ETH δneutral farming on Nolus

ETH δneutral farming on Nolus

Okay, so you have ETH, or BTC, and HODL'n it is all fine and dandy, but wouldn't it be nice, while you are HODL'n it, that you earned from it, not only in the price-movement, but also by farming yields from the principal, and in a price-protected manner, at that?

This 🧵discusses one such way to do this, using δneutral farming on @NolusProtocol.

I (short-)sold $wETH on wETH/axlUSDC @TeamKujira FIN board.

This was a multi-step process, where I accumulated 278 $axlUSDC in total. I transfer that all that to @NolusProtocol.

I am going to create a $wETH δneutral position on Nolus.

The first side of the $wETH δneutral position on @NolusProtocol is to establish a farm from the $wETH I sold short on @TeamKujira. I deposit the 168 $axlUSDC gained from that sale into Nolus Earn, yielding 14% $NLS APY and 6% APR (on the $axlUSDC).

The other side is the 0.16 $wETH long position, which I lease for 110 $axlUSDC, ...but its value is 263 $axlUSDC! (meaning: I'll need an additional 163 $axlUSDC to close this position, eventually).

This is a LEVERAGED long position.

This completes the δneutral position:

• On the short-side, I'm farming 168 $axlUSDC at 6% APR, net
• On the long-side, I'm leveraging 0.16 $wETH

This is NOT 100% pure δneutral, as I must manually manage the risk, myself, but in this I do get price-protection.

• Should the market go up, I close the long-side and profit from buying 0.16 $wETH at a discount: a leveraged-buy.

But then:

• Should the market go down, I use the liquidity from the $wETH (short-)sale, and close the long-side, avoiding liquidation. Yes, manually, granted, but still the protection is there when needed.

Either way, I farm 0.16 $ETH (and short-side liquidity), protected.

This is The Plan™️

I'm starting here, with this smol position, and see how it works.

Once this is proved out, I'll increase the $ETH δneutral position. Then, given that works, I'll expand to a $BTC δneutral position, as well.

I'll keep you posted, here, as I do.