I've taken heavy losses (or lost heavy profits) in DeFi. Cream has been my biggest invested risk capital loss as far as DeFi and AAVE (LEND) has been my biggest loss on profits. Luckily (not really, lol), I've derisked a couple of weeks ago so all my DeFi positions are cut in size and Cream and AAVE are both deposited in over 100% APY (Cream no risk of IL since single asset, AAVE a small risk of IL 98%/2% ratio LEND/YFV). I will be converting both interest rewards to USD stablecoins on a periodic basis whereas in other times I would have re-deposited them for even more compounding returns. Risk-aversal is the mode during bear market. The reason I mentioned the 2 above is that imho I consider those the blue chips of DeFi continuing to deliver on the DeFi products even as the market punishes (or market correction defending on PoV) their "prices". What DeFi products are these? Lending/borrowing, money-market stable coins swaps with yields, flash loans for traders, and DEX (coin swaps, limited but hopefully growing, nowhere near Uniswap levels). Those 2 are severely down in prices, but so are the many DeFi coins I'm watching so no one is spared as far as I can tell. Sorry for the TL;DR above and I know you mentioned your interest is in YFI which is in a different class of DeFi (again imho). YFI is a governance token for income-producing assets and strategies. I believe YFI participates in yield-farming food coins and other emerging opportunities and the income they return to the vaults and if business is good, YFI price is good acting as a DAO. Well, DeFi (yield-farming ) business is bad, very bad during this bear market, hence the much lower price of each YFI. I bought a little over 1 YFI at around $39K, saw it crash to $22K (start of DeFi bear market and $SAFE debacle), saw it go back up to over $34K, then $EMN debacle, and the price is now $18K. I did an "epiphany" trade 4 days ago to $core (cvault.finance) from YFI. Epiphany trade, wtf is that? YFI was a great concept from Andre Cronje, give a "worthless" token as rewards for providing liquidity staking your valuable coins, but he will not keep any of it. Rare and fair distribution. No one knew how to value them, as "farmers" got the rewards, they were eager to dump them for any value they can get. Well, scarcity and fair distribution (think Bitcoin) is a valued commodity in decentralized cryptos, I saw YFI at $3K, read up on it, and it was supposed to be trading at $30 a few days before, saw it shoot up all the way to $30K, finally bought in at $39K a day before Coinbase listing, it went to $43K the day of Coinbase listing and has been on a price death spiral since. Epiphany trade was I finally realized 4 days ago that YFI is a mature and scarce token acting as a DAO and by maturity is supposed to be more stable in price, as it creeps up going up to $100K and maybe even higher, and yet at $24K I was down 39%, so I said to myself, this is just as risky as a 2-day old coin, yup, a coin that has only been out for 2 days is outperforming YFI, so F it, let me trade YFI to this new $core coin. Well not all of it, 0.7 YFI coz you know, risk-aversal, lol, the rest trade to stablecoins. So, I initially had 1 $core, and that .7 yfi gave me me an additional 7.3 $core which is valued at $46K currently (although price is severely correcting, it was valued at over $70K yesterday), has recovered my YFI losses (so far) and then some. $core is an all out, no excuses, will-pump-the price to the moon and beyond version of YFI that has 1/3 of the supply (scarcity extreme). Devs are anon so risk of rugpull but now, the project is valued at a very high price so no reason to rugpull their own investments valued very highly now. YFI is scarce, 30K coins, no more ever, $core is is 10K coins, no more ever. YFI has no more yield-farming, $core invented yield farming for a coin that has no more emissions, how??? Lock the LP pair (core/eth) 10K coins during the genesis release to the market and all the fees go to the yield-farmers (minus a small portion for dev fees). They released $core router which makes it 1-click entering into these LP's (but remember they are locked forever). They will be working on vaults later on which will be again the goal is to pump the price of $core and increase the value of those LP's through higher APY's. Churn and active transactions are the name of the $core game. When you transfer from one wallet, you get 99% only to the receiving wallet as that 1 percent is transaction fee paid to the yield farmers. A CEX listed $core and the devs are watching, since CEX may hurt the Uniswap LP's as CEX don't do transactions on the blockchain, they do database entries of buys and sells and do wash trading volumes, so the Devs have indicated on Telegram that if the CEXes start hurting the Uniswap LP core/eth volume, they will send a message to the CEX (i.e. Binance) that they will block the transfers. There's more info on the website cvault.finance and Telegram $core groups. Locked LPs forever means you always have a liquidity for when you wish to exit $core into stablecoins or other Erc-20 coins or Eth. Finally, those Uni LP core/eth tokens have developed a market on Balancer exchange, so now, they are technically not locked since you can even cash them out for a price, when you no longer want to be a yield-farmer. I sold 1.3 $core yesterday to stablecoin to lessen the investment risk capital. My next planned $core sale will be when it hits $50K each TL;DR, if YFI was designed from the ground up with the goals on price appreciation and preservation only, then you get $core. $core epiphany trades below:
During this bear market in DeFi and somewhat lackluster or a pause in cryptos prices coinciding with a pause in the bull market in the US stock markets, my crypto portfolio is close to ATH ytd, what?! I owe it to derisking 2 weeks ago, and 1 crypto holding $cel Celsius which is up over 300% in the last 2 weeks. ($core I mentioned in previous post is also helping quite a bit). $cel Portfolio allocation has become outsized, I don't plan to rebalance, since I think $cel is still way undervalued by the market. $cel is what you get when you cross a pure CeFi BlockFi (lending/borrowing) which gives the profits and ownership to VC's and rich fiat investors with a pure DeFi AAVE $LEND (lending/borrowing) which gives all the operating profits and protocol ownership to crypto token owners. Celsius is a US-licensed and regulated company (also in the UK) that has employees and gives 80% of the profits to the $cel token holders, all verifiable on the blockchain. Celsius did an equity sale a month ago, and true to the crypto ideologies, instead of releasing to the VC's and rich investors, did it through the bnktothefuture.com platform, i think minimum investment was $1K, open to the whole world, and guaranteed participation to anyone. Love Celsius, not just for the profit$ it brings to my portfolio but also for delivering on the promise to improve everyone's life anywhere. https://celsius.network/ https://app.bnktothefuture.com/pitches/celsius-network
Thanks for your response and that detailed write up! I’m still trying to get a grasp on Defi as a whole, I haven’t been paying attention to crypto nearly as much as I should have for the last year due to the crazy world events. My interest isn’t necessarily solely in YFI but it’s definitely been an interesting crypto to watch. AAVE is another I’ve been closely watching, the idea of a flash loan would have quite a few applications. It does seem to be a bit too good to be true, potentially causing an exploit that has not yet been detected. I’m particularly concerned with how high some of these APYs are on the yield farming. It doesn’t seem like it will be sustainable. I read that the APYs on $Core are upwards of 900%. That doesn’t really seem like a platform that they are focusing on being a long-term Defi solution. I’d be happy to hear any thoughts you have on that. Otherwise the main thing I’ve been trying to think through is why would people want to use these platforms to attempt to generate 100% APY when these coins are doing 1,000%+ quickly? It seems in some ways like the token itself is the biggest competitor to the platform because if the platform takes off, the token will almost always perform better. Also, what is your opinion on the new UNI token from Uniswap? It seems to have garnered a lot of attention very quickly through their airdrop and exchange listings but I’m not sure how long that will last. The exchange itself has the largest TVL and its one of the most accepted DEXs in the whole space. Do you think that DEXs will be able to overtake the use of CEXs in the crypto space, even with the regulation issues?
The issue with very high APY's is that they are not sustainable, due to the very high number of tokens being created, the price of the tokens crash, one example of one I was yield farming was sushi of sushiswap platform, I was getting over 2000% APY calculated in $ value of the liquidity pool I was providing (LEND/ETH). It was great for a few days. Also another issue with yield farming is if the LP pair involves the tokens being generated, then you're exposed to the price crash of the coin and as a result, Impermanent Loss of the other side of the pair which is something you usually own. You asked why I'm staking (Yield farming) Cream at 100% when other coins are doing 1000%, those coins are not for long term hold, and as I mentioned the APY is not sustainable and Cream is a single coin, no pair, I hold it long term and getting interest income payable in Cream and there's no impermanent loss, dunno if that 100% is sustainable long term, so I'll quit when it gets too low and not worth it anymore. I farmed Core for a few days using the LP (forever locked cannot be converted back to Core/Eth) but first of all, the reward is not 900% (it was 5 days ago, but has since come down, it's a function of how many LP's are staking and how much volume Core trades are generating, first day trade volume of Core was $100M, now it's $50M I just checked on Uniswap, the APY is 450%. Core yields are not from creating unlimited coins it's from transaction fees, and transfer fees and later on from vaults and possibly other coin LP pair (maybe locked them, too if paired with Core, but will be disclosed to participants if being locked), but the point is, Core will have yields forever without creating a single additional Core coin than the existing 10,000 coins. It's why it's called deflationary farming (versus inflationary farming of new coins new emissions). Deflationary just like bitcoin, lost private keys are lost forever and 10,000 will be less when taken into account. I'll have to correct you, DEXes are doing more volume now than CEXes, Uniswap is doing more $ trade volume than Binance or Coinbase or any of the big CEXes. And all the volume of Uniswap is real, recorded on the blockchain, no wash trading fake volume. I have no opinion on the Uni tokens as investment, as I'm bitter I sold my free 2000 Uni's right away for $6000sh, when I could have sold them the next day for over $17K or anywhere in between, lol. They were free, though, so I'll have to just forget about it.
Okay, I can see why CORE is different in that aspect. I need to read up more on inflationary versus deflationary farming. It just seems like most of these projects would rather get their 5 minutes of fame than actually try to be sustainable which will be a problem in the long run. Im not sure where you’re getting those numbers on CEXs vs DEXs but Binance reported that they did over a trillion in volume this year. I think they probably would have done even more if US regulators didn’t force the original Binance platform out of the US market. Obviously there are work arounds but I’m sure lots of people have stopped using the platform since then. Do you think Uniswap and the other big DEXs will avoid having to geoblock the US? I’m not quite sure how technically different Binance’s DEX is from Uniswap but they were forced to geoblock the US back in 2019 around when they launched their own US platform. That’s rough about what happened with UNI for you but my advice would be to not look back. Lots of these projects are still in their infancy and we’re lucky to be here at the ground floor. It’s hard to keep perspective sometimes when emotion gets involved but there was no guarantee that UNI wouldn’t haven’t tanked at the open due to the huge airdrop. You can only work with the information you have at the current moment.
I think you're correct that Binance is still higher than Uniswap, although Uniswap is still growing. I like Binance, though, and whenever I had problems (rare), they were quick in resolving them. The Uniswap website is just a front end, but actual trades happen on the block chain using a smart contract. Imo, it's easy to implement geo-blocking on the website.
Good info on the subject of geo-blocking. uniswap.org website is not necessary to interact with the smart contract on the Ethereum blockchain. Anyone (who has the technical skills) can interact directly with the uniswap smart contract or use other independent websites.
I took heavy losses in DeFi tokens (i.e. Cream, Mln, YFI, TRB, etc) but luckily got out with profits in others (i.e. AMPL, sushi, AAVE, etc.). I do believe that DeFi sector will come back. I have 2 positions in DeFi (Core - tokens and yield farming and Encore - only yield farming) and so far so good (for now). My biggest portfolio position is a digital asset that is classified as CeFi (or TradFi) by the DeFi community, but imo I believe it's more DeFi than CeFi. Good luck to all DeFi believers and hope we'll survive this downturn to enjoy the turnaround later.
Yes, I've been in stablecoins since yfi broke 36k in support (entered before the flippening). Been looking for strength with the recent downturn. It's a good breather to catch up on the various projects. I anticipate a larger sell-off in equities with the upcoming election and thus BTC (not as severe) and alts (more magnified) will follow.
I'm very glad to hear that you're doing well. You mentioned YFI and not sure if you were considering investing in it, but I read a tweet from one of the $core supporters saying "YFI is worthless". Having lost 39% in YFI investment and switching the investment to Core and recovering the losses, I couldn't just dismiss it as hyperbole and imho, there's a lot of truth in that statement than anyone involved in YFI would care to accept. Since you're on break from DeFi and if you have some time to spare, please join the Core Discord. I think there's some intelligent discussions going on there. I only read and absorb and I think I'm able to follow. I realize it can be a recipe for my own confirmation bias and what not being invested in $core and all, but I honestly get more impressed the more I learn. $core is a very small portion of my portfolio and I'm able to say that I didn't drink the whole jar of koolaid. The risk capital for me is actually much less since I sold a little core last week. I'm not recommending for anyone to buy $core, a highly speculative token based on a project that is less than 2 weeks old, however if you're considering investing in YFI, then I urge you to DYOR on $core first as the latter may have invalidated the value proposition of owning the former, imho.