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Kaloh
@kaloh
Liquidity pools metrics are extremely misleading Seriously - just show REAL metrics, would make adoption much better and not a guessing game 1. Fees APY 2. Impermanent Loss % 3. Expected Earnings or Losses: fees APY %- Impermanet Loss % Also, show a clear Bottom Line Bottom Line: Liquidity provided - Impermanent Loss + Earned Fees Why is no one doing this? 🫤
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Monteluna
@monteluna
As someone who does this for a living... 1. Fees APR is a meme. If you're an LP, you are market making. Historically this was a contracted quant heavy business because marker makers generally borrowed and could lose a lot of money in IL. They were contracted to supply liquidity *during* market events, so they had to be held to a standard to actually show up during downturns. 2. Again the problem is no one wants to supply LP during a downturn or market changing event. We see this at Aero/Velo where the best yields come during options turnover days (before 1st and 15th), and during some weird new information event. What's the point of talking about a global APR when LPs legit get scared and instantly dump positions? Those who stay in get huge yields, so the APR is basically completely not a gauge of your returns if you stay in while others aren't there. 3. So if the APR you get is determined by when you're in the market, it gets worse with CL. You have to be actively providing yield in tick.
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Monteluna
@monteluna
P.S. I don't speak for @velodrome and @aerodrome but some shadow gigabrains have been working on two fronts: First, dynamic fees that adjust pricing based on market conditions. This is already available for major pools and all stats show these generate far more fees than Uniswap pools on CL. The industry is learning LPs are not compensated for the risk in a fixed model, and tradfi learned years ago fixed fees are bad. Second, Mellow has automated management of CL positions that usually over month to year timescales are a good average fee gauge. I really think people who aren't professional shouldn't view CL as a yield opportunity because you need automation and good quant skills or you will get screwed. Mellow does provide this so... Use them!
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Kaloh
@kaloh
Thanks for this, makes a lot of sense
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Brian
@wireframeguy
Can you give a bit of insight into your own strategies? I’ve been trying to LP for a long time but never seem to profit.
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