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#24 Liquid Staking+Correlation hedge for Alt Rebound Market strategy!?

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#24 Liquid Staking+Correlation hedge for Alt Rebound Market strategy!?

How i made 50% with my test strategy on #AVAX with @BenqiFinance + yield

2lambroz.eth
Jan 29, 2023
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2lambroz.eth 🐑 @2lambro
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 #Avalanche
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2:06 AM ∙ Jan 29, 2023

^ 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

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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”

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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

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So how does it work

I use @BenqiFinance

  1. deposit USDC

  2. borrow BTC -> swap to sAVAX (short BTC, long sAVAX)

  3. deposit sAVAX (earn sAVAX yield)

  4. 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)

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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

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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

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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

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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 🐏

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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!

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