HODLer's Den, DeFi Edition ⚖️
HODLer's Den, DeFi Edition By Aromatic
Twitter | Facebook | Reddit | YouTube | LBRY | Patreon | Store Front
Disclaimer: Nothing in this report constitutes investment advice—I am just reporting on my accounts and its progress on each platform. You should not use this report to make financial decisions. I recommend you seek professional advice from someone who is authorized to provide investment advice.
Hey everyone and welcome to the HODLer’s Den, DeFi Edition!
Here you will find information on the DeFi (Decentralized Finance) crypto space. As usual, I will try my best to provide insight from a HODLer’s perspective.
Uniswap & Ampleforth (AMPL)
At this point I should probably cut my losses and get out of the wETH/AMPL Uniswap pool. Last week it was down 38% and this week it is currently down 41% overall—I am actually surprised it did not go down much further. If the Geyser incentive was not active, I probably would have removed liquidity from the pool a long time ago.
I will ride this one out until the Geyser incentive is over. The APY (Annual Percentage Yield) is also up this week to 76% compared to last week’s 68%. There is still roughly 41 days remaining for the Geyser incentive. I will have to decide what to do at that point, but for now I do like seeing the Geyser multiplier increasing each week.
Balancer/wEthereum Liquidity Pool
During last week’s report, I decided to put some liquidity—about 150 USD—into the wETH/BAL pool. I am happy to report that my liquidity grew and is now at 161 USD. Within a week, my assets in the wETH/BAL pool grew 7.3%—not a bad Return On Investment (ROI)! However, remember it costed about 26 USD to enter the pool, so overall, I am technically still down.
Assuming the fees to invest in the initial pool remained the same, I would have to initially invest 356 USD to break even with the current 7.3% ROI since 7.3% of 356 USD is 26 USD. Also, remember that there will probably be the same amount of fees involved to remove liquidity from the wETH/BAL pool.
Shift Into CeFi/Defi
Decentralized Finance (DeFi) is clearly the hot commodity right now in the crypto space and its presence is catching on as Centralized Finance (CeFi) platforms are making the adoption.
The amount of fees to participate in many DeFi protocols or liquidity pools remain a huge barrier to entry—I would have had to invest 356 USD and waited a week to break even on the initial fees and this does not even include the fees involved to withdraw my liquidity. Even then, it is not a guaranteed return of 7.3% each week. There are many variables at play here that could affect the pool: Ethereum’s price, Balancer’s price, the volume of the pool and its market cap. I remember checking on the wETH/BAL pool midweek and it was hovering around 141 USD at one point.
This is why I believe that the transition into a CeFi/DeFi will help many investors with small amounts of assets gain exposure to the variety of protocols and projects in the DeFi space. CeFi platforms can pool many investors’ funds so that the overall fees to invest in liquidity pools are basically negligible. Imagine if I joined in with 26 other people who also wanted to invest 150 USD each into the wETH/BAL pool. The fees to invest our combined funds, 150 USD * 26 = 3900 USD, would still be roughly 26 USD but now the total fees can be divided by 26 people resulting in each person paying only 1 USD to participate. Now imagine a CeFi/DeFi platform doing this on a larger scale for hundreds or thousands of investors—you get the idea.
The integration of DeFi into CeFi platforms will probably bring in higher Annual Percentage Rates (APRs) for people like me who like to HODL and earn interests. The structure of DeFi is to be trustless and transparent which will ultimately force CeFi/DeFi platforms to do good as investors and users can easily audit and verify every transaction.
I am super excited to see what DeFi/CeFi platforms have to offer as I am sure they have plenty of projects in the works right now. I will continue to HODL and watch my portfolio grow greener each day.
For more information on DeFi and crypto news in general, check out C1S’s channel on YouTube. There are plenty of videos for you to watch and learn about the fast-growing crypto space.