Back in black lies close ahead! At least, I sure hope it does. The tone of last week's report focused on the positives of providing liquidity in a falling market.
This week the markets have changed, as I'm sure you're well aware. Outside of my BAL LP position, the Balancer AMM got some good news this past week as well. Let's get into the juicy details.
Balancer Pool Split: 60% BAL / 40% wETH
There are a few elements to Balancer that stray from the typical AMM. For those interested in learning more about the Balancer Protocol, you can find links to great material at the bottom of this post.
Balancer provides pool options outside the usual 50/50 asset pairing many AMMs require. Pools using the Balancer Protocol may also contain multiple assets. I'm providing liquidity to a pool with only two assets, instead of three, four, or more.
In a typical 50/50 asset pairing, the values of said assets will change over time. Having a 60/40 pair puts a twist on how the weighted values change over time in the pool.
It doesn't make as much sense to try to explain it in words as it does to just show you. Using a thrifty DeFi hub known as APY.Vision, you can see how the values of your original assets change over time.
Heads up for any of you that may be new wLEO liquidity providers! APY.Vision (formerly Liquidity Vision) is an effective tool for tracking the progress of your position.
Starting Position & Current Position
These are the stats the APY.Vision provides. What you won't see without keeping records, is what happened in the middle. The image that follows shows my original asset amounts when I entered the Balancer pool and where they stand today.
As the price of BAL went down, wETH went up! Because of this, my assets in the pool changed. I have almost one full BAL more than I entered with, but less wETH. Together, my assets are worth about $12 more now than when I entered.
Pool Percentage & Individual Asset Performance
What else can you see using APY.Vision? Looking at the following image, I can see my pool percentage. These mark my share vs everyone else in the pool. It works to determine the yield output to each provider.
This section also gives info on your individual assets in the pool. It shows the price of BAL upon entry and the price now. BAL has a little bit more to go before reaching the value it was at when I entered the pool.
As you can see in the image above, wETH has gained almost $100 in value since I entered the pool. Even it has the lesser 40% weight in the pool, I've lost wETH to cover for BAL dropping. Nevertheless, wETH has outperformed BAL and is adding value to the pool.
Gains & Losses
Last but not least, the next image shows overall pool performance. My gains or losses.
To be precise, it shows the fees I've paid (but not the exit fees). It also shows that I've lost a bit of value from the pairing. But overall, the two tokens in this LP have performed well together. To the tune of a current gain of $12.
Were I to exit the pool now, I'd have less ETH and more BAL. The exit fees on top of the fees paid would come close to erasing that $12 profit. It's a break even scenario.
Except, I haven't yet shown the BAL from Yield Farming.
Balancer Yield Farming
Some of the BAL I've received is in my MetaMask wallet. Last week's yield is still in a contract waiting for me to collect. It costs s small amount of gas to collect the BAL. Because I provide only a small amount of liquidity, I like to let it build up to save on fees.
The image above shows the BAL I've earned from yield farming. In the image below, more BAL waits until I'm ready to collect it.
Put together, I've earned just shy of 1 BAL. At the current price of BAL, that puts me in the black by about $12.80. Not too shabby for lending a small amount of Hodlings for only one month.
If I decide to continue providing liquidity to this pool, I could invest my yield to compound my earnings over time.
New Investors Come To Balancer!!
Balancer was struggling to find any foothold in the market ladder until good news broke this past week.
https://twitter.com/BalancerLabs/status/1325914832248299520?s=19
- BalancerLabs
It didn't take long after that Tweet for BAL to finally find its footing. Since then, BAL has shown some nice price action. Take a look at this image from last week's report. BAL was hurting.
A week can make a big difference and this past one has done just that. I'm hoping for more of the same in the weeks to follow.
Balancer AMM Learning Links
@inalittlewhile/into-a-balancer-lp-60-bal-40-weth-it-wasn-t-easy
@jk6276/research-notes-on-setting-up-a-balancer-pool
@jk6276/making-bank-in-a-balancer-pool
@inalittlewhile/9-days-of-liquidity-balancer-lp-report
Thanks for reading and as always...
Images Captured As Screenshots
Bottom Image Courtesy Of Hive.io Brand Assets
LeoFinance Illustrations Courtesy Of @mariosfame
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