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Blood in the streets

Markets continued to tank today. So, we learn.

Seems like everything was in the red today. I didn’t take a lot of time looking at the markets today, but it seems that everything was down significantly. $BTC broke below $10K, and took everything with it, it seems.

The losses that got stopped out in the last week or two, like $BAT and $CVC, were actually good in that they preserved some capital. And since I only deployed two percent on the other orders I placed, I’ve managed to avoid taking losses on $ZEN and $SOL. I’m still waiting for my COSMOS/$ATOM order to hit, and if Aave’s $LEND token has another flat day I may pick up some of that as well when it hits a nine on the TD Sequential.

I’m also keeping an eye on the IDEX-ETH price. If it spikes I may trade some; I’m still open to the possibility of providing liquidity on Uniswap. We’ll see.

I read a lot of Mastering Ethereum. The cryptography chapter managed to put me back to sleep this morning, but I’m actually getting to the smart contract part and am looking forward to trying my hand at Ethernaut right after I get done with this. I’m really looking forward to writing some programs to watch what happens with these liquidity pools.

Should be fun.

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Liquidity

Spent some time today delving into Uniswap. Here’s a couple of posts that have some good information:

Understanding Uniswap Returns

An Introduction to Automated Market Makers

I had a bit of a flash this morning that I should probably start exiting my IDEX position into ETH, specifically the yETH pool, but it turns out that Yearn has halted deposits on the pool. I’m glad i got my little test deposits in when I did.

Still, I was looking at the best way to exchange my tokens. On IDEX, obviously, but I have never actually used them since they implemented accounts, so I can’t trade there as of now. Binance has trade pairs to BTC, but that would involve another trade. Then of course, there’s Uniswap, so I took a look and found an IDEX-ETH trading pool.

The liquidity here is not very impressive. And I saw an opportunity for me to provide some, although I still don’t understand how the assets in the pool are being staked together. I would assume that the pool would need to be 1:1 in value between the pairs, but it actually looks to be about 1:2, as far as the USD value of IDEX-ETH. And I’m not going to put any more capital at risk until I understand what this “divergence loss” is and how I can keep from being affected by it.

I also spent some time looking for arbitrage opportunities. There was a bit of a price divergence between the IDEX exchange price and the Uniswap price, but the liquidity is so low that trying to take a large order would eat the price divergence back to par, and dealing with low amounts would have caused any profits to have been eaten up by gas fees.

So for now, I’ll take no action while I wait for a bit of a price recovery on IDEX and explore other opportunities. I’ve given up trying to get the Monero blockchain running locally, and have it syncing in a cloud server. What was taking over a week with my SATA stripe array looks like it’ll take a few hours on cloud.

Other than that, I’ll be working through Mastering Ethereum, trying to understand these smart contracts, and hopefully figure out how these smart contracts work, how to design my own, and how to build programs to interact with them.

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Black Thursday

Today was a good day, unless you count what happened in the markets.

This morning actually started out pretty good. My four-year old slept in her bed for the first time ever, and both my wife and I had the best night’s sleep in a long time. Everything was pretty calm around here and I managed to get a lot done.

Bitcoin took a huge dump today, but so did most of my equities positions as well. I was actually pretty calm about it, as I had some stops trigger over the last couple days, so I’ve got my bigger positions protected. I even picked up some more Grayscale Ethereum Trust, $ETHE, as the premium held, and DeFi isn’t going away anytime soon. I was actually pretty calm about it. Staircase up, elevator down.

I had a couple stops set on $ICX and $LISK from last week, it looks like both of them triggered, but neither of my recent buys hit my stops, so that’s good. I picked up some $ALGO today as well, and Cosmos, $ATOM, just hit a nine on the TD Sequential, so I’m probably going to market buy some of that as soon as I get done writing.

I did spend some time fretting about my USDC holdings which are currently just sitting in my wallet. I’m half tempted to dump them in Yearn, but with the gas costs I’m probably just better off dumping it back in BlockFi. I am however, at total risk of becoming a degen and dumping my entire ETH holdings in the new yETH vault, with it’s shiny 99% APR. Thankfully I missed the withdrawal window to get my funds out of BlockFi until Tuesday at the earliest. Waiting is probably a good thing right now, so I’ll do nothing.

I spent some time reading over the Ethereum yellow paper today, and I plan on spending the rest of the evening Mastering Ethereum as it were. I want to be able to read these contracts and understand exactly what they’re doing before I go and do anything stupid.

And I’m really feeling the urge to do something stupid. I got a notification from my student loan issuer yesterday. The debt forgiveness has been extended until January 2021, so I don’t have any debt or interest to worry about till then. But I have an extra $600 a month that will be coming due then, and that is going to be a real big problem for me unless I take another job — or choose one of the other payment plans. The possibility of raking in some of that sweet, sweet, yield farming money is looking really, really good right now. If I was willing to dump all of my BTC into ETH and stake it, I could pretty much retire right now.

I know it won’t last for long, and I would rue the day I was born if I did something like that and lost everything to something like a contract failure or exit scam. I’m taking it real easy right now, and trying not to get caught up in some stupidity.

At least for now.

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Slow day

Markets were down all day, so today was a chance to catch a breather.

So the Yearn.Finance ETH vault went live earlier today, and I managed to stake a small position plus another twenty dollars in gas fees. Apparently they’re depositing the funds in Maker, using it as collateral for a DAI loan, then depositing that on Curve, earning CRV tokens, selling those which goes back to the ETH pool.

I’m comfortable with these little 2% experiments and consider it as a sort of tution. Unchained covered why DEXs are taking off in this latest episode, and they really break things down quite well. It’s worth a listen.

I’ll admit I didn’t get a lot done today, I stayed up too late last night and got woken up too early by the kids. They were quite a handful today and it was tough trying to get some work done while nursing the lack of sleep.

About the only thing I did do was re-opened a position in $ZRX.

This isn’t ideal, considering that I just stopped out this position less than a week ago, but I want to explore picking up positions on the TD #9, before it closes. I’m still trying to flesh out the “rules” about how I’m going to set stops on these positions. Damn Binance and the lack of decent trailing mechanisms. I’ve got a lot of work to do to code these things up.

Using my Google Sheet trade calculators has become very cumbersome given that the CryptoFinance module that I had been using for price feeds no longer works. I had built custom API lookup scripts for some of the smaller markets in my mining portfolio, but it’s just too cumbersome keeping those together between various sheets. So I think the time is nigh to convert those over to some sort of Python program, maybe with a web front end.

I’m not sure how much work that’s going to be, of course.

All of this DeFi madness did get me to pick up Mastering Ethereum, which I started reading through today. Things seem to have come quite a ways since I tried experimenting with things a while back, now they have a online IDE that lets you compile, deploy and test smart contracts on a local JS node. It’s pretty handy, and the whole thing is pretty damn handy.

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Market updates

September is starting off with a bang.

$BTC was up to $11.9k this morning and has been edging on either side of $12k all day, but most of my attention was on ETH and DeFi tokens. I entered positions in Horizon ($ZEN) and Grayscale’s Ethereum Trust ($ETHE).

DPW Holdings

I started a value averaging protol with DPW Holdings ($DPW) back in June of last year. I believe they were on a list I pulled together for autonomous or aerial vehicles or something and is one of those stock pics that I threw a minimal amount of capital at without too much thought. Within a week they went from a dollar to six, and I thought I was a damn genius. It fell right back down, thankfully I sold some during this and a subsequent spike in mid-July. The protocol ended early last month, and my position is a bit underwater, but it’s less than half a percent of my total portfolio.

DPW Holdings

I set a contingent order to set a trailing stop should the price exceed five dollars. It’s my first time doing this with my brokerage, but I think I’m going to be putting them to use in the future.

Horizen

Horizen came up in my notes yesterday while I was feeding off of CryptoPanic. I was looking a running a node, actually, but discounted the one percent returns on the “Secure” node as weak, while the capital required for the 14% APR “Super” nodes as too steep. And mining the coins seemed completely out of the question as well. Still, the ticker price was trending as a nine on the TD Sequential for most of the day, so I broke out my trade calculator and took out a two percent position.

Horizen ($ZEN) chart

The price recovered after my order, so the nine actually turned into a one by close, so that might actually make a good strategy. My stop is set at the last entry signal, and I’ll raise the stop if it hits the exit target.

Grayscale Ethereum Trust

I’ve been heavily invested in Grayscale’s Bitcoin Trust ($GBTC) for at least a year or more, and right now it makes up about a fifth of the holdings in my managed IRA. And while I hold a special place in my heart for Ethereum, I’ve refrained from participating in Grayscale’s Ethereum Trust ($ETHE), mainly due to the insane premiums that have been attached to it since it was made available through my brokerage.

Since all the madness in DeFi and yield farming has taken off, ETH has become extremely lucrative, jumping to the top of the mining calculators over the past couple days. I switched my rig over last weekend, and at last check I’m making close to three times mining revenue than I was six months ago. And while the price of ETH has risen four times since last March’s lows, ETHE’s premium over NAV (the ratio between actual assets and number of shares,) is actually at the lowest level in a year.

The ETHE premium (ETHE/ETHUSD/NAV; NAV = 0.0934346 ETHE/ETHE) on the candlesticks. ETHE (falling) in blue, while ETH (rising) in red.

To me this seems like the best time to enter into an ETHE position. There’s not a lot of chatter about it on Twitter, but I did find the following thread which thinks that the premium could go even lower, and the price down to $40. Given what’s happening in DeFi right now, I don’t think it’s likely, especially given that price computes below NAV, but I set a stink bid regardless and opened a small position (0.5% capital) before the end of the day. Taking these nominal positions relieves my FOMO and gives me some breathing room.

https://twitter.com/JonathanZafar/status/1299460592173027330
https://twitter.com/JonathanZafar/status/1299460592173027330

It’s just crazy to think that just back in June, ETHE was $220, ETH was $240, and now ETHE is $60 and $ETH is $470. I’ll scale in from here and keep an eye on the premium. The closer things go to NAV, the better a deal we’ve got here.

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SushiSwap FOMO

More DeFi madness.

Well I learned quite a bit about DeFi today, and things really escalated quickly after I succumbed to a bit of FOMO. Thankfully I didn’t go too crazy.

I’d been seeing news earlier in the day that Uniswap, a ERC-20 DEX had broken $500 million in volume, and then read some info about SushiSwap, which is basically going directly after Uniswap. Uniswap operates by providing fees back to liquidity providers. Then this tweet happened:

And that’s exactly what SushiSwap is.

The developer behind SushiSwap, the anon Chef Noni, describes it as Uniswap with Sushi tokenomics. LPs are provided with rewards in Sushi tokens, but the main difference with UniSwap is that LPs can withdraw their capital and still earn rewards by holding Sushi later on. Right now, they’re just stealing liquidity directly from Uniswap, but the plan is to launch their own native pool in the coming weeks. In the meantime, as an early mover advantage, they are providing 10x staking bonuses to LPs, and another 5x to those that stake the SUSHI-ETH Uniswap pool.

The project launched just 72 hours ago, and already has $57m in liquidity with over $99m in volume. The SUSHI itself has gone from $0.90 to $6.00 in that time. The context here of course is YFI and other DeFi tokens that have had 10,000% gains in the last month. Could SUSHI see a run like this?

Obviously, the risk/reward here for a small stake seems immense, so I decided to give it a shot and see what is going on. SUSHI was trading around five or six dollars earlier, so I decided to throw some ETH at it. I made a bit of a mess at it, but I eventually got it figured out.

In order to be an LP on Uniswap, one has to provide equal amounts of assets on all sides of the pools. In most cases, it’s just two tokens, like ETH and DAI, but in others it might be three or even four tokens. After pooling your assets you’ll be provided with the relevant Uniswap token for the pool.

Of course the point to these pools in the first place is to facilitate swapping between the pool currencies in the first place, so the first thing I did was use Uniswap to purchase SUSHI. I wanted to stake in the highest paying pool, which is the SUSHI-ETH one. You can follow along with this guide here, but please check the contract addresses before sending any funds. The SUSHI token contract address can be verified here.

From there it was just a matter of adding my newly acquired SUSHI to the pool along with an equivalent amount of ETH. And this is where I messed up. Uniswap attempts to calculate the exchange rate between the two currencies before sending the transactions, but the volatility of SUSHI was too much for Uniswap’s default slippage percentage of one percent. My first two attempts at the conversion failed, wasting about ten dollars in ETH, before I raised the slippage to ten percent and it went through, giving me SUSHI-ETH Uniswap tokens.

I now was an LP in the same pool that I had just used minutes earlier to exchange my ETH for SUSHI in the first place. The conversion was not one-to-one; five SUSHI and equivalent ETH netted me 0.540 LP tokens.

The next step was to stake my SUSHI-ETH LP tokens in SushiSwap. This also took a fair amount of gas, but managed to go through at a fairly low rate. All in all I staked sixty dollars between ETH and SUSHI, and over twenty dollars in gas.

I’ll admit I got really wrapped up into a severe case of FOMO while setting all this up. Thankfully I’ve calmed down and managed to refrain from any additional buy-ins. DeFi is moving very, very fast, and I found myself in bit of a mania today. Thankfully I’ve managed to limit my exposure to just a hundred dollars.

Still the urge to go and swap a couple hundred dollars of stable coin or ETH is still there at the back of my mind. I just have to keep telling myself: risk management risk management risk management. I might wake up tomorrow and find SUSHI up 10x, or down to pennies. Either way, things are moving so fast right now that I’m sure there will be plenty of opportunities to deploy more capital in other projects. The last thing I want is to run out of dry powder this early in the game.

I’ve been so obsessed with the price of BTC the last few weeks. DeFi is the only thing that’s managed to keep my attention off of it for half a day or more, but it’s fueled a whole other obsession. We’ve still got four whole months left in 2020 and it seems like it’s going to be a doozy.

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Work weekend

Another weekend draws to a close.

Today was not nearly as productive as yesterday. I spent most of the morning messing with VMs and blockchains, trying to get things Monero and Arrow synced back up so I can access my funds. I managed to combine four 250GB drives together into a striped software RAID (converting Win10 from AHCI to RAID is just too cumbersome), and configured WSL 2 and Docker on it.

Trying to build Monero from scratch in the official Dockerfile was a wash. One of the dependencies wouldn’t build, so I just wound up downloading the precompiled binaries. Things are still pretty slow to sync, and could take another week. I may use some of my Azure credits and just start tucking stuff there. We’ll see.

I did lots more reading on various projects, mostly DeFi stuff like Curve and Yearn. These things are really complicated, and I don’t have the type of free capital to deploy to really take advantage of these protocols, given the high fees.

Probably the most interesting piece of news today was about this new Project Serum DEX. It’s built on Solara, of which I had never heard of before, but there’s so much going on with this project that I was just fascinated. The hardware requirements for the nodes themselves are quite impressive, and it looks like it requires about thirty million dollars of SOL tokens for a stake. I’m not sure how this compares to similar projects, but it’s pretty obvious that this is out of my league.

I’m still evaluating other options, a ChainLink node, perhaps, but it seems I’ve been priced out of that as well. I’ll just have to stick with my IDEX node for the time being and start testing for Etherum 2.0. The requirements for that are still within my grasp.

In fact, ETH is the most profitable token up on the mining calculator right now, so I’ve switched the rig over. I’m not sure what this means for my BEAM converter, but I’m waiting for slight bounce back in price before I sell to cover August’s mining costs.

My immediate goal is to figure out how to generate income. I spent too much of the last two years focused on politics and finishing my degree. I think I’m mostly done with my little adventure doing WordPress builds. The opportunity is just too big to miss right now.

I’ve got work to do.

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Adulting

It’s been a remarkably productive day today at the homestead.

We allowed the girls to stay up a bit last night, I wound up going to bed a bit earlier than usual on a Friday as I had my bender Thursday night. We all woke up and were out of bed by seven. Even Missus gave up on trying to go back to sleep as she normally does.

We were expecting rain this weekend and most of next week due to the hurricane that’s been moving through the gulf coast, so I went out as soon as was neighborly and did my monthly weed-eating. Missus tended to her flower beds, and even I wound up pulling some weeds and laying some mulch myself. I also downed some limbs in the backyard as well. All of this before eleven in the morning.

Missus had me hang a new shelf over the bathtub, and I don’t know what was getting into me at that point but I must have felt motivated, cause I started cleaning out old piles of computer junk. My downstairs office almost looks empty.

I’ve got about a dozen or so hard drives that have just been laying in boxes, ones I’ve pulled out of clients machines out over the years, lots of five hundred gigs and under. I actually recabled one of my machines so I can start inventorying them and cleaning them out so I get rid of them. So now my upstairs office is a mess, but I have a plan to get rid of a lot of old equipment, routers and access points, all kinds of stuff that’s just been laying around the house. The reorganization is long overdue, and it’s helpful to see how things are developing. Calming, almost.

I’ve done enough for today, so now I’m going to spend some time working on my programming projects, restoring some blockchain wallets, and doing some research on LINK and ETH 2.0 nodes. You know, the kind of things one does on a Saturday night.

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Evening update

Today was supposed to be my self-designated RDO, or regular day off from work, something I’m experimenting right now as a way to reclaim some of my time so that I can work on personal projects. I did wind up doing a fair amount of reactive work for my day job, but got a surprising amount done still.

Of course I was focused on money: activities in the equities markets, crypto, and trying to make sense of what the hell is going on in DeFi right now, which is just a bit mind boggling.

I did finally say goodbye to my Basecamp account. As much as I like the product, the monthly fee of a hundred dollars is just too much for me when I don’t have any active projects going on. I think I can do most of what I need there in Notion, anyways.

Of course I rewarded myself by starting a TradingView trial. After god knows how many years I’ve been using that, and I’ll never have to see a stinking nag screen or ad again. Hallelujah.

I caught some nice profits off of Materialize ($MTLS) earlier this week after placing a trailing stop on them after they hit a nine on the TD sequential. It got pulled up with a spike on Wednesday I pocketed a nice one hundred percent gain. I’ve had a value averaging protocol in place on this one for more than three months now, and reset the position to start accumulating again while I watch and see if the TD generates a buy signal.

Materialize ($MTLS). Value average accumulation period in white box.

I’m not seeing any good entries in the crypto markets right now. Cardano (ADA) looks like it might be setting up for a buy zone. It seems to be at the support formed by the June buy setup. I would probably size my position here to stop just under the 200-day MA.

Cardano ($ADA) chart

Tezos ($XTZ) seems to be a bit of a mess, but might be worth a look. It looks like it takes 1000 XTZ to stake, which is a bit much for me to accumulate, so I’ll keep this one on the back burner at the moment.

Tezos ($XTZ chart)

The topics of staking came up in conversation with an associate today. My IDEX holdings are maintaining for right now, and I’m eagerly awaiting the release of IDEX 2.0 in the coming weeks. I don’t know whether that will be a “sell the news” type of event or not, but I’m hoping I’ll have enough of a stake to operate a Tier 2 node when the specs are released. Still no word on what that’s going to look like. In the meantime, it looks like I’ll be getting double the staking rewards every two weeks.

Perhaps the biggest decision right now is whether to accumulate more Ethereum in advance of the planned change to poof of stake. 32 ETH seems to be the magic number needed to create my own money-printing machine. That’s going to require a substantial investment, but will it be worth it? I’m guessing yes.

I was also exploring the possibility of running a ChainLink node. Interestingly, it doesn’t actually require staking LINK, although ETH is needed. The hardware requirements are pretty steep though, requiring 16GB of RAM. Running one in AWS isn’t going to be cheap, but if LINK continues to perform, it may be worth it also.

And speaking of LINK, half of my original ICO proceeds are now officially locked up in a Yearn Vault. I may have been overzealous, cause I still don’t understand fully how it works or is paid out. So far it has cost me a bit of gas to purchase Aave’s aLINK and deposit it in the Yearn vault, not to mention the cost I’ll incur to pull it out. For now I can just wait and see what happens, and watch to see if any more buying opportunities arise. The price has really pulled so far ahead of the moving average that I would expect it to consolidate or pull back for a while. Given how much ChainLink has been up to, though, there’s really no telling how far up this is going to go. I just can’t see selling any of this right now.

And I still won’t be buying anything yet, until I get my trade plan program up and running. I haven’t looked at it in a year, and who knows what I was doing last time I worked on it. I’m almost scared. I’ve got a few more things I want to do with my BEAM converter before I change gears to work on it, so hopefully we’ll have several more weeks of opportunity before things start to take off.

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Building steam

I continue to focus my activities on cryptoassets and trading.

I’ve had some mild anxiety over some of the sells I made, BAT especially. It’s not that I feel that strongly in it as a long term play, but I just had a tinge of a feeling like I’m going to regret that one. I’ll just keep watching and see if an entry comes up on the TD Sequential.

I’ve been starting at this indicator across my watchlist for the last few days, both with crypto and equities, trying to see if there are any rules I can glean out of it. It looks like it’s going to be impossible to call the tops with these signals, but they do seem like they make nice support and resistance lines. I’ve seen many, many times where the price has bounced of a previous top or bottom. I’ll either have to prepare my orders for prices that are approaching a potential signal, or revisiting a previous one. It’s also import to remember that it’s better not to get focused on catching the tops and bottoms so much as it is about getting the trend right.

I’ve only made a couple of sells lately, and am still watching for potential buying opportunities. I haven’t seen anything especially interesting yet. Most coins are well above their moving average, so I’m paying special attention to those coins that are still trending below it and haven’t joined the alt-party yet.

Before I jump into any position though, I’m going to take my time and plan out my trades. I’ve got to revisit my old trade planning tools that I scrounged together in Google Sheets and Python previously. Since I’ve learned how to pull data from exchange APIs, I should be able to hack a program together that will track the prices in real-time and set my entry and exits automatically.

But first, I’ve got to finish work on my BEAM converter. I’ve got most of the functions I need to check prices, compute my mining costs, and send a transaction to the exchange, so I’ll need to finish writing up the order functions, as well as another to send funds to my hard wallet (if that’s what I want to do). I’m hoping to have that done by this weekend.