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Dr. StrangeLiquidity

Dr. StrangeLiquidity

Or: How I Learned To Stop Worrying and Love the BANK(less)

As a small LP of Bankless Tokens, how I’m using the rewards to pay my mortgage every week. 

_{Written: November 7th, 2021}

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Backstory

Hey Bankless team! Long time listener, first time caller.

I woke up to an alpha alert this morning in my brain that I need to get out in a brain dump for all of my fellow Banklessians. As a small-time LP of Bankless tokens since early summer, I’ve been riding this wave upwards over the past few months and had to shout out a little alpha, with the full knowledge that in doing so will only increase the public interest in the LP rewards pie 🙂

I was gifted and able to acquire an approximate sum of 200,000 Bank tokens due to the generosity of the DAO Genesis Team and some savvy trading (read: buying) in the interim. My first thought was,

how can I work with these Bank tokens, or better yet, how can I get them to work for me? 

-tomtranmer

Recently, I’ve been watching my Sushi LP rewards grow with the boost to the pool rewards on Sushi farm about a month ago. I realized, with amazement, that we were moving out of “nice amount of money to get every week” territory, and into “whoa, this amount of money could do some serious work every week” land.

My current mortgage payment has me paying $400 CAD per week to the TradFi Bank. I’m not too happy about it, but I know it’s a lot better than it could be. I wondered what it would take to extend some of these newly pumping LP positions in order to earn a sufficient amount to cover my mortgage payments. 

Note: this “gamification” of my LP positions does not take into account any current gains or losses due to currency changes due to pricing volatility, only the rewards generated from the newly incentivized Balancer pool and Staking LP tokens on Sushi. 

The Sushi Story

So I started with a small Sushi LP position less than 150 days ago. 10,000 BANK and 0.11 ETH ($280 USD each at the time). Swapped, wrapped and Staked in order to earn an estimated 15% APR on my staked position. I really just wanted to watch it and see what happened. Well, as you all know, BANK went up and ETH went up and the position kept delivering. 30 days into the position and now earning an estimated 30-35% on the deposit, I felt it was time to extend. I added another 12K BANK and 0.15 ETH ($300 USD) and staked the result. In retrospect, what a dream those gas prices were at the time! Sushi kept rolling on, Steady Eddie that summer, earning that Sushi.

Fast forward to a month ago. Someone kicked up the incentives for the sushi pool and both ETH and BANK have been on a tear. The incentives on the BANK POOL have been on fire for the past few weeks. Back near the beginning of October, I was looking at 229% APR. 

Here is a snapshot of the estimated APR today, November 7th, at 258 Sushi per day.

Today I also decided to add some more, bringing my current total position to the following, for a total gas cost of around $100 for the Pooling and Staking:

My Pool %: ~ 1.05%
My Estimated Rewards: $200+ USD/week
BANK: 38,086 
WETH: 0.8624
$USD: $7,950

I also claimed 2 weeks of Sushi Rewards. 33 Sushi, presently valued around $400 USD.

I may have been subject to some impermanent loss in that timeframe, but if you’re watching the total balance only, I don’t see how you can be unhappy with how things have worked out so far.

A Ballad for Balancer

So I learned about Impermanent Loss from William M. Peaster and how an 80/20 position as an LP could help to limit IL exposure. It just so happens, another teammate had started an 80/20 pool on Balancer, and so I decided to APE my way in early, on the very same day as the first Sushi pool. How better to test the one against the other. The initial position was a total of $900 USD.

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For much of the lifetime of the pool, I was holding up to 10% of the pool. Trading fees received were minimal, but I was proud knowing that I was helping  facilitate some small Bank acquisitions by the community. 

Little did I know, things were about to take a turn to the positive in a hurry. 

Bankless DAO and Balancer just launched the incentives this week for the 80/20 Balancer pool. Lucky for me (and the gas fees) I had been LP’ing there since June and now have recently extended my position. The extra unlock from the DAO here is allowing Discord membership to be maintained with LP tokens from Balancer. 

As everyone piled into the pool this week, I saw my position percentage drop from 10%, to 5%, to below 1%, but I still had an amazing first week of farming in the Balancer Pool. I decided I should add more today as well. Why miss out on the pool party 😛 

My Pool %: $11,014/$1,457,079 ~ 0.75% of the pool
My Estimated Rewards: $200 + /week
APR: 80.32%

Balancer has a great rewards calculator that gives you a snapshot of your percentage of the Liquidty mining rewards at the time you deposit. You will see these actual rewards fluctuate up and down with the rewards on offer as well as how many APEs join you in providing liquidity.

Epilogue

So to sum it all up, $200 from Sushi, $200 from Balancer, I figure that my mortgage payment is all setup for the next few weeks. All thanks to BANK and the Bankless DAO, with special guests, Etherium and ETH.

Extra Alpha-train

Credit for this as published in DAO Chat by 0xLucas

LP tokens are great when they’re farming big fees from facilitating trading, or when they’re heavily incentivized but the token parties involved, but this cannot last forever (think like a promotional introductory interest rate on a credit card). The clock is ticking down on these rewards.

In due course, LP’s with BANK are about to become more useful, yet again, as Olympus Pro bonding and Tokemak reactor staking are both in the review phase of the Bankless DAO Governance process. This path below for LP tokens is not yet live, but as the roads begin to unlock with snapshot votes and hard work by the Bankless DAO and pattern teams, we could one day see the following path to a BANK(less) lover’s liquidity dream:

1. Get (or use your existing) LP Tokens of BANK/ETH pairs – tbd which will be input at Olympus pro, so YMMV.
2. Sell your yield generating LP tokens back to the DAO by bonding them with Olympus Pro to get more BANK.
3. Stake your BANK with the Tokemak Reactor, and receive xBANK to represent your position for future withdrawal, as well as earn TOKE tokens for liquidity direction governance on the Tokemak platform. 
4. Future active use for TOKE and xBANK tokens…? Time will tell.

Let’s get moving West friends. To a bright and Bankless future.

Cheers,

Tom Tranmer