RT @coinbase: Compound (COMP) is launching at https://t.co/bCG11KMQ6s and in the iOS and Android apps within the next 15 minutes. You may need to update your app to properly buy, sell, convert, send, receive, or store COMP. We will update when COMP is fully live. https://t.co/TvKp1gnVp5
What are the risks if you aren't borrowing, or borrowing a very small amount? Is it only that you get liquidated, or are there serious risks to the reserves you are loaning as well? My understanding is that a major flash crash would need to occur for risk as a loaner.
>What are the risks if you aren't borrowing, or borrowing a very small amount?
The risk is losing your funds due to a bug or failure of the contract, for a measly 1-4% interest. The returns become more worthwhile when you add leverage, but this also amplifies risk.
I think these days, the more reputable developers are using tools and auditing practices that really minimize these types of risks. Also if COMP gets hacked, expect your ETH in a cold wallet to plummet in price as a result.
So what do you think about rate arbitrage? ie take a loan out in DAI (~1.5% on compound, offset to an extent by COMP rewards), swap on curve.fi (probably the best rate on 1:1 stablecoin exchanges) for Tether, then supply that Tether back for ~3%. Kinda low returns, but you stick to stablecoins, so you don't face the impermanent loss. Idk
Yeah I haven’t started on yield farming yet lol, just been using defi loans to leverage up my long ETH position... I defs want to try it, but making 100%+ gains trading options still atm, so have funds used for that, and everything else used to accumulate more ETH lately. Went form 80/20 BTC/ETH, now closer to 60/40.
For everyone asking about options check out DumbMoney.tv/discord and their YouTube channel, I use to work at Chris’s startup, anyways he’s an example of an accredited investor, and all he does is trade stocks/options and invest in startups, he and the other 2 on DumbMoney have made 10 million this COVID year.
Ok I just discovered https://go.ledgerx.com/ my friend shared it with me. US citizens. the Dec 2021 strike price of 10k is $3800, that imho is a gold pot lol. Just signed up after for them to create my account.
Yeah, apparently it was $4200 earlier... that's the cost of the options contract. To take assignment you have to pay the strike price. Makes more sense if you think BTC will be 50k or 100k by that date. Same thing with stocks, example a $900 TSLA option for 1 is $100, or $10,000 since it's 1 option x 100 shares. Say you have 1 option and my the date TSLA is $1000, you can take assignment, but that will cost you 90k just to buy those shares. A lot of traders just trade the options contract between each other, without the goal of taking assignment.
In this scenario, I may even consider taking assignment by Dec 2021... or I could sell the contract to someone else, all depends on the price of Bitcoin by then, which will be hell of a lot higher than 10k imho.
I'd like to, but Deribit isn't for US citizens and I'm not using VPNs. There is an option for US speculators, but I can't recall the name. But they only had like 1 week options, 3 puts and 1 call. If I'm on the buying side I want 1-2 month contracts. Also need lot more options, strikes and vol.
Sorry, the language on this lends itself to obfuscation, and yield farming is such a new and fast-moving game that it changes constantly.
In somewhat easier to understand English: There's a gap between the lending rates on the Compound protocol for various stablecoins. So one currency can be borrowed at 1% on Compound, and another can be lent at 2%.
By borrowing one at 1%, then swapping to the other on a low-fee decentralized exchange (ie, the curve.fi dApp) and then lending the second currency back at a higher rate, you can (in theory) turn a profit.
Right now, gas prices being what they are, your volume would have to be massive to make it worthwhile, and you have to hold the positions (your initial loan, and then your deposit to lend to others) long enough for interest to accumulate. On the plus side, you get more exposure to COMP.
COMP is distributed based on how much interest a given wallet accumulates on the platform. So that difference in the rates gets amplified by the amount of COMP you accumulate holding both positions.
Don't have the $$$ necessary to do it myself. The yield farming game relies heavily on leverage to get that operating capital, and I'm not really willing to take the risk of being liquidated to make it happen. Curious to know what anyone else's experience is, however.