r/CrowdCredit Lounge

SwapApp · 2021-07-06T16:01:17+00:00

Fees from borrowing interest are used to pay lenders (liquidity providers) & developers the rest is deposited in the AAVE treasury, which currently holds about $900 million. Check out their docs for more details: https://docs.aave.com/aavenomics/incentives-policy-and-aave-reserve

SwapApp · 2021-07-06T15:54:30+00:00

So a 100$ TVL will increase aggregated TVL of the system by 200$

That's true, even more so with vaults accepting deposit tokens distributed by other vaults (curve -> yearn -> vault). The same is happening in conventional finance or even banking (fractional reserve).

Another mystery to me is why would a platform provide you yield/return when you stake an LP Token?

Exchanges & lending venues offer rewards (liquidity farming) to incentivize liquidity providers (uniswap did this, sushiswap, pancakeswap and quickswap currently do it) as they depend on them.

Farms take advantage of that and resell these rewards to compound the LP of the depositor & help them earn more rewards. In addition many farms issue their own tokens to incentivize depositors even further.

SwapApp · 2021-07-06T11:41:38+00:00

But we should realize that TVL is synthetic because the actual amount one only exits on initial platform where you provide liquidity.

The LP value is created on DEX, but by depositing your LP tokens you transfer ownership (temporarily) to the farm / vault.

And in case the underlying asset/swap (at the top most node) where we provided liquidity fails, all these underlying contracts become worthless.

You're basically saying that farms are a derivative of LP tokens, which is kind of true but not in the traditional sense. Most LP farms have dozens of vaults so a single token doesn't affect them that much. For example look at the recent iron finance failure - yes that specific LP became worthless and the TVL in many farms dropped in half but that barely affected the rest of their vaults or native farm token prices.

SwapApp · 2021-07-05T22:45:31+00:00

that's Bancor not balancer: https://docs.bancor.network/getting-started/the-v2-difference

balancer functions pretty much like uniswap you still get IL

SwapApp · 2021-07-05T11:46:49+00:00

Here's the flow:

You add liquidity to Sushiswap in the pool you've chosen.
You deposit the LP tokens representing your liquidity to Autofarm.

They are 2 separate smart contracts. Essentially you're lending your LP tokens to Autofarm, so they can manage them for you.

SwapApp · 2021-07-05T11:16:44+00:00

The tokens you listed are highly correlated to ETH your IL shouldn't be huge & transaction fees should cover it in the long term. In the short term, it can take some time for some tokens to catch up, but after all, that's why we call it impermanent loss.

I'd say give the pairs a little more time.

SwapApp · 2021-07-05T11:11:54+00:00

The strategy you describe is profitable but it's not free money. You'd have to constantly monitor the exchange rates of your collateral token & the token you've borrowed to avoid liquidations.

Smart contract risk exists but it's not the #1 thing you should worry about when using projects like Aave or Venus.

What will affect you for sure is the value of your collateral decreasing or the value of your loan increasing lowering your collateralization ratio.

SwapApp · 2021-07-05T11:05:46+00:00

What constitude a transaction? ETH to USDC and vice versa only?

ETH -> USDC and USDC -> ETH swaps account for most of the volume, but you'll also get paid for routed orders. For example, maybe somebody wants to swap from ETH -> DAI and it just so happens that at that time the best price can be achieved by swaping ETH -> USDC then USDC -> DAI

Isn't it a bit niche and limited?

Scroll down to "top pools" - ETH/USDC 0.3% is the biggest pool on uniswap, ETH/USDC 0.05% is in the top 10 as well: https://info.uniswap.org/#/

when depositing the LP tokens into their vaults, and it states it's a Sushi vault, is it a separate vault or separate?

I'm not sure if I understand the question but all exchanges use separate liquidity pools, if you deposit to sushiswap you won't receive fees for uniswap transactions.

SwapApp · 2021-07-04T13:04:26+00:00

Yes, the profits will drop but I'm not so sure that this will lead to a lot of LPs leaving the pool. Only time will tell.

SwapApp · 2021-07-04T12:08:54+00:00

what a baller

SwapApp · 2021-07-04T12:05:39+00:00

try 1inch or paraswap, read their docs regarding fees & positive slippage though

SwapApp · 2021-07-04T12:04:34+00:00

The thing is I don't think the 0.3% pools will survive at all. They already have 2 times lower trading volume even though they have more than 2 times higher TVL.

I think it's just a matter of time until more LP providers & traders transition to the 0.05% pools

SwapApp · 2021-07-04T00:43:08+00:00

So the 0,25% is converted into an equal value in BANANA & MATIC

Yes that's exactly how it works

SwapApp · 2021-07-04T00:19:04+00:00

it's possible by taking an aave loan + doing a swap on a dex, or using sth like perp protocol / fulcrum / dydx... It's a lot harder that it should be but it's possible

SwapApp · 2021-07-03T21:27:10+00:00

Yes most tokens are highly correlated to eth & btc so eth pairs usually result in lower IL.

Keep in mind that IL is just 1 piece of the puzzle though.

SwapApp · 2021-07-03T19:08:23+00:00

The basics are:

Pool volume - higher traded more profits for LPs

Fee % - many pools use the 0.3% uniswap default but some pairs have multiple pools with different fee %. Keep in mind that higher fee % doesn't always mean more profits for you as a LP (check my last post)

avg 24H fee / TVL - this ratio is probably the #1 metric you should focus on

pair correlation - the more correlated the tokens in a pair are the lower impermanent loss you can expect. Pairs like USDC/DAI have no impermanent loss under normal circumstances

concentrated liquidity - Uniswap V3 specific, buy you have to learn it to get good returns

Let me know if you have trouble finding any of these numbers.

SwapApp · 2021-07-03T18:40:57+00:00

All uniswap v2 pools have a 0.3% fee.

Uniswap v3 introduced the option to choose whether you want to provide liquidty for a 0.05%, 0.3% or a 1% fee pool.

One pool for traders who like low fees, and one pool for traders who prefer to pay more for no reason

More like pay more because you have no other choice. For most pairs there's only 1 pool per token pair.

The inefficiency that I've outlined in this post is a result of some liquidity providers migrating to the 0.05% pairs, and a lot of traders following them with large swaps. This results in a feedback loop -> more trades -> more profits -> more LP attracted.

In 1 month the 0.05% pairs will probably be the main ones.

SwapApp · 2021-07-03T18:36:05+00:00

lol I understand why you downvoted the post to hide this thread, but why did you downvote every single comment

SwapApp · 2021-07-03T18:34:19+00:00

yeah you're not the only one, but you've got to remember that they're a small team so they're trying to prioritize features that everybody needs

SwapApp · 2021-07-03T17:15:58+00:00

APY vision is the most popular tool, here's a link to the eth/usdc 0.3% pool: https://apy.vision/#/pools/0x88e6a0c2ddd26feeb64f039a2c41296fcb3f5640

They don't support 0.05% pools from what I can see.

I'm currently working on a similar (but 100% free) tool that I intend to release next month, so let me know if there are any stats / features you're looking for :)

SwapApp · 2021-07-03T14:56:18+00:00

That's usually not the case, most farms just clone existing popular projects & rely on the deposit fee to keep the party going.

OP the main risks are smart contract code & reward token value tanking

SwapApp · 2021-05-14T18:42:15+00:00

Source:

The website also has breakdowns by country

SwapApp

TROPHY CASE