POP QUIZ: Supplying QI

POP QUIZ!

You recall, the previous pop quiz focused on growing an $AVAX-bag from supplied $QI.

Well, how do we supply $QI?

That's the focus of this pop quiz.

Okay, let's say you have $21,000.00 of $AVAX.

You convert that all to $QI and start earning 11%+ $AVAX, which, the previous pop quiz, shows various results: $23K - $26k total at the end of a year, depending on your reinvestment strategy.

There is risk in this approach, however.

And the risk is this: you're swapping the protocol token, ... of the frikk'n AVALANCHE BLOCKCHAIN ffs, $AVAX, ... for a protocol token of @BenqiFinance, $QI.

• $AVAX is lookin' good rn.
• $QI ... never has?

Why sacrifice $21k $AVAX to earn $5K $AVAX from $21k of ... $QI?

WAT DO???

How do we get $QI?

1. Well, we can swap for it, swapping $21k $AVAX for $21k $QI, on, say, @traderjoe_xyz or @pangolindex.
2. Or: we can supply $x of $AVAX to borrow $21k, but not of $QI (you can't borrow $QI on @BenqiFinance), but another token, say, ... $AVAX? (or the token of your choice)

Exercise 1

At a 74% collateral factor for $AVAX, how much $AVAX (in $USD-value), would you need to SUPPLY to be able to BORROW $21,000 of a token of your choice? 

What does exercise 1 do for us, other than cost (a lot) more to fund $21k of $QI?

That's Exercise 2

GIVEN you SUPPLY $x of $AVAX to BORROW $21K of (well, whatever token).

How much, in $USD, are you yielding in $AVAX and $QI from that SUPPLY and from your BORROW per annum?

There are several approaches to maximize yields on @BenqiFinance.

a. Convert the borrow 💯 to $QI, then SUPPLY

That's the first pop-quiz I did, so I won't revisit it here, but, we have other options, ...

Another option is

b. Borrow $AVAX, convert SOME (how much?) to $QI to stake, SOME to $QI to supply to the QI-AVAX LP

We're going to be looking in depth at this option for this pop-quiz.

c. Dealer's choice [meaning: you come up with a better $AVAX-yielding strategy than mine].

But there are also (at least) two more options:

d. Netflix 'n chill 😎

e. none of the above

Which option, or optionSSSSSSsssz, will you take this year? And, what are the results of taking (each of) those options? Measure and report your findings. I'm interested!

Okay back to option b. The following exercises assume you have $21K $AVAX BORROW, some you'll SWAP for $QI SUPPLY to @BenqiFinance, the rest you'll STAKE as QI-AVAX LP on @BenqiFinance.

We'll look at various measures in the exercises below.

Exercise 3 [easy]

GIVEN $21K $AVAX BORROW:

• 50% SWAP to $QI as @BenqiFinance SUPPLY
• the other 50% becomes QI-AVAX LP as @BenqiFinance STAKE 

FROM the $QI-yield, if you SUPPLY 50% $QI and STAKE 50% $QI as QI-AVAX LP, what are your annual returns and totals of $AVAX and $QI?

Exercise 4

a) Exercise 3 generates a lot more $QI than $AVAX, yes? no? How much more $QI than $AVAX do you generate in exercise 3?

b) How much do you invest into $QI supply vs. QI-AVAX LP to generate THE SAME ($USD) AMOUNT of $QI and $AVAX, percentage-wise to each instrument?

Okay: b) was 50% $AVAX-yield/50% $QI-yield, but I want c)

c) what percentages go into $QI SUPPLY vs. QI-AVAX LP STAKE to to get a 66% $AVAX-yield/33% $QI-yield.

Why?

I want to keep 50% of the $AVAX for myself, not for reseeding the LP, because the $AVAX bag is the aim, not $QI

... but you need $QI to generate $AVAX, so: maximize $QI?

Um, no.

Exercise 5 [hard?]

Find the optimum percentages of $QI SUPPLY and QI-AVAX LP STAKE on @BenqiFinance that

a) generates the maximum (combined) annual yield; or,

b) generates the maximum $AVAX yield; or,

c) both.