Share Dialog
Share Dialog
Subscribe to DefiEdge
Subscribe to DefiEdge
What’s to expect in this edition of the newsletter?
Research Analysis: Understanding correlation of multiple UniswapV3 pair types: Volatile-Volatile, Volatile-Stable, Stable-Stable.
Expert’s Corner: A section presenting views of renowned industry experts on burning topics of the market.
Platform Highlights: Stay updated with the latest blazing numbers of the platform and invest today to earn amazing yields.
Latest trends of the market in our “What’s Hot in the market?” section.
The Golden Pair - An analysis
If understanding pair correlations is a quidditch match, this edition tries to search for the golden ball a.k.a. the golden pairs from a huge set of pools.
When choosing a suitable pool for LPing there are so many factors to be taken into account: The TVL, The Volume and the Volatility of the individual tokens. For the number crunchers, it’s a tug of war between earning fees vs mitigating impermanent loss. It boils down to keeping LP ranges active while also covering for Impermanent Loss (IL) and losses due to fall in asset prices.
This study is going to explore multiple such factors in the quest to explore the golden pairs. For the ease of understanding we have divided this study into 3 sections as mentioned above, let us dive deep into them and start the Quidditch match!!!
A. Volatile-Volatile Pairs
Let us start with the pair of ETH/BTC as these are two of the most popular tokens. There are three charts we need to look into:
ETH price history
BTC price history
ETH/BTC price ratio history to understand correlations
The data of the past 5 years is taken into study for this particular pair to account for different market trends.
The BTC/ETH chart shows good uniformity with the past few months being range bound between the interval of 12 to 15 . This makes it a really robust pair for even the bear markets.
As the price of both the assets slowly recover to higher values, your position earns good gains from the upper price trend while the LP position can still remain active and aggregate the fees. We have created a strategy using DefiEdge for BTC/ETH on the Polygon network to test this theory.
You can check out the strategy at:
https://app.defiedge.io/s/polygon/0xbc29ec9643eabd8369b2ef95a1f9d7a23e9b02dd
The fees numbers are promising some good returns even in this market especially with a low volume of WBTC/WETH on the polygon network.
The pool stats can be checked out at:
https://info.uniswap.org/#/polygon/pools/0x50eaedb835021e4a108b7290636d62e9765cc6d7
This makes WBTC/WETH a really strong candidate for our golden pair.
To diversify the study, let’s take into account another Volatile-Volatile pair with low correlation to establish a fair comparison against WBTC/WETH.
LINK-ETH
Let’s see the trend for LINK
LINK-WETH Pattern
Let’s have a look at the UniswapV3 LINk-WETH pool on Polygon to see how this pair is performing currently.
In spite of a volume of less than $1M, this pair is generating fees of ~$900, but a sharp drop in the 24h Volume. Due to lesser correlation, the pair has seen a larger spread than WBTC-WETH. This opens it up for a personal choice of ranges by the strategy managers according to their risk appetite and also not the best of gains from asset rise as LINK is not highly correlated to WETH pricing.
After these spicy volatile volatile pairs, let’s move into a mix pool of Volatile-Stable pairs.
B. Volatile-Stable Pairs
This is a straightforward analysis as it depends not only on market conditions but also on the individual development of the underlying protocol. We are going to present the stats for 2 pools before moving on to the Stable-Stable pairs.
WMATIC-USDC
Woooh! The price has seen some highs and lows, this is even evident in the provided liquidity ranges in the WMATIC-USDC UniswapV3 pool on Polygon.
Now that’s a fat spread of LPing ranges. But the price is also a factor of the excellent development at Polygon rather than just being swayed solely by the market conditions. There are two high performing strategies of WMATIC-USDC on DefiEdge which have some staggering fees numbers. Check them out at:
1. https://app.defiedge.io/s/polygon/0x9d591747f2e1de7884b42b670ab34ca6c63fee9a
Both the strategies have done decently well with a wider range of price to capture the fees and slowly mitigating and Impermanent Loss. Check them out yourself to find out more.
Let’s look at another Volatile-Stable pair to understand this dissection better.
2. UNI-USDC
UNI sure have had some golden glory days, let’s look at its pool on UniswapV3!!!
The spread is betting more on the uptrend of the token compared to MATIC’s more even spread but a lot of inactive liquidity on the higher side of price ranges.
Let’s dive into the STABLE-STABLE pairs now and see what surprises they hold for us.
C. Stable-Stable Pairs
Stable-Stable Pairs are like milk and cereal of DeFi, the GO-TO Breakfast. These are usually pegged in different ways and show only a small range of variation. You can read more about the stablecoins here.
Now in spite of this small movement, these have started to generate some heavy numbers.
We are going to explore two pools to see how STABLE are the yields from these.
USDC-DAI
Let’s see how this pool is doing on Uniswap V3:
Here is it’s corresponding strategy on DefiEdge:
https://app.defiedge.io/s/polygon/0xd76dfa2923bf79a235582b3c4ad361f3db0d74c5
Quite stable volume, price spread and fees. This pair is like a calm ocean with minimal waves, but the yield is also a bit on the lower side due to its low risk factor. This is like a classic cappuccino, always loved by those who are fond of it.
Let’s peep into a slightly more lively pair:
BUSD-USDC
The USD price looks quite stable:
How is the pool of BUSD-USDC doing on UniswapV3? Well, here is the answer:
Definitely a wider spread than expected for a Stable-Stable pair. The 24h volume is sure on the lower side leading to a very small fee amount in 24h. It would be really excellent to create a strategy on DefiEdge and find out its numbers. Well, if this pair is the one that excites you too, create a strategy and let us know how it is performing.
That’s All for the research section of this edition of the newsletter. Quite an informative Quidditch match. We hope you as the seeker have found the inspiration to look for your “Golden Pair” of UniswapV3. Hope this christmas brings you to DefiEdge to manage that pair while you receive the great gifts of yields from the DeFi santa. Check out the sections below to see what Experts say about some of the burning questions of the DeFi community while staying up to date about the latest trends in Web3 and DefiEdge community.
Expert’s Corner
What’s to expect in this edition of the newsletter?
Research Analysis: Understanding correlation of multiple UniswapV3 pair types: Volatile-Volatile, Volatile-Stable, Stable-Stable.
Expert’s Corner: A section presenting views of renowned industry experts on burning topics of the market.
Platform Highlights: Stay updated with the latest blazing numbers of the platform and invest today to earn amazing yields.
Latest trends of the market in our “What’s Hot in the market?” section.
The Golden Pair - An analysis
If understanding pair correlations is a quidditch match, this edition tries to search for the golden ball a.k.a. the golden pairs from a huge set of pools.
When choosing a suitable pool for LPing there are so many factors to be taken into account: The TVL, The Volume and the Volatility of the individual tokens. For the number crunchers, it’s a tug of war between earning fees vs mitigating impermanent loss. It boils down to keeping LP ranges active while also covering for Impermanent Loss (IL) and losses due to fall in asset prices.
This study is going to explore multiple such factors in the quest to explore the golden pairs. For the ease of understanding we have divided this study into 3 sections as mentioned above, let us dive deep into them and start the Quidditch match!!!
A. Volatile-Volatile Pairs
Let us start with the pair of ETH/BTC as these are two of the most popular tokens. There are three charts we need to look into:
ETH price history
BTC price history
ETH/BTC price ratio history to understand correlations
The data of the past 5 years is taken into study for this particular pair to account for different market trends.
The BTC/ETH chart shows good uniformity with the past few months being range bound between the interval of 12 to 15 . This makes it a really robust pair for even the bear markets.
As the price of both the assets slowly recover to higher values, your position earns good gains from the upper price trend while the LP position can still remain active and aggregate the fees. We have created a strategy using DefiEdge for BTC/ETH on the Polygon network to test this theory.
You can check out the strategy at:
https://app.defiedge.io/s/polygon/0xbc29ec9643eabd8369b2ef95a1f9d7a23e9b02dd
The fees numbers are promising some good returns even in this market especially with a low volume of WBTC/WETH on the polygon network.
The pool stats can be checked out at:
https://info.uniswap.org/#/polygon/pools/0x50eaedb835021e4a108b7290636d62e9765cc6d7
This makes WBTC/WETH a really strong candidate for our golden pair.
To diversify the study, let’s take into account another Volatile-Volatile pair with low correlation to establish a fair comparison against WBTC/WETH.
LINK-ETH
Let’s see the trend for LINK
LINK-WETH Pattern
Let’s have a look at the UniswapV3 LINk-WETH pool on Polygon to see how this pair is performing currently.
In spite of a volume of less than $1M, this pair is generating fees of ~$900, but a sharp drop in the 24h Volume. Due to lesser correlation, the pair has seen a larger spread than WBTC-WETH. This opens it up for a personal choice of ranges by the strategy managers according to their risk appetite and also not the best of gains from asset rise as LINK is not highly correlated to WETH pricing.
After these spicy volatile volatile pairs, let’s move into a mix pool of Volatile-Stable pairs.
B. Volatile-Stable Pairs
This is a straightforward analysis as it depends not only on market conditions but also on the individual development of the underlying protocol. We are going to present the stats for 2 pools before moving on to the Stable-Stable pairs.
WMATIC-USDC
Woooh! The price has seen some highs and lows, this is even evident in the provided liquidity ranges in the WMATIC-USDC UniswapV3 pool on Polygon.
Now that’s a fat spread of LPing ranges. But the price is also a factor of the excellent development at Polygon rather than just being swayed solely by the market conditions. There are two high performing strategies of WMATIC-USDC on DefiEdge which have some staggering fees numbers. Check them out at:
1. https://app.defiedge.io/s/polygon/0x9d591747f2e1de7884b42b670ab34ca6c63fee9a
Both the strategies have done decently well with a wider range of price to capture the fees and slowly mitigating and Impermanent Loss. Check them out yourself to find out more.
Let’s look at another Volatile-Stable pair to understand this dissection better.
2. UNI-USDC
UNI sure have had some golden glory days, let’s look at its pool on UniswapV3!!!
The spread is betting more on the uptrend of the token compared to MATIC’s more even spread but a lot of inactive liquidity on the higher side of price ranges.
Let’s dive into the STABLE-STABLE pairs now and see what surprises they hold for us.
C. Stable-Stable Pairs
Stable-Stable Pairs are like milk and cereal of DeFi, the GO-TO Breakfast. These are usually pegged in different ways and show only a small range of variation. You can read more about the stablecoins here.
Now in spite of this small movement, these have started to generate some heavy numbers.
We are going to explore two pools to see how STABLE are the yields from these.
USDC-DAI
Let’s see how this pool is doing on Uniswap V3:
Here is it’s corresponding strategy on DefiEdge:
https://app.defiedge.io/s/polygon/0xd76dfa2923bf79a235582b3c4ad361f3db0d74c5
Quite stable volume, price spread and fees. This pair is like a calm ocean with minimal waves, but the yield is also a bit on the lower side due to its low risk factor. This is like a classic cappuccino, always loved by those who are fond of it.
Let’s peep into a slightly more lively pair:
BUSD-USDC
The USD price looks quite stable:
How is the pool of BUSD-USDC doing on UniswapV3? Well, here is the answer:
Definitely a wider spread than expected for a Stable-Stable pair. The 24h volume is sure on the lower side leading to a very small fee amount in 24h. It would be really excellent to create a strategy on DefiEdge and find out its numbers. Well, if this pair is the one that excites you too, create a strategy and let us know how it is performing.
That’s All for the research section of this edition of the newsletter. Quite an informative Quidditch match. We hope you as the seeker have found the inspiration to look for your “Golden Pair” of UniswapV3. Hope this christmas brings you to DefiEdge to manage that pair while you receive the great gifts of yields from the DeFi santa. Check out the sections below to see what Experts say about some of the burning questions of the DeFi community while staying up to date about the latest trends in Web3 and DefiEdge community.
Expert’s Corner
Q. Since the incidents of UST/LUNA and FTX, what steps are needed to reinforce the oracle prices and risk assessment for users?
Chainlink Labs continues to further enhance the industry leading security and reliability of Chainlink oracles for users, including:
-Expanding Proof of Reserves token coverage for cross-chain and collateral backed assets.
-Continual improvement of risk assessment frameworks and requirements that feeds need to maintain once they are deployed.
-Proactive documentation with data feed categories to ensure users have the latest status of all live feeds
Learn more about risk mitigation best practices in our documentation:
https://docs.chain.link/data-feeds/selecting-data-feeds
Q. How has the volatile market conditions affected the "futures market"?
Ans. I believe the volatile market conditions will lead to a real lack of liquidity in general within the markets. There is a lot of uncertainty meaning market makers won't feel confident providing liquidity to books across all of crypto, especially futures markets.
Q. What should be the strategy for the DeFi products to build in this bear market?
Ans. The DeFi space is experiencing the first cryptocurrency winter that is putting stress on all protocols that profess to espouse decentralization. But what consequences will this have?
Uniswap has introduced what will perhaps in a few years be recognized by all ( even outside the crypto world ) as one of the biggest revolutions for the world of finance. Thanks to this, users have not only the possibility of being able to act directly without the need to be supported by an intermediary, but also the possibility of being the market. At the height of the bull market, also strengthened by hype and high speculation, it was very easy for defi protocols to grow and establish themselves but without solid foundations in a context in which context still suffered in terms of functionality major GAP. But now? Now there is a need for the protocols to support the evolution of DeFi and to help bridge the gap in functionality with CEX that has always distinguished the two worlds, especially from the point of view of operations for users.
Operating in DeFi has always been complicated, and users have always been subject to the biggest risks in the industry (front running, slippage, price impact, order execution are just some of the major problems). DeFi has laid the groundwork to offer never-before-seen opportunities to users but now the different protocols must develop their growth strategies by orienting them to the development of use cases that can bridge the present gaps, offering users the possibility of using additional functionality not present in the industry today by combining their innovative vision with the technology component. Change requires time and that all stakeholders are oriented to work together in the same direction. As Civilization we have embarked on a path to make DeFi accessible to all, and we are confident that other protocols will accept our invitation.
Onward, upward together we can do it, together! #WeAreCIV
Platform Highlights
What’s Hot in the market?
We integrated with Morpho to make sure there is capital for strategies and making our shares composable in upcoming releases updates
Phase 1 of $OP liquidity mining rewards ended, perhaps quite early and it was distributed to different protocols managing different pools on Uniswap.
Uniswap really taking over all DEXES on all chains and deployment on L2 makes a lot of difference
Uniswap introduces router permit2 that makes it possible to swap multiple tokens and NFTs in one transaction making it swap at best rates.
Diamond creates a tool to backtest data and get fees returns from Uniswap.
Q. Since the incidents of UST/LUNA and FTX, what steps are needed to reinforce the oracle prices and risk assessment for users?
Chainlink Labs continues to further enhance the industry leading security and reliability of Chainlink oracles for users, including:
-Expanding Proof of Reserves token coverage for cross-chain and collateral backed assets.
-Continual improvement of risk assessment frameworks and requirements that feeds need to maintain once they are deployed.
-Proactive documentation with data feed categories to ensure users have the latest status of all live feeds
Learn more about risk mitigation best practices in our documentation:
https://docs.chain.link/data-feeds/selecting-data-feeds
Q. How has the volatile market conditions affected the "futures market"?
Ans. I believe the volatile market conditions will lead to a real lack of liquidity in general within the markets. There is a lot of uncertainty meaning market makers won't feel confident providing liquidity to books across all of crypto, especially futures markets.
Q. What should be the strategy for the DeFi products to build in this bear market?
Ans. The DeFi space is experiencing the first cryptocurrency winter that is putting stress on all protocols that profess to espouse decentralization. But what consequences will this have?
Uniswap has introduced what will perhaps in a few years be recognized by all ( even outside the crypto world ) as one of the biggest revolutions for the world of finance. Thanks to this, users have not only the possibility of being able to act directly without the need to be supported by an intermediary, but also the possibility of being the market. At the height of the bull market, also strengthened by hype and high speculation, it was very easy for defi protocols to grow and establish themselves but without solid foundations in a context in which context still suffered in terms of functionality major GAP. But now? Now there is a need for the protocols to support the evolution of DeFi and to help bridge the gap in functionality with CEX that has always distinguished the two worlds, especially from the point of view of operations for users.
Operating in DeFi has always been complicated, and users have always been subject to the biggest risks in the industry (front running, slippage, price impact, order execution are just some of the major problems). DeFi has laid the groundwork to offer never-before-seen opportunities to users but now the different protocols must develop their growth strategies by orienting them to the development of use cases that can bridge the present gaps, offering users the possibility of using additional functionality not present in the industry today by combining their innovative vision with the technology component. Change requires time and that all stakeholders are oriented to work together in the same direction. As Civilization we have embarked on a path to make DeFi accessible to all, and we are confident that other protocols will accept our invitation.
Onward, upward together we can do it, together! #WeAreCIV
Platform Highlights
What’s Hot in the market?
We integrated with Morpho to make sure there is capital for strategies and making our shares composable in upcoming releases updates
Phase 1 of $OP liquidity mining rewards ended, perhaps quite early and it was distributed to different protocols managing different pools on Uniswap.
Uniswap really taking over all DEXES on all chains and deployment on L2 makes a lot of difference
Uniswap introduces router permit2 that makes it possible to swap multiple tokens and NFTs in one transaction making it swap at best rates.
Diamond creates a tool to backtest data and get fees returns from Uniswap.
<100 subscribers
<100 subscribers
No activity yet