Impermanent loss isn’t a real loss, it is a loss of opportunity, of what “could have been” if you had just held the assets in your wallet. The reason is because Balancer will automatically reduce the quantity of the asset that is increasing in price to maintain balance, whereas if it is in your wallet and you held the asset that is increasing just becomes a larger % of your wallet. For example if you provided liquidity to the LEND/WETH pool and LEND outperforms ETH by 100% you would make around 75% gains on Balancer and 100% if you just held it in your wallet. The impermanent loss is 25%, or the difference between the two scenarios. Of course you wouldn’t have lost 25%, but you just would have made 75% rather than 100%. Most people providing liquidity to balancer are looking for steady yield, not to speculate and maximize gains on spot price.
One of the only actual risks of loss would be contract risk where some sort of bug is exploited and funds are drained. Of all of the AMM’s, Balancer is one of the most trusted and their smart contracts are heavily audited, so they are my preferred AMM compared to the others.
It did end up blowing past 400. It hit as high as 415 before tumbling back a little bit. I think it would be healthy for the long term trend if price went sideways for a few weeks and started building some support.
Oops it wasn’t a price projection my bad. It was more “it would be nice.” You mentioned a high of $600 by year’s end! Will you keep that 400-600 range?
Hi, I just re-read your thread here after seeing what Ethereum did last night. It may be healthy, but since I Fomo’d in at $325, I am happy either way. It can consolidate for ages, or just shoot to $1,500 tomorrow. I didn’t have any three weeks ago, so I am “feeling lucky”. Well done on the psychology. So far the only part of my Crypto plan that is lacking is my approach to massive market correction. As a partial solution, I decided to sell one quarter of any Crypto investment that has doubled. I expected to only do that once or twice per year, but since May I have done it twice. First with ADA, and more recently with LINK. Loving the volatility, but dreading an 80% correction!
@Mondeoman The volatility can be brutal! It’s been nice that we haven’t seen much volatility since the epic March 12th crash. That was painful. I am up almost 1,000% since the March 12th bottom so I am glad I stuck it out. I have since expanded my portfolio to some bigger DeFi plays. My largest holding is now NXM, which is the token for Nexus Mutual (provides smart contract insurance) and YFI (find Andre Cronje and yearn.finance on Twitter). I am building up some other positions as well. I will post more about some of that here as time goes on.
Great job on the ADA and LINK trades! Those two have been on an absolute tear for the past 6 months.
@ponponwei I think Ethereum’s fundamentals certainly support the possibility. Transaction fees have been 2-6x higher than Bitcoins for a month or two now. Transaction fees are an important metric because that translates into blockchain security as miners payouts increase creating greater mining demand. Wallet growth has been great. Search engine searches have increased dramatically. Overall it has the feeling of the beginning of a new multi-year bull run.
With ETH up about 4x since March I wouldn’t be surprised to see a larger pullback or even a period of sideways consolidation but if the fundamental growth continues I think the long term outlook of ETH will be very bright. Potentially much higher than $600 in the long term.
Hi, and congratulations on the rapid result with YFI. I blinked and missed it. Two nights ago, I took a look at Polkadot as it rocketed up to #6 in the market cap charts from nowhere. I took a two hour detour to read about the origins of Polkadot as I follow in much detail the emerging pieces of the jigsaw I now think of as the “interoperability conundrum”. It’s a race of the "to-be"s trying to garner critical mass with either testnets or mainnets against the "has-been"s that were the best thing since sliced bread a week or so ago. Definitely not for the faint hearted. Anyway, it got to 3am and my younger son came home from work. He graduated in accountancy last year but hates accounting. I showed him a crazy arbritrage opportunity between two of the exchanges I use - one based in GBP, the other based in USD. Whilst Crypto.com was showing DOT at £4.78 ($6.32) the buy/sell spread on Bittrex was showing $8.99 to $9.80 - almost 10% spread and an arbitrage from Crypto.com of 42%! Whilst I commented to my son that there must be a catch, I wanted some of the price action that had caused DOT to double in five days since being available on more established exchanges. I bought in and went to bed. Immediate losses were there, to the tune of around 10%, but my investment plan for Cryptos is developing after only a three month participation in a similar manner as my Forex planning in terms of risk / reward expectations, and it feels great. Long may this enormous volatility continue. Whilst our current participation is small, it is very likely that some more serious asset substitution is on the cards for Q4, 2020.
Edited - I forgot to finish the arbitrage story. So I immediately tried to transfer the DOT tokens to Bittrex and got the message "we are working hard to let you transfer DOT in and out. Please stay tuned. So I laughed out loud with my son, and he asked me “is that your get rich slow number 16 scheme Dad?” Lovin’ it.
This post just reminded me of a story I just read where an exchange in South Korea got busted for purposely restricting transfers so the owner of the exchange could arbitrage themselves at the expense of their customers.
A lot of crypto rallies on pumpanomics but I think a few are starting to reflect actual fundamentals and revenue. One that immediately comes to mind is LEND (Aave).
Glad I read this same day. It’s now $27K. If your post 23 hours ago was Crypto is truly insane, it is now half way to the moon. Excellent choice. And nerves of steel. Well done.
Do you think it is down to your analysis when you got into these alts, or is it a matter of waiting a sufficient time to let the accumulation stage reach its hyperbolic stage?
I have only been in Crypto since May and today it looks a lot like a one way bet.
Any recommendations on a plan to avoid huge price drops? Here is my dilemma:
Whilst I wish to maintain most funds off exchange, I also want to set stop orders to sell below (say) a 20% drop in value. Problem is that volatility can be + 100%, -50% in a day!
My strategy for take profit is to sell off one quarter of tokens each time they double. I do not have a strategy for when the coins tank, and feel I should have one.
My positions in NXM, YFI and YAM were more just conviction-based trades. I thought that NXM was on the cusp of breaking out due to it being one of the only major smart contract insurers and in light of the growth of DeFi. My first tranche was purchased at $12 and additional tranches purchased at $15 and $20. Right now it sits at about $75
Yearn is one of the hottest and fastest growing DeFi protocols generating major yield in their “y” tokens. I bought at YFI $6,000. I did the mental math and figured that if the platform was valued around 1 billion or more (which I thought it should be) that would put the YFI token at about $35,000 which is where it sits right now.
For YAM, I believed it could be valued as much as $500M-$1B. I bought a tranche at $2.50 and another couple at $5.00. That sits at $25 right now with a $100M market cap.
I normally don’t make conviction-based trades like these and I generally am swing trading using candlestick analysis. My biggest candlestick trading winners this year have been in LINK. My LINK/ETH set is up 359% since I launched it back in April or so (Moonshot Capital is the LLC that I trade under on TokenSets).
I have quite a few candlestick wins this year in a number of pairs: LEND, REN, LINK, SNX, and some other ERC-20 tokens.
