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The market seems to be cooling off a bit, until you realize that the action on Ethereum is being migrated to L2 chains. Base, DegenChain, Polygon and even Dogechain along with others are attracting communities and traders while Uniswap LPs are also migrating/diversifying.
On Ethereum, this week we saw the 0.3% tier pools grew by 7 percent and the 1% shrunk reflecting lower fees. Seems like the market has picked it's meme coins for the season.
Oh and seems like Base season is here.
On the docket this week:
Scroll past Scroll and Degen Chain
Degen LP Party Update and profits from other pools
DyDx LP Vaults
Scroll
Scroll has been consistently doing volume comparable to the total value locked on it.
The chain is roughly seeing 30-50 new LP positions everyday and maybe one of the L2s where in the future we do see some action.
However this may not be the most LP friendly chain. There are no memecoins and only utility tokens like ETH,WBTC,USDC,USDT and and wstETH. Only a few retail LPs here with no opportunities for short term bets.
Degen L3
Just launched 2 days ago and already contesting Blast in TVL and Volume, this could be one of the best chains for LPs, only problem is the chain is rife scams and rugpulls. On the 31st of March, DegenChain saw it's block minted as a successful L3 chain built on the L2 Base. With already 10 million transactions, it might be the dream chain for memecoins.
But as aforementioned, the rate of rugs is too high. There are currently no tools for LPs on the Degen chain as well.
You can expect a through tutorial for LPing on DegenChain from us in the future with a complete toolset for you to make sure you're protecting yourself while picking risky assets.
We are now in our third week of our collective LP learning experience.
Since the last two weeks, the price of $Degen has more than doubled and then receded to now being $0.048 and our HODL metrics do not look very good. Indeed holding on to $DEGEN would have netted us more.
However we started of with 0.8ETH and are currently sitting at nearly 1.1 ETH including fees.
Coupled with our rewards from the LP incentive program, which stands at nearly 1 ETH ($3300), we are def looking good!
We went out of range on both of our positions when the price of Degen came down. And are constantly monitoring it's performance. Could we have done better with a wider range or maybe a position with more Degen at the start? Or maybe we should have made waaay more positions to cater to every possible price jump?
We're are answering these questions and more on the PoolFish Youtube channel where you can find content that revolves around being a responsible and profitable LP.
What we are sure of is that we made the right choice with LPing with Uniswap. While other Dexes do offer native rewards, Uniswap has become synonymous with crypto trading itself i.e The "Coke" of Cola
This is subjective to the project since some people are having success on Aerodome with other pairs.
Other L3s
The only comparison to Degen L3 is DMT chain, and it seems because of DEGEN, $DMT also got a boost ion price. DMT/WETH or DMT/USDC on Arbitrum could be a good choice for LPing aswell but careful of the downward swings!
And some LPs seem to be doing well, except the rise in DMT may be temporary since there is a L3 hype right now. But as of now it seems like Degen is the clear winner. There are LP opportunities there but we should wait for the infrastructure to be developed.
Similar to how there is fierce competition within L2s, we can expect for a similar chain v chain between L3s.
dYdX Chain is rolling out LP Vaults and an AMM engine in two phases to significantly improve liquidity on the platform. These LP Vaults will boost the overall functionality of the protocol
The first phase-- deposits only (experimental), then in the second phase-- full functionality with withdrawals and a user interface.
And LPs can expect to get compensated for entering into these Vaults.
We'll keep updating as the dydx releases more info on the topic.
-- Base --
Since Base coins have being rocketing, here are some top picks. Most of them are currently very volatile but a cautious position with mostly ETH could yield some good results over a few weeks. All of these are seasonal memecoins so don't expect them to be lasting for months on end! ETH/doginme | ETH/BRIUN | ETH/PONCHO | ETH/FRAME
-- Arbitrum --
SPA/ETH on BASE in the exotic pairs category for the ones feeling adventurous.
-- Optimism --
-Ethereum-
ELON/ETH for those who are looking for safe bets that go to moon when anything SpaceX/Elon Musk happens.
We might not get to Mars anytime soon though.
Uniswap does have a bright future in the coming months and a bullish strategy through the summers might be a good option. Another very viable pair is WETH /UNItoo since ETH is lagging behind BTC anyways.
-- BASE --
Since base has emerged as the memecoin central (and many rugs too--be careful), it only makes sense that LPs can capture so much fees from stables/ETH pairs. Degens are apeing in left and right and have pushed the fees for Base stable/ETH pairs incredibly higher ⬆️ than other chains.
--ETHEREUM--
USDC/ETH & WBTH/ETH for whose looking for a safe bet
It seems like we are anchored at the previous all time high from the previous cycle and it seems so that BTC might be headed for a 100k by the end of the year. Memecoin frenzy is keeps getting crazier and L2s are being finally being utilized for more than airdrop farming.
We'll see you next week with an in-depth analysis of the L3 Degen chain and LP opportunities within it. Stay Safe!
The Poolfish
6
/poolfish Liquidity Provider Newsletter is out! What we covered. - Exploring Scroll and Degen Chain LP Opportunities - Degen LP Party Update and profits from other pools - DyDx LP Vaults https://paragraph.xyz/@poolfish/exploring-lp-opportunities-on-new-chains