DeFi Update #5: 2 Month Returns on PancakeSwap

Warburton Time for another update.

neurontin 300 mg for pain This last week in April makes for 2 full months of this DeFi experiment. Here is the original post.

Background

L├╝deritz
You may recall the goal was to earn $100 per month on a $500 investment or 20% per month. I failed to reach it the first month but my returns improved over these last 4 weeks.

buy modafinil sweden We have 3 cryptocurrencies and they are:

  • BNB 257.94
  • CAKE 11.37
  • SWINGBY 71c

The current token prices are

  • BNB 513
  • CAKE 26.03
  • SWINGBY 43c

You can see we have BIG price moves in our 3 cryptos. BNB has doubled while CAKE is up 128% and SWINGBY is DOWN 39% in the same 2 month period.

If all I did was buy $500 of BNB and HODL it, I would be up $500 in 2 months. Hard to beat that. But, that's not the goal. Using a DeFi app as I'm doing with PancakeSwap is the goal.

Risk of Impermanent Loss


My SWINGBY/BNB investment is at risk of impermanent loss because the investment into the liquidity pool is matching dollar amounts of both coins.

I provided .5 BNB and 177 SWINGBY to the pool. If I took them out now my 177 SWINGBY would be worth 76.11. I would only be able to withdraw 76.11 worth of BNB as well to keep the USD value of the pool the same meaning my impermanent loss would be (257.94-76.11) $181.83. OUCH

ROI

Now let's look at the returns. I currently have 8.79 CAKE at a price of 26.03

That equals $228.80 or an average return of $114.40 per month for 2 months. My total return is (228.8/500) 45.76% or 22.8% per month.

So after 2 months, I've hit my goal. Yet there are 2 issues.

  1. If I subtract the impermanent loss of $181.83 from my total return, I've only made $47
  2. I would have made more just HODLing BNB despite CAKE's price increasing too

So is it a good deal? Well I'm uncertain I would have BNB and I definitely would not have CAKE in my portfolio had I not tried this so I would say Yes.

A more aggressive yield farmer would have moved out of the SWINGBY-BNB pool and into another one but I wanted to see how it would do.

I'm going to keep my money in these 2 pools for at least one more update and see what happens.

About the author

Stu Stu Lustman, the author of this post, is a Credit Analyst by trade trying to bring Commercial Credit Analysis techniques to the world of Peer to Peer Lending. Check me out on Twitter, LinkedIn and Google+

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