DeFi user, farmer, yapper, tester
Singapore
Joined December 2024
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Shallots retweeted
Introducing Primus Confidential Finance (dapp.primuslabs.xyz), where privacy meets transfer and yield on-chain.
We're excited to announce a collaboration between Primus @primus_labs, Unitas @UnitasLabs, and United Stables @UTechStables to launch a Confidential Finance Product on @BNBCHAIN, powered by the Fully Homomorphic Encryption (FHE) technique.
This isn't just another confidential transfer or on-chain vault. It's a new standard for how private, compliant, and capital-efficient on-chain finance can work. 🧵
Shallots retweeted
Money Hacks: Weekly Budgeting
I have been doing weekly budgets for 6 months now. Honestly, it has changed me for the better.
I used to eat into my savings multiple times in a month because I kept exhausting my available cash.
Now I will teach you a method to save a lot more than you think you can.
Every month, I allocate ~50% of my salary for monthly expenses. The essentials being
> Giving mom and dad money
> Phone bill
> Subs
> Insurance
> The rest for daily living and dating
I then calculate my weekly budget based on the remaining amount as such:
(90% x remaining) / 4 = weekly budget
The 10% is intentional as an extra goal to hit to save more.
The catch is that it's alright if I don't meet the 10% savings goal at the end, as long as I don't eat into my savings for my monthly expenses.
After 6 months, I have saved an extra $976 which is insane! That extra cash will then be used to DCA into BTC.
Why weekly instead of monthly?
Personally, I feel that 30 days is too long and I'll end up thinking I have so much money at the start which will cause me to overspend in the first 2 weeks of the month.
Daily budgets are too inflexible and restrictive. It will probably give me too much misery.
Weekly is perfect because I can review it every 7 days and mentally reset each week to make sure I stay the course.
The lesson:
> Small wins compound over time
> Track your progress so that you can see how far you've come
> Progress isn't linear. Look at me, I failed the budget 3/23 times but still ended up saving
Of course the overall savings and budget viability is dependent on your salary and life circumstances.
I hope that this can inspire some of you who are struggling to keep your expenditure in check.
What are some methods you guys use to save more money?
Shallots retweeted
"Comparison is the thief of joy."
Growing up I was told this quite often, stop comparing yourself to others.
Stay in your own lane and focus on what you need to achieve.
But the reality is... it's harder than it looks.
Seeing people younger than you achieve more in life than you can be daunting.
It's simply human nature to look and compare.
What we have to keep in mind is that everyone has their own circumstances.
Better environment. Richer parents. Higher growth opportunities.
Not everything is a constant hence comparison is simply unfair.
So how do I stop?
The answer is simple....
Gratitude.
Being grateful for what you have.
Don't have a nice car? Somebody has to bike to places.
Don't have a car? Somebody has to walk to places.
Don't have a bike? Somebody can't even walk.
Break out of that "envy chain" and take a moment to reflect.
Next time you stop and compare, take a moment to look at the things you do have in which others don't.
Shallots retweeted
As DeFi evolves, so does the leading Lending Protocol @aave
Here are the key upgrades Aave V4 brings:
> Liquidity Management
> Liquidation Engine
> Risk & Pricing
In Aave V3, liquidity is contained within individual markets.
eg. Ethereum Core, Prime, RWA Horizon,etc
Liquidity cannot flow between these markets causing
> Fragmentation and inefficiencies
> New markets needing to independently attract capital
> Slow TVL growth
Borrow positions often faced over-liquidation even when health factor fell barely below 1 as liquidation bonuses are static and pre-determined.
"Dust" borrow positions were also common due to
> Fixed close factors
> Static liquidation bonuses
> Gas costs > Liquidation bonus
Borrow rates were solely calculated by supply/demand curve. This meant riskier collateral paid same borrow rates compared to safer ones, endangering lenders.
This resulted in idle markets, users incurring more collateral loss, dust positions accumulating as bad debt overtime and lenders inheriting higher risks without proportional compensation.
In Aave V4, liquidity is unified via Hubs and Spokes.
Hub: Central liquidity source enforcing system-wide accounting by adding supply and debt caps on spokes
Spokes: User-interacting module facilitating supply and borrow based on their defined caps.
Imagine a big warehouse in a supermarket (Hubs) where different aisles sell different products with differing prices, expiry dates, health risks (Spokes).
This enables
> Central shared liquidity
> Capital efficiency
> Scaling without liquidity migration
The outcome? No more idle markets. Increased LTVs, smooth scaling.
The changes in V4's liquidation mechanics include
> Target Health Factors
> Variable Liquidation Bonuses
> Dust Prevention
Instead of repaying a fixed close factor, liquidators pay just enough to restore borrower's health factor.
Variable liquidation bonuses scales with health factor. Lower HF = Higher bonus. This incentivizes liquidators to remove the riskiest positions first.
Dust prevention achieved by liquidators fully repaying any debt or collateral that is <$1,000 after liquidation.
V4 also integrates a Risk Premium system
> Base rate from Hub (supply/demand)
> User Risk Premiums based on quality of collateral
Safer collateral pays closer to base rates.
Riskier collateral pays more.
V4's allg till we see the new risks involved.
> Shared liquidity risk
> Governance configuration risk
> Liquidity priority risk
> Overconfidence in capital efficiency resulting in pushing utilization too far
> New angles for DeFi exploits
Since multiple Spokes now draw from the same liquidity Hub - misconfigured parameters, correlated collateral, or stress in one Spoke can indirectly affect others.
This increases the protocol’s “blast radius” compared to V3 where risk is typically contained within one market.
V4 reduces idle capital and dust at the cost of higher systemic, governance, and correlation risk making user behavior and risk management more important.
Practical tips to be a safer user:
> Don't max out your LTV, keep HF > 1.6
> Always check the collateral, LTV and LTs
> Monitor your positions, don't set and forget
> Don't loop correlated assets, use V3 if you want to
> Be wary of newer spokes
> Keep some stables ready to repay debt
> High APY = High risk
Always great to see Aave leading at the forefront of DeFi.
What do you guys think about the new upgrade? Does it improve your overall experience?
Shallots retweeted
Are we as a space seriously deciding to rewind the clock straight back to the wild west ICO era where teams could raise tens of millions, disappear into thin air, and the community just shrugs it off?
Because if you’ve been watching what’s happened this past week, it’s hard to call it anything else but that.
—
First up: @TroveMarkets
Target raise: $2.5M at $20M FDV
Actual raise: $11.5M
Refunded: $2.4M
Kept: $9.4M
Their justification?
“From the total raise, we will retain $9,397,403 to continue building a perp DEX on Solana.”
They claim to be a “build-first” protocol yet it’s been three days since their so-called “cleanup” statement, and not a single word from the team.
No new updates and no roadmap. Just radio silence after pocketing nearly $10 million.
Let’s be honest: if your plan is to “build,” but your first move is to hoard investor funds, you’ve already shown your hand.
This isn’t “building.” It’s the same old ICO script with investors losing heavily.
—
And then there’s @intodotspace
Target raise: $2.5M
Actual raise: $20M+
Refunded: $7.3M+
Their excuse?
“The $2.5M target was a soft cap, not a hard cap.”
Now they’re claiming that $2.5M was the minimum needed to start, and they actually needed more than that to “build leveraged prediction market infrastructure at scale.”
Really? So we’re supposed to believe that a project with no live product, no verified team, and no transparency suddenly needed an eight-figure raise “to operate safely”?
It is safe to say without bias that if $2.5M only gave them a few months of runway, just maybe their model was flawed from the start.
Instead, like Trove, they’ll “build” with what’s left and disappear into the same fog of unaccountability we’ve seen for years.
—
Going forward, enough is enough. Let’s draw a line right here.
Because if we don’t, more "builders" will think this is normal and it’s not.
Here’s how we protect ourselves:
• Don’t participate in any raise that doesn’t stop once the target is met. If there’s no hard cap, walk away.
• Only support raises that guarantee instant refunds if oversubscribed. No “refunds later” nonsense with undisclosed criteria.
• Avoid undoxxed and unvetted teams at all costs. If they won’t show their faces, don’t show them your funds.
• Protect your liquidity always because no one else will.
—
The greed cycle is back but we don’t have to play the same game.
If we keep rewarding these shady “raise-now, build-later” antics, we’re signing up for another wave of heavy rug pulls.
Crypto can’t grow if we keep falling for the same old scams wearing new branding.
Let’s not repeat history. Let’s remember it .
Shallots retweeted
Aave, Pendle, Fluid and a few others are quietly doing something TradFi still struggles with.
They are turning idle dollars into productive dollars with full transparency, 24/7 liquidity, and rules based risk.
Here is what each of them is doing exceptionally well 👇
> @aave is the default balance sheet for DeFi
When markets get real, capital doesn’t want novelty. It wants depth, liquidity, and predictable risk controls.
Aave built the money market people trust to park size, borrow size, and survive volatility. That is why it keeps attracting sticky liquidity instead of mercenary TVL.
> @pendle_fi productized yield into a financial primitive
TradFi sells term structure. DeFi used to sell APR screenshots.
Pendle turned yield into tradable duration with PT and YT. This is how you get fixed rate style products, hedging, and real portfolio construction onchain. It makes stable yields and real yield assets behave like instruments, not farms.
> @0xfluid is proving efficiency is a moat
Most lending markets compete on incentives. Fluid competes on execution.
It is building liquidity depth and borrow utility in a way that keeps the system usable as it scales. The signal is not just TVL. It is utilization and durable borrow demand as liquidity grows.
---
The bigger point is why this beats TradFi on capital attraction.
DeFi wins by compressing the stack
→ Custody, settlement, risk, execution, distribution all live in one state machine.
→ Lower friction, faster iteration, globally accessible yield without permissioned onboarding.
B2B cross border still routes through correspondent banks. Multiple hops, multi day settlement, meaningful fees.
Even card payments run through layers of intermediaries. Days to settle, fees at each layer.
Onchain stablecoin rails compress the cost curve. L2 scaling makes it even cheaper and faster.
-----
TradFi offers yield. DeFi offers yield plus composability.
As stablecoin rails scale, the fight is where balances live between spends.
Aave. Pendle. Fluid.
Different layers, same outcome.
DeFi replaces the plumbing, then absorbs the flow.
Maybe I'm just short-term thinking but no yield on stablecoins is good for DeFi:
- Yield on USDC on Coinbase or holding via Circle? -> Stablecoins never leave their ecosystem
- No yield on stablecoins? -> Users forced to chase yield in DeFi.
This generates revenue for DeFi protocols, promotes innovation, and new models.
$AAVE, $PENDLE, $FLUID and other protocols would benefit.
Although native yield bearing stablecoin wrappers would be cool. Something like wstUSDC.
Shallots retweeted
Borrowing Assets on @aave 3/4
Short Recap:
> Borrow position is overcollateralized
> Repayment of position is principal amount + interest
In this post, we explore some borrow features like
> Health Factors
> E-mode and Liquid E-mode
Health Factor:
A metric indicating the stability of a borrow position.
Health Factor > 1 = Safe
Health Factor < 1 = Liquidation process begins
Your Health Factor starts to decline when your LTV increases. Once LTV starts to exceed the Liquidation Threshold (LT), Health Factor becomes < 1
Health Factor is important for users as it triggers users to increase it to > 1 before liquidation begins. You can increase it by
> Supplying more collateral
> Repaying a portion of the outstanding debt
These actions basically bring your LTV back to a safe level
E-Mode:
High Efficiency Mode is designed for assets which are highly correlated. This means that their prices follow the same directions. (eg. USDC/USDT, ETH/stETH)
Because of their high correlation, collateral and debt rise and fall in unison which present the following advantages
> Higher LTVs
> Borrow more against your collateral
> Improve capital efficiency
As E-mode only works for correlated assets, there are multiple categories within E-mode with their own correlated assets, specified LTVs and liquidation rules
This is to prevent the mixing of unrelated assets
Liquid E-Mode:
E-mode but only for assets with deep liquidity. When assets with thinner liquidity are sold in huge amounts, it could trigger depegs which can trigger liquidations and incur bad debt quickly in the protocol
In simple terms, Liquid E-mode is the safest E-mode
In this manner, risks are isolated to their specific categories and normal users do not have to bear the unnecessary risks.
DeFi Lending for Beginners (Week 2)
Introduction to @aave
Aave, originally known as ETHLend was initially a peer-to-peer (P2P) Lending protocol which eventually pivoted to pooled liquidity which in current times is the DeFi Lending standard.
Today, Aave stands as the leading protocol with the highest TVL per DeFiLlama totaling at $34.8B with an ATH of $44.7B in Oct 2025.
Other mind-blowing metrics include
> $1.74B Cumulative Fees
> $2.64B FDV
From 2017 to our current age, Aave has weathered through the merciless torrents of market collapses, black swan events and came out on top when no one else did securing themselves the position as the top DeFi lending protocol.
In a 4-part series, I cover
> Aave's Mechanics and their definitions
> The Supplying Process
> The Borrowing Process
> Other ways to participate in Aave's ecosystem
1/4 Aave's Mechanics and definitions
Overcollateralization:
> Users cannot borrow more than they supply
> Protects Lender's deposits as well as the protocol against market volatility
Eg. To borrow $100 USDC you need to supply $150 of ETH
Supply Yield Accrual:
> Deposit Token -> Receive aToken representing share of pool and automatically starts earning interest
> As interest accrues, aToken increase in amount and can be withdrawn anytime for the increased value
Eg. Supply 100 USDC -> Receive 100 aUSDC at 2% APY. After 1 year, assuming rates stay constant, redeem 102 aUSDC for 102 USDC.
Utilization Rate:
> How much of the available money in the pool supply is being borrowed
> High = Supply APY increase since demand increase
> Low = Supply APY decrease since demand decrease
Eg. Total ETH in pool supply = 100 ETH, if 50 ETH is being borrowed from the pool, Utilization Rate = 50%
If it goes to 60%, Supply APY increases, if down to 40%, Supply APY decreases
Loan-To-Value (LTV) Ratio:
> How much you can borrow against your collateral
> Differs from asset to asset
> Higher LTVs = Major/Stable assets, safer
> Lower LTVs = Volatile/Illiquid assets, riskier
> Think of it as a buffer, LTVs are higher for riskier assets because price swings are big while lower for safer assets as price swings are small
Eg. 75% LTV for ETH. Supply $100 of ETH, maximum borrow = $75 of whatever asset
Liquidations:
> A process where a position's LTV exceeds the permissible threshold resulting in the loss of collateral
> Protects lender's deposits
> Done by liquidators who repays the borrowed position and receive more collateral from the defaulter to earn a profit keeping Aave's overcollateralization safe
> Usually has a buffer after specified LTV to give borrowers time to react by either adding more collateral or repaying their debt to lower the LTV
Eg. Taking the LTV example, imagine you borrow USDC. The LTV threshold is 80%
If ETH up, LTV down, can borrow more until hit 75% again.
If ETH down, LTV up to 82%, your position becomes riskier.
ETH keep down = exceed LTV threshold past 85% = liquidation starts = lose a portion of collateral
Repayment:
> Principal amount + interest accrued on loan
Eg. Borrow $100 USDC at 2% APR. After 1 year, assuming rates stay the same, repay $102 USDC
That was a lot to take in so make sure you bring this knowledge with you to my next post
Shallots retweeted
Supplying Assets on @aave 2/4
Short Recap:
> Supplied tokens automatically accrue interest by increasing in balance
> Supply APYs determined by borrow utilization rate and governance decisions
The standout feature we are exploring today: Isolation mode
Isolation Mode is a feature in Aave V3 that was implemented to safely introduce new volatile assets as collateral
Freshly launched coins have very violent price swings which could cause a lot of chaos within Aave's lending markets if not managed properly
To include the use of such risky assets, Isolation Mode only permits the borrowing of specific stablecoins listed by Aave Governance and can only be used under the following conditions
> It is the first asset you are supplying
> No other assets enabled to be collateral
What are the benefits of Isolation Mode?
> Maintain exposure while unlocking liquidity
> New assets have higher supply APYs
Why is Isolation Mode important for Aave and its users?
> Debt Ceilings enforce a max total borrow limit which limits losses to stablecoin suppliers if collateral goes to 0
> Restrict borrowable assets to stablecoins that do not fluctuate in price hence lowering risk
> Lower LTVs to create more buffer time for reaction
> Higher Liquidation Bonuses to incentivize Liquidators to quickly remove bad debt
> No collateral mixing prevents blue-chip collaterals from experiencing supply shock in the event the risky asset crashes
Isolation Mode was designed with high conviction alt holders in mind
Isolation Mode not only brings inclusivity to new users but also protects its existing users with its risk parameters in place
DeFi Lending for Beginners (Week 2)
Introduction to @aave
Aave, originally known as ETHLend was initially a peer-to-peer (P2P) Lending protocol which eventually pivoted to pooled liquidity which in current times is the DeFi Lending standard.
Today, Aave stands as the leading protocol with the highest TVL per DeFiLlama totaling at $34.8B with an ATH of $44.7B in Oct 2025.
Other mind-blowing metrics include
> $1.74B Cumulative Fees
> $2.64B FDV
From 2017 to our current age, Aave has weathered through the merciless torrents of market collapses, black swan events and came out on top when no one else did securing themselves the position as the top DeFi lending protocol.
In a 4-part series, I cover
> Aave's Mechanics and their definitions
> The Supplying Process
> The Borrowing Process
> Other ways to participate in Aave's ecosystem
1/4 Aave's Mechanics and definitions
Overcollateralization:
> Users cannot borrow more than they supply
> Protects Lender's deposits as well as the protocol against market volatility
Eg. To borrow $100 USDC you need to supply $150 of ETH
Supply Yield Accrual:
> Deposit Token -> Receive aToken representing share of pool and automatically starts earning interest
> As interest accrues, aToken increase in amount and can be withdrawn anytime for the increased value
Eg. Supply 100 USDC -> Receive 100 aUSDC at 2% APY. After 1 year, assuming rates stay constant, redeem 102 aUSDC for 102 USDC.
Utilization Rate:
> How much of the available money in the pool supply is being borrowed
> High = Supply APY increase since demand increase
> Low = Supply APY decrease since demand decrease
Eg. Total ETH in pool supply = 100 ETH, if 50 ETH is being borrowed from the pool, Utilization Rate = 50%
If it goes to 60%, Supply APY increases, if down to 40%, Supply APY decreases
Loan-To-Value (LTV) Ratio:
> How much you can borrow against your collateral
> Differs from asset to asset
> Higher LTVs = Major/Stable assets, safer
> Lower LTVs = Volatile/Illiquid assets, riskier
> Think of it as a buffer, LTVs are higher for riskier assets because price swings are big while lower for safer assets as price swings are small
Eg. 75% LTV for ETH. Supply $100 of ETH, maximum borrow = $75 of whatever asset
Liquidations:
> A process where a position's LTV exceeds the permissible threshold resulting in the loss of collateral
> Protects lender's deposits
> Done by liquidators who repays the borrowed position and receive more collateral from the defaulter to earn a profit keeping Aave's overcollateralization safe
> Usually has a buffer after specified LTV to give borrowers time to react by either adding more collateral or repaying their debt to lower the LTV
Eg. Taking the LTV example, imagine you borrow USDC. The LTV threshold is 80%
If ETH up, LTV down, can borrow more until hit 75% again.
If ETH down, LTV up to 82%, your position becomes riskier.
ETH keep down = exceed LTV threshold past 85% = liquidation starts = lose a portion of collateral
Repayment:
> Principal amount + interest accrued on loan
Eg. Borrow $100 USDC at 2% APR. After 1 year, assuming rates stay the same, repay $102 USDC
That was a lot to take in so make sure you bring this knowledge with you to my next post
Shallots retweeted
DeFi Lending for Beginners (Week 2)
Lending has been around in TradFi for a long time and the base concept is simple.
Banks/Institutions borrow money from retail and deliver a fixed-rate interest at maturity and use that capital for further investments.
How does DeFi Lending differ from TradFi and why would we choose it? Read on to find out!
DeFi's primary factor of earning yield from Lending is through Borrow Demand.
The DeFi Lending Process:
> Lenders supply collateral (Eg. ETH)
> Borrowers borrow from the pool
> Borrow rates are charged to borrowers
> Borrow rates paid fluctuate based on supply and demand by algorithmic determination
> Yield is distributed to Lenders proportionally based on the amount they supplied relative to pool size
> Additional yield can be earned through seasonal campaigns based on protocol
Why would users want to borrow assets?
> Leveraged exposure (eg. supply ETH, borrow ETH, ~2x exposure)
> Stay liquid without selling spot (eg. supply ETH, borrow USDC)
> Advanced Yield Strategies to maximize capital efficiency (eg. supply ETH, borrow USDE, stake USDE recieve sUSDE, swap for PT-sUSDE, supply PT-sUSDE as collateral)
The catch:
Borrowers must supply more collateral than assets they borrow. This is known as Overcollateralization. This is to ensure
> Borrowers can't default payment without consequences
> Protect Lenders' deposits
> Protect Stablecoin Pegs (eg 1 USDC = $1)
Why we would choose DeFi > TradFi:
DeFi Lending is a yield strategy that is more complex than just supplying collateral to earn yield.
When done right, you can optimize the use of a single asset to produce yields that far outperform traditional fixed-rate lending.
That is of course, by doing your own research and understanding the inherent risks in every strategy that you deploy.
In week 2, join me as I explore Lending protocols, the process of opening a Lending position, the risks that you bear as a lender as well as a few strategies you can deploy to maximize the use of your capital.
If you haven't yet seen my Week 1 LP journey, have a look at my highlights or the article attached to look through what I learnt from opening my first LP position.
Shallots retweeted
The LP process that no one explains to beginners:
In this post I cover:
- Asset Selection
- Fee Tiers
- Price Ranges
- Uniswap V2/V3
TLDR:
- Asset Selection determines your main strategy
- Fee Tiers aid with inventory risk and IL
- Price Ranges improve capital efficiency but increase risk of losses
- V2/V3 depends on what kind of user you are
1. Asset Selection
When it comes to choosing which pair of tokens you want to LP in, there are some factors you must consider.
> How volatile can each token get?
> Where do I think the price of the token is headed?
By answering these 2 questions, it sets the main strategy that you will deploy in order to juice the best APRs
In my previous post, I chose ETH/USDC because
1. ETH is a blue-chip alt that will not disappear overnight
2. USDC is a stablecoin that many users use for trading
The volatility of ETH can be wild which is the main driver for trading activity which generates more trading fees, hence improving overall returns.
2. Fee Tier
Fee Tier selection exists to compensate LPs from inventory risk and impermanent loss (IL). More on IL in future posts.
A range from 0.05% for extremely stable pairs (eg. USDC/USDT) to 1% for extremely volatile pairs (eg. memecoin/SOL) are available for selection when opening an LP position.
Imagine if you opened an LP position for memecoin/SOL but only had a 0.05% fee per trade. Not only do you risk the depreciation of both the memecoin and SOL, the fees you earn will be too low relative to the risk.
You may ask "So why can't I just select 1% fee tier for USDC/USDT and earn free money?".
For extremely stable pairs, liquidity is deep and the price impact per trade is low. In such cases, traders are sensitive to fees. Traders would be routed to 0.05%-0.3% fee tier pools instead of yours because who wants to pay extra fees for a stable swap.
1% Fee Tier works best in volatile scenarios especially in trading freshly graduated coins because liquidity is thin and price is moving fast. Traders will not mind paying 1% fees in order to get in earlier and LPs are compensated fairly for the risk of such volatile pairs
In the case of our example, ETH/USDC is a relatively safe pair with moderate volatility so the 0.3% fee tier was selected.
3. Price Range
Fees are earned only in the price range that you select. Outside of these ranges, fees are not earned and depending on whether it is outside the upper or lower bound, it will determine if you experience capped upside or full downside. (more on this in an upcoming post)
Uniswap allows you to choose 4 preset range strategies with each one based on differing scenarios of where you think the price of the asset is headed (in this case ETH).
You can choose the preset ranges or set a custom range if you are confident in your price prediction of ETH.
4. Difference between Uniswap V2/V3
To put it simply,
V2: xy=k AMM curve
V3: Concentrated Liquidity
In V2, capital is distributed evenly between the price 0 and ∞, thinning out your capital. Capital has less depth and hence will not earn as much fees.
In V3, capital is distributed only across the price range that you have chosen, hence concentrating liquidity. Liquidity is deeper and hence earns more fees.
V2 fits best if
> You want to be hands-off
> You have no clear price view
> You are LPing long-term
No need for rebalancing, repositioning and active monitoring. Earns less fees than V3 but will always be earning.
V3 fits best if
> You are active
> You have backtested systems to predict price
> You are LPing short term with smaller capital
Active monitoring and confidence in price prediction is required. Earns more fees than V2 but has chance to go "out of range" resulting in capped upside or full downside.
To understand this difference, refer to the attached image from Uniswap's blog for an example
To conclude, there are multiple factors to consider before opening an LP position which can be daunting for new DeFi entrants. Remember to always DYOR
Beginner Yield Farming:
7-day @Uniswap LP position
Goal:
Explore the protocol and learn how to open an LP position. Evaluate emotions on UX and note takeaways on LP mechanics
Asset:
ETH/USDC
Chain:
Base
Amount:
$190
As you follow the steps below, take note of the parameters chosen and I will explain fully in the next post why I selected those options for our LP strategy.
How to open a position (step-by step):
1. Head to the Uniswap dApp
Make sure to look for the official Uniswap X account and access the dApp via their official link
On the landing page, click on "pool"
2. Creating a new position
- Under "Your positions" click on "+ New"
- In the top right, change option to "v3 position"
- Select ETH and USDC as your token pair and choose 0.3% Fee Tier
3. Set price range
- You will only earn fees within the range
- Set it as roughly + and -5% by dragging the pink sliders up and down
(I can't add any more photos due to limit)
4. Deposit Tokens
- Deposit an amount of ETH/USDC and the protocol will automatically calculate the amount required for the other tokens
5. Review and Create position
- Remember to check your transaction in your wallet extension that nothing looks sus in case you fuck yourself over
Congrats, you've just opened your first LP position on Uniswap.
In the next few days, I will be reviewing what I learnt from opening the position and covering the factors to consider before arriving at the final strategy which includes
- Asset selection
- Fee Tier selection
- v2/v3 selection
- Price Range selection
Stay tuned!
Shallots retweeted
Beginner Yield Farming:
To start off our journey, I have chosen Uniswap as the first protocol to experiment LPing with
If you don't know what LPing is, check out the post I wrote before diving into this
In this post I cover:
> What Uniswap is
> What an Automated Market Maker (AMM) is
> Benefits of AMM VS Order Book Method
What is Uniswap?
Uniswap is a Decentralized Exchange (DEX) created in 2018 which enables trading of tokens directly from your wallets without a centralized authority. This is done through the use of AMMs. Uniswap also introduced the concept of Liquidity Provision which paved the way for DeFi today.
What is an AMM?
In Centralized Exchanges (CEX) (Eg. Binance), a traditional Market Maker uses an Order Book method where trades are executed only when a bid (buy) order matches an ask (sell) order.
An AMM however determines the price with the constant product formula (x*y = k) where swaps take place instantly against the pool's liquidity.
x = Token A
y = Token B
k = Constant
At all times, k stays the same as x and y fluctuates in value
3. Benefits of AMM VS Order Book
a. Trade Execution
- Order Book: Need to wait for matching order
- AMM: Instant swaps against the pool
b. User Experience
- Order Book: Requires understanding of order placement, spreads and order-book depth
- AMM: Simple User Interface, just choose amount and click "swap"
c. Liquidity
- Order book: Requires approval from the exchange and a special account
- AMM: Anyone can be a Liquidity Provider (LP) by supplying the 2 tokens and earning fees
More than just these points I stated, there are more factors in play which we will explore as I open a position and explain further on in later posts.
Conclusion:
Uniswap pioneered DeFi by introducing AMMs and LPing to perform instant swaps against a liquidity pool. While traditional CEXs can de-list orders or freeze funds at any time, Uniswap as a DEX allow permissionless usage as your wallet is self-custodial.
LPing opens a new door for anyone to be able to participate to earn fees regardless of the kind of user you are, opening up the floor for token pairs to have deep liquidity.
In the next post, I'll be showing an LP position on Uniswap and walk you through the steps in opening one and what to take note of before confirming the position.
Let me know if this post helped you!
Stable Yield Sources for Beginners that are easy to execute
Week 1: Trading Fees
Trading Fees are charged to users who perform swaps on Decentralized Exchanges (DEXs). Fees are paid to the protocols as revenue as well as incentives to Liquidity Providers (LPs)
If you're looking for an option to earn safe yield from DeFi, LP-ing is a very common strategy to deploy. In this post, I cover the basics of
> What LPing is
> How you receive yield from trading fees
> Factors influencing yield
1. What is LPing?
All tokens need liquidity which comprises of a pair of tokens eg. ETH/USDC pool in order for swaps to be performed. Being a Liquidity Provider is simply supplying the tokens into the pool to enable trading
2. How is yield received?
When you deposit a token pair eg. ETH/USDC into a pool, you receive LP tokens representing the share you own relative to the total pool size. When trades are placed and fees are paid by traders, you earn the amount of fees proportionate to the amount of tokens you supplied
3. Factors influencing yield
a. Trading Volume
- Higher trading activity = more fees accrued
b. Fee Tiers
- Low fees for stable pairs (eg. USDC/USDT)
- Mid fees for blue-chip pairs (eg. ETH/USDC)
- High fees for volatile pairs (eg. TRUMP/SOL)
c. Amount of assets supplied relative to pool size
- $5k worth of ETH/USDC in a pool with $400M TVL will earn you less fees than a pool with $4M TVL. This is because in the latter, your LP tokens represent a larger share of the pool which would grant you more fees.
To understand this further, I will be scouting for a protocol that I can LP in so that we can explore the yield, benefits, risks and other factors that play a role on your decision to open an LP position.
Let me know if this helped!
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