If you're playing poker on a site because it has great rakeback and disregarding the tough competition when there are other high-rake soft sites you could be spending time on, the rakeback hitting your account daily/weekly is disillusioning. Same concept.

If you have X in funds and farm a pair that you think will underperform other assets, the yield situation better be higher than your conviction of underperformance, or serve as an appropriate hedge related to your other assets. Twoshae knows more but this is how I've approached it for the easy-pool farming I've done.

First, thanks for the response… I kinda get that… in this analogy is the high rake/soft player pool = just buy and hold ETH/BTC according to MM?

Again, I think I get it… I guess this plays on the advice twoSHAE gave about choosing/pairing two coins you’re bullish on? The idea being with IL you’ll be acquiring more of the declining coin at a lower cost basis and the yield reward can conceivably allow you to rebalance/recoup the coin that’s going up in price? Is that right?

I'll defer to twoshae to give a more explicit response, but the analogy is basically that the yield is too focused on since it's this wonderful-feeling passive income. And it can cause someone to lose sight of whether the assets they're holding and/or providing liquidity for are really things they want to own at a certain time/for a certain period. Deciding which assets to hold and to what frequency is incredibly challenging and unique to your objectives/risk tolerance, and adding in the factor of getting passive income on them (even from staking) can be distracting. Add in the risk of impermanent loss and there are more factors. Not saying it's bad or even hard - some pools for assets that definitely serve a purpose in a portfolio are a money print.

With simple 50/50 pools you want to basically have two coins that may (and hopefully do) have a lot of volatility yet you believe they are similarly valued when you enter. Yes you're acquiring the worse-performing coin but yields can offset this unless the pair runs away from you. This isn't as much of a disaster as it sounds; if you have a portfolio of a handful of tokens you could say a few months later "oh I really wish I had 2% of A rather than 1% of A and 1% of B", but how well could you really have predicted that price action for these more speculative coins?

Got it, much appreciated! Really cleared it up for me.

total newbie question here, but what determines the APY for LPs? It seems that, on average, the higher APYs are for pools w/ lower liquidity, but it's not a perfect correlation. Also, what do you guys think about Raydium? I'm seeing a 50% APY on eth-usd LP, which seems amazing, but I guess there's the inevitable risk of a rug-pull/hack, etc. Sorry if I sound dumb. Still trying to wrap my head around all this. Appreciate any help you guys can provide!

In most instances it's the creator of the pool that determines the apy.

The apy is made up of their made up token, which has some temporary value.

So you provide liquidity on eth-usd. If one goes up or down relative to the other, you will suffer loss. But you'll get some RAY token as reward. Whether RAY retains any value is the question.

These farms are mostly good very short term as 90% of reward tokens plummet. And if they don't plummet and you're in long term you're subject to variance in eth or usd price. Eg. If ETH tanks you'll end up with more less valuable ETH and less usdc than you started with. Your net value will be less than had you just held those tokens individually.

And then the real degen pools is the RAY-ETH pool. You're providing liquidity for the farm coin and earning reward in farm coin. People will dump on you. But these tend to have the highest apy because the projects need to incentive liquidity for their farm coin.

Lastly, there's literally thousands of the projects and rug pulls are rampant, so you gotta know what you're doing..

Alternatively, if you diversify across 50-100 different ones, you'll have some rugs, some losers, and some 100 baggers. Many ways to skin the cat. Of course with ETH gas price you can't really do that unless you're playing very large. You're better off checking out bsc, polygon or fantom. Go to vfat.tools to check out most of the pools.

Its a full time job.

thanks a lot for the lucid and concise explanation, nuts. really appreciate it and your general involvement in these threads.

Wild that this was a week ago

Gwei been at 500 for last 30 minutes or more. Wonder what is going on...

Tons of collateralized positions on the brink of being liquidated. I was up at 3am to pee and looked at prices and had to go to my computer to make transactions to make sure I wouldn't get liquidated. Many are in the same boat. Bots going wild too. Defi aka moneylego means when there is volatility there's opportunity, and bound to be lots of transactions.

todays been a really strong argument for side chains with dexes going down and gas insane and i reckon the smart thing to do over the next 6 months is research and pick who the side chain winner will be

knc minting 44 million new tokens soon because minting machine go brrrr

Would like some insight on stable coin volatility… is this a weakness in the system or is this an opportunity to buy a dollar at a ~10% discount? Are these prices fluctuating bc so many people are bailing?

Be greedy when others are fearful?

polygon basically already won imo

I had a chance to buy polygon at 1.2c but I chose stake at 16$ because of reddit mainnet rumors.

Stake is currently 12$ and polygon is out of reach having grown 180x.

Scaling solution @ 10B$.

I've been pretty skeptical of sidechains as a scaling solution but you might be right. The problem with side chains is the more side chains you have the less secure the entire network will be.

But maybe if there's just one very popular side-chain it could be secure enough for our purposes.

dumb question but why is polygon's moat supposedly insurmountable?

i get that theyre smashing it right now but i woulda thought theres still room for someone else to challenge in ways that eth is not challenge'able

It's not insurmountable but polygon already has a good fast(ish) working bridge and a bunch of the big eth defi platforms working quite well. (aave/curve/sushi/etc).

I'm sure people will chase big yields as newer sidechains try to copy it but in terms of immediate usability it seems like a big lead.

Hope ya'll survived yesterday. What a crazy couple of days. Whether you took a bath or killed it, should be a wake up call if you were not following sound risk management before.
Don't degen on leverage, don't put yourselves in positions where you can be wiped by a short-lived market nuke.

Re: polygon discussion -- has anyone tried Slingshot yet? app.slingshot.finance

For full disclosure, I am an investor in the seed round -- I think it's an awesome product and they aren't stealing your positive slippage like 1inch. Best place to do your trades while on Polygon network. Any feedback / comments / improvements let me know here and I can pass it along to the team. They're currently only fully launched on Polygon, but they'll be rolling out on different L2s/sidechains/mainnet 1 by 1.

Just tried it, every time i go to connect wallet it auto connects my metamask and wont let me connect a different wallet

And then when you click your wallet address in the drop down in the top right, rather than it launching a new window, it just seems to close the wallet drop down and refresh the page

Thoughts on staking ETH? Looks like Coinbase is offering 6% but isn't clear how long the ETH is locked up. Any better options with similarly low risk?

I'm using the Yearn crv.stETH vault. Bit of a learning curve working with the contract but i'm getting roughly 11%.

(this is for staking on Lido, basically. But you also get curve rewards in the process. And you can simply zap ETH into it, one and done. Withdraw directly back to your hardware wallet into ETH whenever you want.)

https://yearn.finance/vaults

Yeah, as InspectorG says, just use Yearn. It uses Lido's staked ETH token (stETH) so it has the added benefit of not requiring you to lock up your ETH indefinitely like Coinbase, Binance, etc. and yield is higher.

Why is it that every time he says "it's pretty secure" he follows it up with "as far as DeFi goes"?