Liquid staking token δfactor

What does the exchange rate, or factor, of a liquid staking token mean, or, more correctly, what does the δ, or the rate of change of that factor mean?

This pensée comes in light of @demexchange $cGLP factor breaking above 1.04 today.

First of all, we have to know what a liquid staking token factor means.

What does it mean. To stay on the same token, let's take $cGLP and $GLP.

$GLP produces yields in $ETH.

$cGLP is $GLP + the $ETH yields.

So, the factor means $GLP price + ACCUMULATED $ETH yields.

So, the price of the factor SHOULD do what, then?

1. it should always go up
2. it should always BE going up.

A factor that does otherwise tells you what?

1. A factor that goes down means negative yields or fees: validator got slashed, and YOU're paying for it.
2. A factor that's stuck (doesn't go up) means there's no yields, no fees, no activity.

These two scenarios are red flags. ⛳️

What does this mean for you, the investor?

Liquid staking tokens you HODL should always, always-always-always, on a daily basis, be increasing in value against the underlying token.

Like $cGLP is. Like $sFTMX has been (except that one day, where I got really concerned).

Why?

 

The δfactor of a liquid staking token indicates the health of its protocol.

• $sFTMX going up means @FantomFDN is healthy: transactions and fees are happening.
• $cGLP going up means @GMX_IO is healthy: trades are happening, generating fees.

Troubling cases

Let's look at 2 worrying cases.

sAVAX

$sAVAX: CIAN predicts a 30% gain on looped $sAVAX on either @AaveAave or on @BenqiFinance.

But consistently I have been losing ground: recording losses against the $AVAX borrow.

What does this say about @avalancheavax?

No transactions. No fees.

What is the context for the above chart?

1. @BenqiFinance reports a growth of $sAVAX at 7.2 APR.

2. @AaveAave charges 6.69% AND PAYS BACK 2% for borrowing $AVAX

Given 1. and 2. net $AVAX gain should NEVER, EVER go negative. Unless growth isn't 7.2%.

Because, spoiler: it isn't.

This is why I do not loop $sAVAX anymore on @avalancheavax.

xASTRO

Now, let's take the other troubling case: $xASTRO. 

The factor for $xASTRO is 1.044.

The factor for $xASTRO has been 1.044

... for days and days.

This means the $xASTRO δfactor is 0

... for days and days.

What does a $xASTRO δfactor (for days and days) of 0 mean?

• Nobody trades on @astroport_fi anymore. Ever.

Or:

• People trade on @astroport_fi, but the expenses of running the dAPP are the same or higher than the fees collected.

Are either of these scenarios troubling to you?

Here's the order book on @TeamKujira FIN for $ASTRO (not $xASTRO).

This book has been around for a long while.

Look at the orders, bids and asks: that column is nearly empty and the volume-SUM is near 0.

Look at the trades.

0.01 $ASTRO traded? Do you know how much that is?

Now let's look at the order book for $xASTRO on @TeamKujira FIN.

I have questions.

Look, YOU now can tell ME that $xASTRO is bad news, all around.

So: 

1. who thought it was a good idea to float the $xASTRO order book?
2. Was this order book book voted in? Who voted for this?

If YOU DID vote for this order book, what were you thinking? Were you drunk at the time?

That's a real question.

If you DIDN'T vote for this, I think you should contact your validators and ask them what the H-LL THEY WERE THINKING, or if they were at all.

I started this thread around the discussion of liquid staking tokens and what the δfactor means for the health of these tokens, and the underlying health of the protocols that provide them.

I hope you learned something.

But now, we have a different issue brought to light.

These are all the order books on @TeamKujira FIN that are seeing no volume.

Count'm. There're THIRTY-SIX ORDER BOOKS seeing below $100 24h-volume, and this isn't a glitch. This is day, after day, after day.

How do I know?

I know this because I measure 24h-volume at the same time, every day, and I report these data out to you, my dear reader, because I love you and I don't want you to hurt yourself by going into a trade you'll never come out of.

That's why I do this, folks. 

If you look on BOW, you see a correspondence: 

LPs with absolutely no viable volume at all (first data column). 

I'll conclude with this.

Why?

Why, with @TeamKujira being as busy as they are, do they have to play host to so many tokens, 50%, that provide less than 5% of the volume on the blockchain?

And by '5%' I'm being REALLY generous.

Can we institute the Costco model?

For those of you not familiar with the Costco model, it's this:

They put a product on the floor. If it doesn't generate $1M in revenue, it's gone.

So many consistent 0 volume order books and LPs make trading for the amateur and for the professional harder, noisier, and riskier.