In recent days, I've been mining the ecosystem subsidies of Unichain and sharing some profit charts. Many people have been asking about my strategy, so here's a simple share. My writing may not be great, but it's all about the essentials.

Key point: In the face of absolute returns, impermanent loss is nothing.

The first phase of Unichain rewards started on the night of April 15th, lasting for two weeks. Approximately 5 million dollars worth of UNI tokens will be distributed to liquidity providers for the following 12 pools deployed on UNI v4 through Merkl.

  • Reward entry: https://app.merkl.xyz/?chain=130

  • USDT non-loss cross-chain bridge: https://usdt0.to/

  • USDC, ETH/BTC wrapped asset cross-chain bridge: https://superbridge.app/

On the night of April 15th, I was sharpening my knives, preparing to invest 40,000 dollars. When I saw that the pool information on Merkl showed live, I rushed into the UNI pool. Initially, I chose the USDT0/USDC trading pair and the ETH/USDT0 trading pair, mainly using stablecoin pairs to mitigate risks, while being aggressive in the ETH pool for mining.

After half an hour of mining, I felt the strategy was wrong because Merkl's TVL only updates during snapshots. The displayed APR for the USDC/USDT0 trading pair was in the hundreds, but the actual APR was around 58%. No need to think; most people rushed into stablecoin pairs seeing the high annualized return.

The rules for Merkl's distribution of UNI rewards are that 98% are distributed based on fees, while the remaining 2% are based on the holdings of the two tokens in the trading pair, provided they are within the range. Undoubtedly, the more fees someone earns, the more rewards they receive, but it also means more impermanent loss.

Thinking back to last August when I was mining ARB chain Merkl rewards, there was no competition for the ETH/DAI narrow range, and the average annualized return was 70%, allowing for a daily return of 3% in a narrow range. Now, the displayed annualized returns for ETH/USDC and ETH/USDT0 are over 700%. If I don't rush in, am I even human? I decisively moved all 40,000 USDT into the ETH/USDT0 pool and called a few friends.

At midnight, after the first snapshot, the output was as I calculated, with a daily return of 12%. Unfortunately, the snapshot was taken too quickly. After the displayed returns, many DeFi veterans came smelling the opportunity. The high returns only supported half a day before being driven down. Subsequently, it fell steadily to around 3% today.

How can we seize such opportunities? I rely on the following points:

1. Early awareness and familiarity with Unichain ecosystem rewards. I posted about it on March 6th and continued to pay attention.

https://x.com/0xRandle/status/1897557475886555531

2. Rich experience with Merkl's mechanisms. Many EVM ecosystem subsidies are distributed through Merkl. Having used Merkl last year, I know that snapshots are irregular, possibly occurring every 2-8 hours. Returns are updated after the snapshot, creating a time difference. When I saw it was live at 8 PM on the official Twitter, I rushed in immediately. The first four hours after the pool started until the first snapshot were the most terrifying for returns.

Seeing the rewards of early mining and TVL, I instinctively knew how to calculate the highest yield path. Spotting ETH/USDC, ETH/USDT0, WBTC/USDT0, I knew an opportunity had arrived. After checking the specific ranges, I chose to dive into ETH/USDT0. Looking back now, that was indeed the highest yield pool.

I mined for over three days, gaining approximately 8,000 dollars in total returns. After deducting the impermanent loss, the net return was about 6,000 dollars, with a few hundred dollars in unrecorded returns in transit. This gain benefited from Ethereum's low volatility in recent days; the K-line was basically a straight line, making it very comfortable to operate in a narrow range.

Now the TVL of ETH/USDT0 has reached 12 million, and the risk is already very high. A slight fluctuation in Ethereum could potentially cover the impermanent loss. Friends reading this should be cautious; DYOR.

This is the first time I am writing a long article. Brothers, please like, share, and bookmark. If the traffic is good, I will write another issue. Why did I go all in on ETH/USDT0 among the 12 pools? Don't let the surface annualized returns blind you. How to choose the pool with the highest yield based on the range?

Wishing everyone an early A9.