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Currently, the crypto market seems to be neither bearish nor bullish: A sideway market.
A situation where overall volatility of crypto assets won't swing too radically. What can we do?
Here's how you can turn this crisis into an opportunity with #HomoraV2 🧵
2/
Pseudo Delta-neutral Strategy
AKA delta-hedging: is where you balance out your risk exposure by opening long + short positions to minimize impact from price changes.
Now you know how to use #HomoraV2 to short, you can apply delta-neutral strategies too.
Lets look at how:
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Easy way to think about how to apply delta-neutral strategy for A/B coin pool with 3X leverage:
1. Split your initial capital for farming to 25% & 75%
2. Open position with 25% of capital to borrow asset A
3. Open 2nd position with 75% of capital to borrow asset B
How?
4/
Say we farm with $1000 USDC, 3X leverage.
1. Supply $250 of USDC, borrow $500 of USDC = $375 AVAX LONG exposure
2. Supply $750 of USDC, borrow $1,500 of AVAX = $375 AVAX SHORT exposure
3. Total exposure: +$375 + -$375 = 0
Don't forget: you earn APYs from both positions.
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5/
What happened?
1. Total position = $750 USDC -> 50% is converted to AVAX. Similar to buying AVAX.
2. $1500 AVAX -> $375 worth of AVAX is converted to USDC. Similar to shorting AVAX.
This makes exposure (close to) neutral when opening both positions at the same time.
6/
Simple. Of course, this example is simplified with low price fluctuation.
Regardless of which direction the price changes, your yield farming rewards > the risks
If price changes a lot, you can easily rebalance your position on #HomoraV2 by adding/removing collateral.
7/
That's it!
If it's too hard, there's a lot of resources out there on strategies explanations or detailed calculations. For e.g, one from @phtevenstrong.
#HomoraV2 is merely a tool for helping you earn higher rewards. But always DYOR to know the risks!
👍 If you like our content, feel free to LIKE, RETWEET, & SHARE with your friends or peers.
If you are ready to make some beefy yields, let's head to our DApp: homora-v2.alphaventuredao.io/
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You can read the unrolled version of this thread here: typefully.com/Alpha_HomoraV2/uBT1aJO