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.

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.

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.

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.

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.

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.

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.