people are going long.

So here are the 7 of my favorite BTC and ETH yields.

🧵👇 1: jpeg'd ETH (@JPEGd_69)

pETH-ETH : $10.5M Total Liquidity

pETH is a CDP minted against NFTs.

pETH-ETH LP on @ConvexFinance: 31% vAPR

pETH-ETH LP on @beefyfinance: 33% APY

Note: pETH is currently slightly over peg (see image)

I remember last holiday season my brother-in-law, a warm-hearted Cornell-educated man, told me the unvaccinated shouldn't be allowed to use hospitals.

I'll never forget that.

Him, looking me in the eyes and telling me my family was undeserving of emergency healthcare services. Two years ago, I was fired for requesting exemption for the vaccine.

I agreed to test twice weekly, wear a mask, & eat in my office.

Note: This boarding school allowed unvaccinated students to live, dine, & take trips to NYC together.

Text from my dept. head 👇

It's no secret that I like funding rate arbitrage.

But it can be complicated.

Here's a tool to find the opportunities for you.

E.g. 682% Delta Neutral on SOL for the past 25 days First, shout out to R33Y in the DeFi Dojo for integrating exchanges APIs and standardizing the data.

He's the real MVP here.

I just did the functions and made it look pretty.

Spent the last hour watching the arbitrage play of the century on BNBx & stkBNB while I was stuck in a meeting.

Congratulations to everyone who arbed to restore the pegs of those two healthy LSDs.

Fortune favored the bold there, and many made a quick 2-10x. That said, there's still meat on the bone! You can still get a nice yield from the slight depegs still on BNBx and stkBNB.

Oddly, I made a video THIS WEEK on how to arb these depegs.

So check on my video 👇

Word of the day: Rehypothecate

(Verb)

To generate yield on client collateral.

In TradFi, this benefits banks & brokers, but in DeFi, rehypothecation can means higher yields for lenders. Imagine posting 10,000 USDC into a money market, but USDC's utilization is only 20%.

Meaning 80% of deposited USDC is doing nothing.

With rehypothecation, some of the 80% might go to Yearn, Curve, or Convex for additional yield, which would be redistributed to lenders.

We're nowhere near understanding the extent of FTX contagion.

It took over two months for 3AC et al to fail after the LUNA collapse.

We're in for a bumpy next few months.

SO, here are things crypto investors need to consider in the next few days / weeks, Limiting CEX Exposure:

Bottom Line: We don't know what we don't know.

CEXs with bad debt (like BlockFi) are likely to halt withdrawals.

CEXs that claim they are unaffected by bad debt may be lying.

"Guilty-until-proven-innocent" approach mitigates risk short term.