Uniswap Labs Just Released THIS UPDATE! (IMPORTANT) BuildrMetrics (LP Calculator): https://buildrmetrics.com ...

now there's plenty of ways to earn a yield on stable coins you can simply stake stable coins you could be in a stablecoin liquidity pool there's tons of different strategies for stable coins but as you can see by the screen none of them are yielding high enough yields and the ones that are yielding high enough yields like this one on velodrome are not real yield now what does that mean you may ask real yield is the concept where there's a real Revenue stream behind it so velodrome is paying out a reward apy right here we need to be looking at the base apy and as you can see based on the based apy the highest we can really get is 13 now obviously if we go into riskier projects that have a lower TVO we could start to get a little bit higher like over here 20 but still that's not nearly as high as we could possibly be earning with something called delta neutral strategies I recently made a Twitter thread on delta neutral strategies so make sure you give me a follow over on Twitter JK call link is down below in the description I'm gonna go ahead and whip out the Whiteboard and show you exactly what a delta neutral strategy is so say we have one thousand dollars that we want to invest and be completely Market neutral meaning that we don't want to have to worry about prices is going up and price is going down what we could do is we could allocate fifty percent to a short position and the other fifty percent to a long position now if you guys don't know how short and long positions work in a long position we make money when the price goes up and in short position we make money when the price goes down now obviously you can execute a long and short position on a decentralized Perpetual Market or even on a centralized exchange like binance or something like that however the issue with this is this is trading you have to predict the market whereas with the delta neutral strategy we're just using long and short positions to balance our Market exposure and earn a yield the best part about long positions is you don't have to be on a Perpetual Market you can be long on an asset simply by holding it in your wallet if I hold Bitcoin in my wallet and I want it to go up in price and make money I'm long on bitcoin well with short positions it's a little bit trickier now the reason why it's a little bit trickier is because of course you want to make money when the asset goes down so essentially there's three different components here there's a broker there's you which is the short seller and then there's the market so essentially how this works if I want to short an asset I'm going to borrow the asset shares from a broker I'm going to pay a very small fee but then I'm going to instantly sell those borrowed assets at market price so essentially let's just say I'm shorting one thousand dollars for the Bitcoin and that's let's just say 0.05 Bitcoin at time so what I'm going to do is I'm going to borrow one thousand dollars worth of bitcoin and I'm gonna instantly sell that at a one thousand dollar proceed I'm selling my 0.5 Bitcoin that I borrowed for one thousand dollars and my hope is that I can buy Bitcoin back at a lower price keep the profit in between and return the 0.05 Bitcoin so going back to the example assume that the shares drop in value well we're gonna buy back the same number of shares at a lower price and pocket the difference and then we'll go and return those newly purchased shares back to the broker say the broker lint us .05 Bitcoin as long as we return 0.05 Bitcoin to them in that very small fee we get to keep the profit in between now when you go and you short an asset on GMX or Perpetual exchange or something like that it automatically does all of this on the back end now getting back to what a delta neutral strategy is if we're long and we're short on an asset with equal amounts we are delta neutral because when our long position loses money our short position makes money and when their short position loses money our long position makes money which means that these two right here they cover each other they're directly linked to each other and we are not going to be at a profit or a loss as long as we are delta neutral so how exactly do you make money with delta neutral strategies let's go and talk about it remember how I said earlier that you don't have to be long on a derivative Market you can be long by simply holding an asset in your wallet well you can also be logging an asset by staking it now using Lido let's just say we staked our ethereum for a five percent annual yield and then of course we neutralized our exposure by shorting ethereum on let's just say a Perpetual exchange like GMX now assuming that we're not getting paid to short this position we would come out to an overall 2.5 apy the reason why is because that's the apy on our one thousand dollars we have 500 bucks on long that we're earning five percent on but we have 500 bucks on short that we're earning zero percent on now I will say ethereum is not a good Delta tourism example and the reason why is because the yield is not too high at all on ethereum it's only five percent but let's just say we are shorting ethereum on a Perpetual Market that has a funding rate well we could actually earn money on the funding rate or we could lose money on the funding rate let's talk about what a funding rate is so it's important to realize that when we are trading on a market like this one a Perpetual Market we are trading contracts we don't actually take possession of the asset we are trading a contract so essentially these are two different markets we have the actual Market of ethereum and the contract Market of ethereum so essentially what can happen is if there's a ton of people long on ethereum on the contract Market the Perpetual Market I should say and there's not as many people long on the actual price of ethereum what will happen is the price of the contract Market will trade higher than the actual fair price the actual market price of ethereum and if it is trading higher then the funding rate is positive which means that the people that are long on the asset on the Perpetual Market are paying the people that are short on the asset this incentivizes people to go to the other side of the Market or of course close out their long positions that way the price gets back to the fair market price of ethereum and of course same thing goes vice versa if a ton of people are short on the Perpetual Market but not as many people are short on the actual Market the funding rate will be negative this means that the contract Market the Perpetual Market is trading below the actual market price of ethereum which means that the people that are assured are going to pay the funding rate to the people that are long and since ethereum is a pretty trustable asset a lot of people are long on ethereum especially right now so say ethereum had a funding rate of five percent annually you're getting paid five percent to short ethereum you're getting paid five percent to long ethereum so you come out to a total of five percent annually on your overall one thousand dollars let's just say there's a 10 funding rate on ethereum well now you come out to an annual yield of 7.5 percent so the goal here is to find assets that you can stake for a high yield on your long position and of course short for a very positive funding rate I like to use polka dot for example you can stake polka dot token for a 25 annual yield this is real Revenue through through bifrost it's a liquid staking platform just like Lido okay and then you can go and you can short polka dot earn about 10 annually so if you're earning 25 over here on your log position that's 125 dollars per year on your 500 and then you have 500 on short as well Ernie let's just say a 10 apy from the funding rate that's 50 per year which comes out to a 17.5 annual yield which is 175 bucks a year now let's just say we weren't earning anything at all on our short position we would come out to 12.5 percent annualized which is only 125 a year now 17.5 percent is nothing too crazy but I like to use this as an example because it's a relatively safe delta neutral strategy now it gets even better when you start to use leverage let's look at an example using 3x leverage so essentially over here you would allocate 750 to your long position because you can't leverage up on your long position so you would just have to allocate more of the one thousand dollars for the capital too long and let's just say you were to allocate 250 to your short position well effectively you have 750 on long and then if you use 3x leverage on your short position you also have 750 on short so you're essentially playing with 1 500 worth of capital when you really only have one thousand dollars now you're still earning this 25 annual yield but keep in mind you have more Capital allocated to it so you're earning 187 dollars in 50 cents on your long position every single year and on your short position instead of earning fifty dollars you're earning seventy five dollars and if you add that together instead of earning 175 dollars per year you're earning 262.50 which comes out to about a 26.25 annual yield that's the benefit of actually using leverage on the position now you're getting 26 annualized on a market neutral strategy from real Revenue based streams the funding rate is real Revenue because of course people that are long on the asset are paying the people that are short us we're short and then of course the long we're staking or long position earning real revenue from our stake which is giving us that 25 annual yield now before we go any further I want to mention I put out a free resource completely explaining how to execute this strategy if you guys want to do that it's down below in description now the title says 35 annual so let's go and take a look at a higher yielding delta neutral strategy based off real Revenue so by now I'm sure a lot of you have heard of something called GMX it's a decentralized Perpetual exchange you can short and long assets on GMX but keep in mind since GMX is decentralized they have to have liquidity providers there's a token called glp we've covered it on the channel before it offers a 20 annual yield this is real Revenue base you earn trading fees from people that are trading now glp token is comprised of different Blue Chip assets that you can trade on the GMX platform like ethereum Bitcoin link uni token and of course stable coins now the thing is whenever Traders win their trades those people providing liquidity for glp actually lose money and that's because assets are being pulled out of glp token making the market cap smaller therefore making the price of glp token lower now when Traders lose their trades people that are providing liquidity for glps start winning and the reason why is because we're earning their losses now the thing is the earnings you get from glp usually outweigh the losses that you incur from Traders winning their trades but you also have to realize whenever somebody wins a trade there's another person that actually loses the trade that's exactly how markets work but the thing is there's not a fixed amount of each asset in glp because this fluctuates remember based off of wins and losses from Traders but they do have targeted weights right here so as you can see their targeted weight for ethereum is 28 but it's currently 28.7 their targeted weight for Bitcoin is 23 percent but it's currently 17.8 percent and so on and so forth so our goal here would obviously be the long glp token by obviously staking it and then short the underlying assets of glp token and earn the yield so I present to you the spiderweb of delta neutral glp so let's just say we have a thousand bucks right here we want to put 500 bucks on long we go and we stake glp over 500 bucks about 28 is on ethereum at 140 about 22 percent is on bitcoin with 110 and the other 50 is just just in stable coins with two hundred and fifty dollars we're earning twenty percent a year on staking glp which is a hundred dollars annually now with our other five hundred dollars that we want to put on short we're gonna go ahead and short a hundred forty dollars worth of ethereum to neutralize our ethereum Market exposure and then we'll also short a hundred and ten dollars worth of bitcoin assume we're earning a funding rate on ethereum and Bitcoin of around 10 percent annualized we're earning 25 a year right there now the thing is this is only 250 we still have another 250 dollars to actually allocate towards stable coins but we don't need a short stable coins and the reason why is because they are stable so what do we do we allocate this 250 worth of stable coins into another delta neutral strategy so now here we have a delta neutral inside of a delta neutral assume that we allocate it to this polka dot strategy we talked about yielding 26.25 well then we earned 26.25 on this 250 which is another 65 a year so all of this right here comes out to a yield of 19.06 apy that's a hundred and ninety dollars per year it's actually actually worse than our DOT delta neutral strategy so how exactly do we fix that the way to fix that is by leveraging up our long position on glp we want more exposure to it so we can use two different platforms to do this one's easy to use the other one's a little bit trickier to use first off is Jones Dao they offer manage vaults so for example you could leverage up on glp simply by depositing into Jones Dao and you'd earn a 37 apy here so if we use the same exact strategy it's just we're long on glp through Jones Dow earning that 37 annual yield we're now making 185 bucks on our long instead of just a hundred bucks on our long which ultimately will put us at 27.56 percent annualized that's 275 dollars a year now that's good but it's still not good enough for me now there's another platform called Tinder dot finance and you can actually go and lend out glp token so essentially what this will allow you to do is get leverage on glp token so how this would work is you would essentially lend out glp token and then you'd borrow the weighted assets against it so you'd borrow a theory ethereum you'd borrow Bitcoin and you'd borrow the stable coins against your glp deposit and then you would go and you convert those assets back into glp and repeat the process lend out more glp it's called looping now I'm not going to go too in depth on this video that's for another video if you want that drop a like And subscribe let's talk about the potential yield here you could essentially easily get 3x leverage right here and they're also offering some reward token right here called Tindy token so right now it's offering 46 annualized but 20 of that is glp so we're just going to completely cut out reward tokens because we want real Revenue here assume we leverage up by three we're getting sixty percent annually on glp token right here so if we were to go ahead and execute this exact strategy manually leveraging up through tinder.finance we could essentially get 60 on our long earning 300 a year instead of the base 100 we talked about and get an overall yield of 39 annually which is 390 a year now one thing I want to mention is this would be a pseudo delta neutral strategy and the reason why is because we won't be fully covered by delta neutral because of course those weights of the glp index change very often but the thing is we would be earning 39 annually which the yield will actually outweigh the non-delta neutral portion another thing is since we wouldn't be fully hedged if the price of glp does rise meaning that the assets behind glp rise we would actually make some money there as well so with that being said that's going to wrap up today's video I know it's a lot to take in but if you enjoyed drop a like subscribe notifications turned on don't forget to get that free resource Down Below in the description and I will see you guys in the next video peace