@beefyfinance recently launched their highly anticipated Cowcentrated Liquidity Management (CLM).
Being an avid concentrated liquidity provider myself, I was excited to give this a go!
TLDR in next tweet.
TLDR: CLM outperforms HODL in choppy markets & MINIMIZES IL vs other ALM's on the market.
How? No rebalancing via swapping! Saves unnecessary IL, & rebalances the weak asset using the market via its "adopted range". In addition, you incur NO slippage!
I'll elaborate below
I staked on Beefy's ARB/USDC pair. The incentives from @merkl_xyz & @arbitrum are nice and I had some $ARB sitting in my wallet doing nada.
Here is 13 days worth of rewards on a $7,297 initial deposit. This is IN ADDITION to the yield earned on the trading fees of $125.
Rewards and yields are nice, but my long time problem with ALM's are the excessive IMPERMANENT LOSS they incur running THEIR strategy and why I have avoided them for so long.
I've spoken about this at length in the thread below
x.com/FLOAT_LOCKER/status/1707575966678364424
Beefy "reranges" the LP to get back to 50/50 with the existing liquidity split then takes the remaining liquidity (weaker asset) and sets up a single sided LP (SSLP) using the "adopted range" which is just the range prior to the "rerange".
@RobMcStodda & @ApertureFinance (with a small input from me🫠 ) team created their Automated Liquidity Management tool that solves this problem. It gives the power to the user to manage their own strategy.
But I digress, my experience with @beefyfinance below
Depositing had challenges. Beefy determined when to deposit & would not if the market was too volatile. I refreshed until I was allowed. This took a bit of time.
It would be nice to have a way to deposit & Beefy can eventually stake the LP when conditions improved.
Another challenge was being unable to deposit in both $ARB & $USDC at the same time.
At deposit Beefy would not accept USDC and only ARB. So I had to go and swap my USDC -> ARB on @DefiLlama then go to Beefy, & they "convert" 50% of my ARB BACK to USDC. Why? Explained below
The entire vault was imbalanced. Upon every deposit & harvest, vault is reranged back to 50/50 using the deposit & fees respectively
In my case, vault was heavy USDC & needed more ARB to rerange which then uses USDC from the SSLP to match my ARB deposit 50/50. NO CONVERSION 👍
@beefyfinance CLM does something no other ALM does.
The LP stakes 50/50, as price oscillates the ratio changes. When rebalancing BACK to 50/50 they DO NOT swap the weaker asset, they simply set it up in a SSLP to let the market REBALANCE it for THEM!
Genius!
Beefy frequently RERANGES the LP back to 50/50 multiple times per day by using the EXISTING liquidity ratio, then takes the remaining "left over" liquidity and stakes it into its separate SSLP to let the market "rebalance" it for them!
NO SLIPPAGE & NO EXCESSIVE IL!
Can I do this on my own using @ApertureFinance? Sure, but then I'd spend my entire life in front of the screens & wouldn't be able to travel the world as I have been doing :)
It's not WORTH the time to do it on your own if the reward isn't sufficient! Terrible ROI on TIME!
Beefy handles this for you. Although they charge a MAXIMUM fee of 9.5% of TRADING FEES EARNED...it's a small price to pay.
Not to mention, the APY you see on @beefyfinance has fees factored in!
Hoping @revertfinance @ApertureFinance @KrystalDeFi etc take note! :)
Fees MATTER!
So how has my performance of this ARB/USDC pool been for me? Phenomenal. IL is very minimal, and I get the white glove service of having @beefyfinance handle the management. Completely hands off. Love it!
Not to mention the @merkl_xyz rewards!
As you can see, I've earned AN EXTRA $84.51 over a HODL'er in 13 days. This extrapolates to an EXTRA 32% in profits in a year over HODL'ing.
@beefyfinance has Made ALM's Great Again! 🤝
My burning question for @beefyfinance? What if price gets a god/death candle that blows price out of range? What does Beefy do with the range in this scenario? Stay 100% in the single sided Alt pool and depend on deposits/harvests to replenish the other asset?
I partnered with @cryptonoah11 & @knowitowlz to bring forth top notch DeFi education. You will learn directly from myself and our coaches to see exactly how we manage our portfolios to help you on your journey. Sign up for a FREE strategy session below!
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My Discord is also free to join and we can chat about concentrated liquidity, market analysis, and even what shitcoins to slang at the wall!
I also offer a monthly 1-on-1 mentorship for those that get direct access to me personalizing their LP strategy!
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You can read the unrolled version of this thread here: typefully.com/FLOAT_LOCKER/qvRnifl