#24 Liquid Staking+Correlation hedge for Alt Rebound Market strategy!?
#24 Liquid Staking+Correlation hedge for Alt Rebound Market strategy!?
How i made 50% with my test strategy on #AVAX with @BenqiFinance + yield
^ go drop me a like/comment pls, i know a lot of you guys are reading my email. hook a brother up
Liquid Staking+Correlation hedge for Alt Rebound Market strategy!?
How i made 50% with my test strategy on #AVAX with @BenqiFinance + yield
In this thread
My thesis on the strategy
Expected return in different market scenario
What is Correlation hedge
Summary
I often think about how I can catch the next pump. On a cold bear market night in NOV i was drunk and came up with this “bullish altcoin rebound strategy with liquid staking yield”
Hear me out
My thesis on the strategy is
Market might keep going down
If it rebounds, alt layer 1s like Avax prob rebound more than BTC
ideally earn some yield to cover my cost
So how does it work
I use @BenqiFinance
deposit USDC
borrow BTC -> swap to sAVAX (short BTC, long sAVAX)
deposit sAVAX (earn sAVAX yield)
repeat 2
What did i do there
Basically i short BTC, long avax n earn savax yield based on my thesis.
Lets see how my pay out in different situation
Case 1
market keeps going down, i earn in short BTC, lose in long avax, earn savax yield
Case 2
market picked up, but only BTC went up = rekt as fuck, lose on short btc, long avax n only earn little on savax yield
Case 3
market picked up, Avax rebound more than BTC, i lose on short BTC but my AVAX rebound out perform short btc yield + savax yield (which likely to pump as avax goes up)
What is the logic of my strategy, " Correlation hedge "
TLDR correlation hedge is hedging using something with correlation. So I m shorting BTC as its cheaper than avax and i believe if market does pick up avax will outperform btc
Risk Management
I will need to monitor
token price ( correlation assumption and liquidation )
sAVAX yield ( return avax/savax peg lol )
short btc cost
liquidity to unwind position, savax yield cap etc
follow up material
what is @BenqiFinance TLDR
its the biggest lending & liquid staking protocol avax.
u can supply savax, avax, btc.b, wbtc.e, Link and bunch of other stables
Summary
Turns out it works but as always I only put very little money in it so basically a sidelinedooor. Lmao.
It will be interesting to see with the same logic we can do with other coins as well. I normally dont share this type of content, if you guys like it, I will write more
P.S this was only a 800 usd strategy testing position that got me 1200.
i do apologize for my click bait % gain.
new threadoooor gotta farm some engagement 🐏
i am big fan of @avalancheavax & @luigidemeo and respect the defi ecosystem he built on avax, looking forward for the team to come back from the bottom!