Hi HODLers,
For once, I can brag about having picked a good trade that made sense. I decided to act on it. All of the following happened on the Fantom Network.
The idea
This trade was simple, rainSpirit, a locked governance token of $Spirit developed by ola.finance.
Spirit is the token of the Spiritswap exchange (I should say ecosystem as they have lending and other cool things). We are eagerly waiting for their V2.0 which should bring more use cases and rewards for Spirit holders.
Ola.finance is a partner to this exchange as they are the one who developped the borrowing/lending infrastructure.
rainSpirit was supposed to be pegged to Spirit 1:1. They planned to launch their governance platform very soon and had a cool system in place to make sure their HODLers would benefit from new Spirit emissions but also from bribes coming from other tokens/protocols.
You can read more about it in their latest post here
Lost PEG
When I decided to buy a lot of rainSpirit, the quote was at 2.4 rainSpirit for 1 Spirit. As I am writing this article, the trading quote on Solidly and Spiritswap is at c.1.39.
This was due to the publication of the above article but also as they were added to the winSpirit pools on SpiritSwap.
As we will see later, you can get a much better APR at much lesser risk.
I believe the team behind ola.finance is underexposed and therefore people do not see all of their great work. What convinced me to jump in this opportunity was how much I liked their lending platform. They have developed such platforms across different blockchains helping different exchanges (ApeSwap on Binance Smart Chain for example).
I also felt, they wrote very detailed post about what they were trying to achieve.
Current price of rainSpirit
What did I do with some of my rainSpirit while waiting for the PEG?
One of the coolest feature of Solidly platform are the so called Stable Pool. These pools are meant to have a pair trade between 2 assets which are supposed to be equal.
You must be thinking about StableCoins but also tokens such as LinSpirit, RainSpirit, SinSpirit or other locked Governance Tokens.
The cool thing about these stable pools is that it keeps the total number of tokens that you own. Let me explain, as the following example showed, rainSpirit went very far from its 1:1 PEG to Spirit, at the worst time it was at 1/6! Meaning 1 Spirit could buy you 6 rainSpirit.
In a traditional LP of 50:50, I can just tell you, your position value would be close to $0 due to the extreme volatility.
But in this configuration, you would just have way more rainSpirit and way less Spirit. If you believed, long term it would go back to 1:1, you could cash-in some nice APR and just wait till you are right.
And... That is what I did !
Keeping track of my Stable LP
Below you will see some excel tabs that I used to make sure I was not getting rekkt by the volatility.
You can see that slowly as rainSpirit is getting closer to 1:1, the LP is also getting to that equilibrium. While I did lose close to 700 winSpirit due to some level of volatility, it is nothing close to what I would have experienced in a normal AMM pool.
I had also added to this pool at sometimes 1 Spirit and 5-6 rainSpirit so in USD value this has been quite profitable.
I hope this could make sense to you guys and I will see you on Fantom!
Kudos to ola.finance and SpiritSwap's teams!
