euler_mab

Pretty cool to see swaps routing through EulerSwap already just from the basic Cantina deployments.

Seems to have done a couple of million $ in volume already.

Sweet sweet toxic flow from our MEV friends.

Can see how the swaps have affected our account's positions below.

JIT happens.

A brief note on LPing with EulerSwap's new DeFi primitive: just-in-time liquidity (JIT).

Useful for people competing in the capture the flag competition this week.

Do you know how those crafty market makers make money anon? They hedge, duh.

A common way to hedge an LP position is to:

- Deposit USDC
- Borrow WETH
- LP USDC/WETH

The initial position is delta-neutral, since the WETH debt cancels with the WETH supplied to the LP. But as the price moves, the amount of WETH in the LP position goes up or down. So market makers also:

- Rebalance LP to match debt, or vice versa

Rebalancing frequently helps to ensure neutrality, but costs more in operational expense.

Rebalancing infrequently exposes you to directional exposure, but costs less in operational expense.

Rebalancing is pretty costly on Ethereum and that makes profitable market making much harder.

Furthermore, most of the liquidity supplied to DEXs is usually idle or underutilised, making everything most costly.

With EulerSwap, you can boost revenues from market making by using lending vaults to earn additional supply APY, and lower the costs of market making by using JIT.

An easier way to hedge an LP position on EulerSwap is to:

- Deposit USDC
- Offer JIT liquidity on USDC/WETH

The initial position is delta-neutral, as above, because you have no debt and no WETH in the LP. But as the price moves, the amount of WETH collateral or debt in the LP goes up or down as before. So you:

- Rebalance LP to set WETH collateral and debt to zero

By using JIT you avoid taking out a large borrow and only borrow as much as you need to satisfy swaps just as the arrive.

In summary, you can use EulerSwap to increase rewards from LPing by earning additional lending yield and lower the capital costs and operational costs of LPing by using JIT.

We will be setting up a USDC/WETH JIT liquidity pool for the EulerSwap capture the flag competition starting later today. Stay tuned.

The first EulerSwap pool is live!

It's currently $10k pool simulating the depth of an $80k pool.

We like capture the flag (CTF) competitions at Euler.

Aside from being a great security excercise, inviting the brightest minds in web3 security to come try to take your money is a lot of fun.

Study the EulerSwap contracts.

Some great yields on Euler Yield market on Ethereum right now:

$rUSD 26.99%
$RLUSD 17.06%
$USDT 15.69%
$USDO 12.76%
$USDe 9.29%
$USDC 7.43%

Stablecoin issuers in my DMs when realising you can turn $10m in traditional DEX liquidity into a $100m deep liquidity pool on EulerSwap with an industry low cost of capital.