GM LPs. How are you holding up thus far in the bull run? LPs across chains are seeing some of the highest fees since we are seeing after ETH and BTC bounce back from a retracement the last two weeks.
From distasteful memecoins on Solana to Base season memecoins surprising everyone, LPs have never been so spoiled for choice making high stake bets. In the meantime, BTC and ETH with their stable pairs have been accruing lots of fees from panic sellers.
This week on the docket :
Stable-coins/ETH pairs generate millions among volatility
PoolFish DEGEN LP Party Update and PnL
AirDAO loses 35 million to hack from their AMB/ETH Uniswap Pool
Base > Arb for LPs
his week the WETH/USDT pool and WETH/USDC were the clear winners however with ETH being a more volatile than usual at this time, it might take sometime to catch up with the impermanent loss.
With the anticipation of an ETH ETF, this could be a buy the rumor point for ETH and entering ETH with a stable pair for LPing could be a good bet.
One pair that has done exceptionally well has been Maker DAO (WETH/MKR) as their price has been rising after their decision to review their lending rates, making the price surge more than 50%.
Maker DAO generated nearly half a million in fees from under 3000 trades in the past week. The 0.3% and 1% pools accumulated the most fees among the pools👇🏽
However, one look at both the pools on Poolfish, and we can see that this pool might not ideal for the average LP. Retail LPs are sparse and not much in profit. And since this is a bull market we are looking for above average returns.
Last week we embarked on a mission to LP in a memecoin in Base which has been exploding in popularity; DEGEN. We brought along many friends and made a party to collect funds and inject them into the 0.3% WETH/DEGEN pool position.
Since then, we have been optimizing for the best returns while remaining cautious about over buying DEGEN. Since we are dealing with a highly volatile memecoin, it made sense for us to divide our WETH/DEGEN into two different pools to support different ranges for DEGEN.
Our initial position which had very little $DEGEN got quickly traded out of DEGEN and we netted a loss of nearly $36 after collecting our fees of roughly $47. Our position had quickly become out of range since $DEGEN surged a lot and broke out of our concentrated position. We exited this position as we wanted to enter a fairly lax position now with more $DEGEN. The loss mainly comes from ETH going down in the meanwhile.
Currently we have two positions, this is to ensure that we don't miss out on earning fees if the the price of DEGEN deviates or goes higher where our second position will activate with a 100% ETH at this point but
Liquidity Mining for DEGEN
One important thing here is that our LP position is also accruing LP mining rewards from DEGEN LP rewards pool which have been shown to be excellent at bootstrapping liquidity into a project. We expect these rewards to cover any of our losses.
At this point our current in range position is sitting at a roughly 600% APR. The best frame to see it would either ETH or USD. In USD our position has accumulated $250 in PnL. While in HODL or impermeant loss statistics we seem to be in a loss of ~$78.
And our initial deposit of $DEGEN has been reduced to ~1/3 of what we initially pooled in.
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It's a bull-market rife with scams and hacks in every corner. AirDAO's Uniswap pool got hacked on the 21st of March. And this time, this was social engineering attack that lead to an enormous loss of funds. There are numerous attack vectors in which a scam might come for your token. Whether it's liquidity rugs, white/blacklisting token swaps or a smart contract exploit or any other method, no amount of caution is too much.
While Arbitrum is the most use chain since they were the first L2 to become incredibly popular, Arb has been seeing steady decline in fees and trades. This week we see USDC and ETH pairs making good fees despite declining from the past week. The primary exchange on Arb, GMX and another important Defi rail, PENDLE finance, raked in ~100k fees each.
While WETH/USDC and USDC(bridged) made good fees ~$900k are
WETH/ARB 0.05% and WETH/GMX 0.3% are however, our main picks for the week to make a healthy amount of APY while also being a safe bet.
WETH/GMX 0.3 did nearly 2% fees/TVL while WETH/ARB 0.05% did nearly 1%. A long term cautious strategy for both pools could be a good choice since most people are bullish on ETH anyways.
In contrast BASE has been seeing much more action in terms of volume from memecoins and a slew of DEGEN traders looking for the next 100x. Moreover, Base is being widely adopted becasue of being such a high trust brand.
For LPs Base could very well be the best chain given the amount of project launches, their distribution and gas costs as compared Arb.
--POLYGON--
MATIC/BONSAI & ETH/BRETT in the exotic pairs category for the ones feeling adventurous.
BONSAI token spawned on Lens protocol clients when they finally realized they needed a memecoin. BONSAI is polygon, which might not be a mecca for memecoins for everyone, but it is for a passionte community on Lens.
--Optimism--
ETH/DAI and ETH/SNX on Optimism Chain
Synthetix Exchange on Optimism is one of the biggest projects on the chain and is the most high volume DEX for the chain. While the ETH/DAI pair is one of the highest Volume stable/ETH pair on the chain with 33,786 trades int he past 7 days.
--Ethereum--
USDC/USDT on ETH
This week we saw our LP fees holding up, we also saw a market correction that can make veteran LPs choke, so keep your risk profile in check and ask us any questions in the reply to this email!
See you fishes next week!
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The Poolfish
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https://paragraph.xyz/@poolfish/degen-lp-party-airdao-hack-base-vs-arb
Weekly Poolfish Newsletter is out! What we covered: - Stable-coins/ETH pairs generate millions among volatility - PoolFish DEGEN LP Party Update and PnL - AirDAO loses 35 million to hack from their AMB/ETH Uniswap Pool - Base > Arb for LPs https://paragraph.xyz/@poolfish/degen-lp-party-airdao-hack-base-vs-arb