Imagine your leverage position never gets liquidated by price🤌

What is & When to use Goodentry for trading

Imagine your leverage position never gets liquidated by price🤌

Try trading perps with @goodentrylabs

Understand

what is it & 🔥 When is best to use it

📍@goodentrylabs TLDR

Instead of buying dated options on @lyrafinance or @dopex_io, you can now make micropayments block-by-block to maintain a perpetual protected perp (effectively a perpetual option).

This means even if the market moves against you there is no negative PnL!

Example:

ETH = 1,600 and you open a 1 ETH long position.

A day later the market dumps and ETH is now 1,400. With traditional perp future you would be $200 in red 🤡

But with a protected perp at $1,600 activation price, your net PnL will simply be the total funding paid

Two things to pay attention to:

• 1️⃣ Activation price 💲

• 2️⃣ Funding rate %

1️⃣ Activation price 💲

Effectively the equivalent to the strike price of a dated option.

Depending on the activation price you choose you could still incur some limited losses, but it is capped at the lower of entry/exit market price less activation price for long, vice versa.

2️⃣ Funding rate %

Funding rate is calculated based on borrowing rates and average swap fees.

Applying the current funding rate against the example above,

the position would have cost $2 (24hrs worth of funding), as opposed to the $200 lost ✌️

So when will Lambro use protected perps? 🤔

• 1️⃣ Momentum Trading 📈

• 2️⃣ Arbitrage or run Delta Neutral farming strats 🦺

1️⃣ Momentum Trading

When trading momentum Lambro only holds short term position.

This makes protected perp very appealing, since there is often a risk of top-buying with these trades.

Upside is the same as a trad perp but downside is limited to funding fees. Good R/R

2️⃣ Arbitrage/DN strats

Whilst there are some correlations between IV & trading fees, dated option premium and protected perp funding have fundamental differences.

There are opportunities out there to sell dated perps and hedge with protected perp if you look hard enough

DN example

LP on @PremiaFinance when overall utilisation is high.

In this example I could net $13 for selling a put option at $1.7K expiring in 40hrs when ETH=1.72k

To hedge the price risk, I could open a protected perp short position at $1.7k activation price. No price risk since activation price is lower than entry.

Total cost holding perp for 40hrs (if funding is unchanged): 0.0068%*40*1,700 = $4.6

Meanwhile the LP is earning incentives at 20% apr

Potential gain = $13 - $4.6 + incentives at 20% of amount LP'd

❗ In reality this is harder to execute since you can't pick strike and duration of the option you sell on premia and funding rate could move

Watch out for funding rate movements 🚨❗

If the market is too volatile funding rate could spike.

Your position could become too costly to hold or even have your position liquidated as you run out of collateral for funding payment.

Keep a close eye or you are gonna get rekt ☠️

📍ezVaults

If you like the project you can farm their incentivised liquidity program.

There is still limited capacity to farm ETH/USDC which is paying out +100% projected APY.

A couple things to lookout for:

As usual there is always IL risk when you LP, and

Withdrawal could be limited if utilisation is high, although this would also mean borrow rate would spike 💵

Stay safu 👊