Morning notes

I had a blast of activity yesterday after signing off, so let’s get right to it.

First off, the Aave launch on Polygon. Pure insanity. They are really pushing hard to get liquidity. Here’s the chart from this AM. First off, pay attention to the second number under the deposit APY and borrow APR. You’re getting rewards on both ends. I used the Matic bridge to send over some MATIC and wBTC, then deposited the wBTC. Then I went ahead and withdrew about a third of my collateral in USDT, making sure I was in no danger of liquidation. Then, for good measure, I hopped over to Quickswap and deposited some LP in the USDC-USDT pair.

The borrow rates have gone up quite a bit since I went to sleep, so I might need to repay my loan, but I’m still getting a 15% spread on the borrow. I should easily be able to swap the MATIC rewards to cover that spread and still be left with a pretty penny.

MUG news: My new friend DeFiAnt, who manages the LTI Token Set, brought my attention to a possible opportunity to earn liquidity fees on AMMs by setting up multicoin LPs. In this case he created LTI pools on Honeyswap for ETH, wBTC, and xDAI pairs. Then he let the arbitrage bots go to work. So far he’s accumulated about $1500 in fees doing this, so I spent an hour last night bridging funds and setting up ETH and wBTC pools. The reporting on these fees has been very wonky, but I’m going to wait a week or two and see what happens. I spent almost $200 in gas fees doing the bridging, but setting up the pools on xDAI, like MATIC, is insanely cheap. All the MUG pools are here.

I know there’s a lot of launches going on today, I haven’t been keeping up as well as I should have, I think I may have spread myself a little too thin right now. I’ve got funds spread out everywhere, and I’m in a position where I really don’t have a way to keep track of everything. Zapper’s pretty good, but it doesn’t track half of the stuff that I’ve got funds in, so I’m going to have to put something together to make sure I don’t lose track of what I’m doing.

I have got to get my stablecoin farming piece finished today so that I can move on and start working on the SetProtocol docs. I’m already several days behind launching that. Time to roll.

Morning notes

So we’ve been trying to figure out how to get MUG into the hands of more people. It’s not the best-performing NFT TokenSet out there, but without any liquidity besides myself and a few people we’ve distributed it to, I haven’t really had the drive to manage it or issue more tokens. I had a chat with a new friend of mine who manages the Layer 2 Index tokenset, and he told me how he’s been using Honeyswap on xDAI chain to provide liquidity for the LTI token. For weeks, I’ve been mulling over whether to put an LP on Uniswap, but gas fees have really been turning me off the idea. So I went ahead and put a MUG-DAI pair up on Honeyswap yesterday.

xDAI is much easier to get onto than BSC — no VPN needed — but I haven’t explored the space very much. I know about a couple projects over there, mainly Colony, which is a DAO as a service project that I’d looked at previously. Now that I’m starting to understand some of this cross-chain swapping and bridging, I’ve got a lot more exploring to do. I don’t get the sense that there’s as much scammy-ness going on xDAI like there is on BSC, but we’ll see where the opportunity is, and I’ll probably have to start taking a closer look at Matic or Polygon or whatever it’s called next.

There’s a lot of stuff going on with these other L1s right now. RUNE is really taking off, literally, they’re getting ready to do some big launch, and price action on their token is booming as well. I’m really frustrated with this one though, since I don’t have time to delve into it as much as I want. I bought a small amount of tokens some weeks ago, but then had to move them once Binance flagged my account as US-based. When they gave me 14-days to claim my funds, I wound up sending my RUNE over to TrustWallet. I didn’t realize it was a Binance Chain address. So I spent last night trying to move BNB from BSC to Binance CEX, now I’ve got to figure out how to swap it to the actual RUNE network using their bridge, and move my BNB back to BSC so that I can continue being a degen.

Speaking of which, I did wind up putting about $140 worth of COMOS-BNB into the Comos.Finance LP yesterday. To give you a sense of the amount of due diligence I did on this one, I was calling it COSMOS for for two days until someone pointed out that there’s no ‘s’ in the middle.

For about $800 worth of ETH one can can get on BSC and really go to town on some of these projects. It’s almost like going back in time six months or more to when ETH was $200 and gas was only 10 gwei. It’s quite refreshing, but probably even more Wild West than Ethereum right now. We’ll see how things play out over the next six months. Several projects I’ve seen are locking rewards or vesting them, which should slow down much of the dumps, but it also means that getting in a few weeks late might force you to watch your funds evaporate in slow motion, if things go south.

On a personal note, I’ve got two projects interviews today. It seems funny that I’m announcing my retirement from work and now opening up to the prospect of taking on another job. One’s short-term, and the other seems like a more long-term play. I don’t know how I feel about a long commitment right now, but we’ll see how it goes and who knows, maybe it’ll work out.

Homebrew.Finance $MUG NFT Index Launch

Last night, after 8PM EST, I commenced trading of the Homebrew.Finance NFT Platform TokenSet. The nine trades cost 0.59 ETH, which, when combined with the deployment transactions, brings the total cost of deploying the Set to 0.94 ETH. This doesn’t include the cost of issuing tokens via wETH, which required conversion, approval and issuance.

Before trading, I updated a spreadsheet with the updated market capitalization from the CoinGecko NFT category page, and began trading. After we made our first trade, into Enjin, we discovered that the second token on our list, Dapper Labs $FLOW token, is not actually an ERC20 token. I had two choices at this point. I could recalculate the index with the next token on the list, but I was afraid this would require me to adjust the amount of Enjin in the set. Given the amount of gas I would need to do this, I decided to continue purchasing the rest of the tokens with the weighting I had already specified, and leave FLOW’s portion in wETH instead.

I don’t necessarily think it’s a bad thing to leave 20% of funds in wETH for the next month, but I also don’t want to make any decisions without stakeholder feedback. Later today I hope to provide a Snapshot.Page for $MUG holders and put up suggestions for people to vote on.

We deployed approximately thirty thousand dollars worth of wETH in the Set. Performance can be tracked on the Zerion page. It’s in USD, but I’m really going to be looking at performance against ETH. Zapper can do the conversion, but it’s missing two of the underlying components and doesn’t have a chart, so I’ll have to figure out the best way to do this. Developer help on this would be great.

At the end of this thirty day period, (actually four weeks ending March 20th), I will liquidate all positions back to wETH, thus allowing additional issuance/redemption of MUG Set tokens. That is, unless I can determine a better alternative. Set Protocol’s basic issuance module allows redemption of Set tokens into the underlying asset, at an estimated gas cost of eight hundred thousand, or about $260 at 160 gwei. Selling out to wETH brings this down to a single token transfer for participants, but will likely cost me another $1400 to perform the trades. And who knows what the price of gas or ETH will be in a month.

I hope that we’ll be able to gather additional public interest in the set during that time, and that we’ll see additional inflows of capital that will justify the cost. Set fees of two percent on the current funds will only come to about $33 during this time, so unless we can get something like two or three hundred thousand dollars in the set for month two, I don’t see that we’ll redeploy. I’ve actually done the math, we’d need in excess of $1.6 million in funds for the streaming fee to pay for these monthly liquidation/redeploy cycles. That’s $33.6 thousand in gas fees, basically.

Ideally, I’d like to use Set’s NAV module, which can compute the Set token value using on-chain oracles and allow issuance using a variety of tokens. The problem here is that the selection of oracles is limited, and having non-supported tokens in a Set prevents this NAV issuance from working. I’m trying to work with the Set team on a technical solution to this problem, but it will likely take months to accomplish.

The other solution is to issue a sufficient amount of MUG tokens to justify creating a liquidy pool on Uniswap. I don’t have an exact number in mind, I’m thinking perhaps $100k worth of ETH or USDC might be sufficient. This is more than I’m willing to stake from my personal funds, so this would have to originate from an outside source. Then there’s also the problem of impermanent or divergence loss. Let’s assume that we start a pool with $100,000 of MUG and USDC, split 50/50. If the price of MUG doubles, LP holders will wind up losing out on about 8.5% of those gains versus if they had simply held on to MUG directly. Pool fees may offset this risk, but therein lies the risk. (An impermanent loss calculator can be found here.)

Other incentives may can be provided to offset this risk, the usual ones being governance rewards. In regards to that, we have not started development of the Homebrew.Finance $BREW token yet, but I am planning on providing rewards for $MUG holders that stay in through these early days. I will work these details out in another post.

Lastly, there are a number of things that can be done to make participation easier. We’ll need to set up some sort of front end, right now the webpage points to the Gitbook, so need to add that to the roadmap. Again, I can do this work myself, but I would appreciate developer help.

That’s all for now, I’m going to hunker down and get to work building. Thank you all for participating!