Hey – had a few LP questions and wanted to see if any experienced traders could chime in?
1. Regarding volume and liquidity of an LP. If a pool is really small, for example, $2,000 of assets and $1,500 in volume, and you own matching assets that you want to stay long – why would you invest in this LP? If fees are driven off of volume and pool size, aren’t you capped to a small fee share? Or is it that has price goes up, the volume and liquidity value of the pool go up? I will paste the pool as I just want to understand size limitations. This pool is so small I would be funding 3x the assets and that seems a waste of capital?
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2. I like to look at APY vision. [
My question is, don’t advertised APYs for LPs matter less than advertised APYs for farms? Farm APYs can shift with changes from the protocol but when I look at Vision, it’s nice to see historical APYs but the only thing that matters is today and > / going forward. Past APYs may be a good proxy, but looking at an LP APY and trying to project forward returns is seen as? ….. impossible / guesswork?
Net APY since inception, +200%. Trailing APY, +85%. Does is matter? W/ the following assumptions, and I am likely thinking about this incorrectly, assuming $5,000 and existing $2,132 pool = (5,000 / (5,000+2,132) x (vol 1,201 x 0.3%) = $3.6/day or $900 for the year? On $5,000? seems I am missing a step or have to project growth value of volume and pool? How do the models like APY account for this?
Okay, more questions later but I think I’ve taken up enough of people’s brain trusts for now. Thx!
I might be off a bit. I think CEEK-ETH is 1% so fees move to ~3x.