BitHappy
--
The Pits and Opportunities of DeFi Mining!
Q: Why does my BERA/iBERA LP decrease in BERA when I withdraw? I lost money!
A: This is a characteristic of LPs. What actually happens is: if the price of BERA is higher than when you formed the LP, then after withdrawal, iBERA will increase, and vice versa, iBERA will decrease.
Since many friends' strategy is to: borrow $BERA and form (BERA and various versions of LST BERA) to participate in mining; theoretically, this trading pair can be seen as a stable trading pair, meaning the prices of the trading pairs in the LP will maintain a 1:1 ratio.
In #DeFi, LST (Liquid Staking Tokens) commonly exist in 1:1 minting types and yield-compounding types.
For example, @lista_dao's $slisBNB and @HaedalProtocol's $haSUI are yield-compounding types, where the LST token contains the base currency and its yield.
In Berachain, @InfraredFinance's $iBERA is a 1:1 minting type, designed to be pegged 1:1 with the price of BERA.
However, since iBERA itself is tradable and has liquidity, its price will also be influenced by the market, resulting in the situation where BERA may increase or decrease when withdrawing LP. But theoretically, it should not stray too far from 1:1, otherwise it would be a de-pegging event.
iBERA is almost the foundation of Berachain; if it de-pegs, it would be a huge blow to Berachain. Although it is unlikely to happen, it still needs attention.
After explaining the reasons, where are the opportunities?
1. Because iBERA can be traded and its price fluctuates, we can choose to form LP when the price of iBERA is relatively low compared to BERA.
2. Because iBERA is pegged to BERA, we can use automated trading to monitor the price ratio of iBERA to BERA. When the ratio falls below 0.999%, we buy; when it exceeds 1.005%, we sell, repeatedly arbitraging. The ratios are just rough estimates; specific situations should be analyzed specifically.
______________________
The above content is not only applicable to Berachain but is suitable for all chains.
The above opportunities are not only applicable to iBERA but also to many stablecoin trading pairs such as $FDUSD and $USDC, as well as to 1:1 stable trading pairs and all tradable pegged tokens.
There are risks associated with the above content, DYOR, 🤣
Q: Why does my BERA/iBERA LP decrease in BERA when I withdraw? I lost money!
A: This is a characteristic of LPs. What actually happens is: if the price of BERA is higher than when you formed the LP, then after withdrawal, iBERA will increase, and vice versa, iBERA will decrease.
Since many friends' strategy is to: borrow $BERA and form (BERA and various versions of LST BERA) to participate in mining; theoretically, this trading pair can be seen as a stable trading pair, meaning the prices of the trading pairs in the LP will maintain a 1:1 ratio.
In #DeFi, LST (Liquid Staking Tokens) commonly exist in 1:1 minting types and yield-compounding types.
For example, @lista_dao's $slisBNB and @HaedalProtocol's $haSUI are yield-compounding types, where the LST token contains the base currency and its yield.
In Berachain, @InfraredFinance's $iBERA is a 1:1 minting type, designed to be pegged 1:1 with the price of BERA.
However, since iBERA itself is tradable and has liquidity, its price will also be influenced by the market, resulting in the situation where BERA may increase or decrease when withdrawing LP. But theoretically, it should not stray too far from 1:1, otherwise it would be a de-pegging event.
iBERA is almost the foundation of Berachain; if it de-pegs, it would be a huge blow to Berachain. Although it is unlikely to happen, it still needs attention.
After explaining the reasons, where are the opportunities?
1. Because iBERA can be traded and its price fluctuates, we can choose to form LP when the price of iBERA is relatively low compared to BERA.
2. Because iBERA is pegged to BERA, we can use automated trading to monitor the price ratio of iBERA to BERA. When the ratio falls below 0.999%, we buy; when it exceeds 1.005%, we sell, repeatedly arbitraging. The ratios are just rough estimates; specific situations should be analyzed specifically.
______________________
The above content is not only applicable to Berachain but is suitable for all chains.
The above opportunities are not only applicable to iBERA but also to many stablecoin trading pairs such as $FDUSD and $USDC, as well as to 1:1 stable trading pairs and all tradable pegged tokens.
There are risks associated with the above content, DYOR, 🤣
Disclaimer: Includes third-party opinions. No financial advice. May include sponsored content. See T&Cs.