DAO-based asset trading pool
Ethereum and DeFi are blowing up this year. And with the price of Ethereum nearing all time highs against the dollar, that means gas costs on the network cost more. Smaller entrants are quickly being priced out of more lucrative projects such as yield farms, which require high entry and exit fees which can negate ROI for smaller stakes. Currently the cost of entering a position in Uniswap or Sushiswap liquidity pools, and staking these LP tokens in a project like Yearn or Harvest is only profitable if one has a significant amount of capital to invest, and a long enough time frame. These limits, which I currently believe to be around $5,000-10,000, will only increase as the value of ETH increases.
As someone who is currently making the equivalent of a decent salary through yield farming, I would like to bring this opportunity to others, so I have decided to launch Homebrew.Finance which will allow us to pool stablecoins or other assets from a number of smaller investors. We will then deploy these funds to tokens and projects on their behalf, allowing them to save costs on gas. Profits within the fund, whether from trades or yield generation, will not be considered taxable to the user until such time as they decide to pull their liquidity.
The current plan is to develop a pool using Set Protocol. It is our intent to allow participants to deposit USDC and receive the Set’s token, $BREW, in exchange. Initially, we expect the Set’s funds to be deployed to some mix of wBTC, ETH, and the DeFi Pulse Index, $DPI, which is a market-cap weighted index of DeFi-related tokens.
Set Protocol is attractive for several reasons. We can whitelist assets to the Set, and determine the asset allocations according to our needs. There are adapters available for popular protocols such as Uniswap, Sushiswap, Aave, and Compound, which allow us to provide liquidity or gain leverage on our positions. However, staking liquidity tokens, a key component of some of the more lucrative farms, will require additional protocol adapters to be developed internally, as Set Protocol has no plans to incorporate them at this time.
As far as first steps goes, I have taken the first step off registering the domain for homebrew.finance, and a Twitter handle, @homebrewDAO in anticipation. I’ve also initialized a group on GitLab that we will be using to track development and planning. I’m writing this first post to get the word out, and gauge interest in this project. Initially, I’ll be controller of the Set, with an aim toward decentralized governance once we get going. I anticipate some sort of governance token, which can be minted by staking $BREW tokens, can be used to determine voting rights.
I anticipate having the Set created sometime in the next week or so. I hope that by the end of the year we’ll have a solid project up and running, with hundreds of thousands of dollars in liquidity pooled across not just one, but multiple sets with different risk profiles. If you are interested in getting involved, please let me know.