I deposited a small amount of money in FOX (FarmersOnly) four days ago. The headline short term interest rate is 0.7% per day, equating to 1,125% per year, if the rate does not change. Money is still there, and yes, it is compounding at 0.7% per day.
Don’t try this at home unless you understand impermanent loss associated with liquidity pairs. But so far it is doing what it says on the tin.
Generally, the impermanent loss definition states that it is a loss you have to incur when the price of the assets you have deposited changes between the time of deposit and withdrawal. You can find the loss only when you have withdrawn your deposits from a liquidity pool.
The proof of concept I have chosen has no lock in period. Interest compounds multiple times per day. In the short term, the IL is severe and that is why I have chosen a proof of concept with a small commitment - to be able to assess this choice against some historical back test data that I now must spend some time doing, before I decide whether this fits into an overall “high interest, high risk” allocation.
Very early days for me, hence the PoC, and the future pilot run before I regret anything of importance.
Same snapshot some hours later. The FOX-ONE quantity has gone up but the approximate USD value in the same window has gone down. I like the simple interface - it’s not trying to delude an investor by hiding the fiat value of the underlying instrument. A small point - my headline says 1,125% APY, last night it was 1,165% and now it is 1,250%. I need to see a time series of results before taking an opinion on the impact of the moving parts.
Does it specifically say the rate doesn’t change. Most of the time these APRs come down as liquidity flows into them since the distribution becomes thinner in terms of swap fees between the two tokens being provided. But seems you got in early on this one so ride it out until the APR gets down to a number you’re not happy with. Some cracking good yields to be had out there if you can hack the IL risk.
Update for today. Rate has gone up and is now equivalent to 2,574% APY. Also USD value is same as I put in 5 days ago. Interesting to see on a daily basis.
Nearly 1% a day is great even if that lasts a few months. Nice account grower.
Volatility is huge. Can’t argue with the rate and probably not the best time to change anything in the crypto market mostly down big time. Estimated USD value is down about 50%. Patience required, ONE went up very fast, and came down very fast too. A numbers game. Will hold off on the pilot for a while more until market stabilizes somewhat. Proof of concept continues
