The beauty of defi

Six months ago I made this post:

Over this last half year I analysed another liquidity pool of my choice and am here to share the results. Personally, when choosing a successful liquidity pool I look at multiple factors:

1. Am I willing to hold both tokens outside of the pool even without rewards?

2. What are the tokenomics of the chosen tokens, e.g. what is its yearly inflation rate?

3. Is the APY received high enough to offset impermanent loss?

This let me to the LP of BIFI-ETH because it has an average APY of 45% over the last year and beefy has a capped supply and acts as a dividend stock. To better track the performance of my position, I chose four different strategies to compare with each other with the results over the last 6 months:

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October March

Liquidity pool BIFI-ETH 150 246

50/50% BIFI-ETH 150 222

100% ETH 150 206

100% BIFI 150 238

As visible, all strategies performed well but the chosen liquidity pool got the best performance due to the compounding effect of the protocol. In the next table the change in valuation of the pool is displayed. As shown, the amount of ETH (21 %) increased more than BIFI (8%) due to bifi outperforming eth. Nevertheless both tokens increased in quantity which is excellent.

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Liquidity pool BIFI-ETH October March 6 Month increase

LP tokens 0,1160589 0,133013 14.6 %

ETH 0,057337 0,069361 21.0 %

ETH value ($) 75 123 64.0 %

BIFI 0,23491 0,25508 8.6 %

BIFI value ($) 75 123 64 %

Total value ($) 150 246 64 %

Finally, for the regards that can’t read tables I added a nice graph to visualize the four strategies over time.

Keep in mind that this was a relative short time in a upgoing market with little impermanent loss, results may vary during crashes and high volatility.

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4 thoughts on “The beauty of defi”

  1. I’d love to have a tool to track IL in beefy. The new interface is great because it shows the compounding LP quantity, but I have a feeling they left IL out on purpose because so many pools would have a negative return, and it would discourage participation on their platform


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