HOWTO arb $ATOM with borrowed $stATOM.
So, you want to grow your $ATOM-bag, d'ye? There's a conundrum here, though: so does everybody else.
That means the $ATOM price reflects its demand, and so do the borrow rates, being, in my view, insanely high at 7% on @TeamKujira Ghost,
...and that's the lowest borrow rate I see around the Blockaverse, at that, as both @demexchange and @Umee_CrossChain's rates are ~16%.
So, immediately, two borrow strategies present themselves neatly for your consideration.
One strategy is to borrow $ATOM at 7% on @TeamKujira Ghost, then to supply those $ATOM either to @Umee_CrossChain or to @demexchange at ~10%, netting you a 3% APR.
The other strategy that comes to my mind is to borrow $ATOM from @TeamKujira Ghost at 7%, liquid stake it as $stATOM at ~20% via @stride_zone, then HODL on for Dear Life (I can say this unironically. That's a rule.) 😎
This nets you a 13% APR, which is nothing to scoff at.
... and, if either of the above to borrow strategies appeal to you, then: knock yourself out and you're welcome.
But I see a much more profitable approach to growing your $ATOM bag using borrowed $stATOM via arbitrage, and that's what I'll be talking about here.
Okay, so, to arb $ATOM, with borrowed $stATOM, let's ... BORROW $stATOM! (obvie). I 'unlend' 500 $USK from @TeamKujira Ghost then borrow 13 $stATOM from Ghost with that $USK collateral, at 2.8% borrow rate.
Now that I have the borrowed $stATOM, I need convert it to $ATOM to arb it (not necessarily true, but go with me on this for now).
There're 4 ways to do this:
1. Burn $stATOM to $ATOM over 22 days on @stride_zone
You get the most $ATOM this way, but 22 days? If you can wait..
Alternatively, you could swap the $stATOM for $ATOM. @osmosiszone is the DEX for @cosmos, right?
Here's a ... *ahem* [dare I say?] ... 'Secret':
@Shade_Protocol has a better swap on the pairs that it has. If you look at the Osmosis swaps, they keep a bit more for themselves.
Those swaps get you 15.8 or 15.9 $ATOM for 14 $stATOM, no where near the 16.7 of burning on @stride_zone, but they're also immediate trades.
Can we do better?
Hello, @TeamKujira FIN.
A reasonable stATOM/ATOM sell limit order gets you 16.2 $ATOM. How long, though?
Hm.
A very serious problem with stATOM/ATOM order book, and most the other order books on @TeamKujira FIN, is their appalling lack of liquidity.
A trade that takes no time on @osmosiszone and @Shade_Protocol, takes days, weeks, even, as a limit order, or gives you a bad insta-swap.
A swap on an order book with low liquidity can result in a trade settled at a price very different from what was estimated. For example, the market price of stATOM/ATOM is 1.1447 – no where NEAR the @stride_zone ratio of 1.171 – but a market swap results in a price of 1.1388?! 😤
I say all this to say this: ...
[Tautological, I know, but there it is.]
When you trade on a DEX (or CEX, for that matter), know what that trade is, intrinsically, then: know that it's the best trade you can find OR it's a trade you're happy with OR both.
But KNOW your trades.
So, I know this about my trade.
I'm going to let my sell limit order sit on the @TeamKujira FIN stATOM/ATOM order book for one day. If it hits, I win with the best trade of the three. If it doesn't, then: eh, I lose a day and will punt to the next best trade on @Shade_Protocol.
I also know this.
I know the 24-hour volumes of every order book on @TeamKujira FIN, and I re-evalute every morning at 0800 ET.
I go into an order book with my eyes wide open as it its ability to fulfill my order expediously (or, in most cases: not).
You can know this, too.
"How?" you ask, ... in askance.
And, yes, FO' FREE!
"Why?" you ask, ... whyingly. 🙄
Because I love you.
M.O.U.S.E.
