Transcript: Anchor Borrow Strategies for Luna Acquisition Pt.2

Finn 0:10
Hello and welcome to The Ether. Today is Wednesday, January 12th 2022. This is part two of a two part Cephii Space, Anchor Borrow Strategies for LUNA Acquisition. Let’s take a listen.

Cephii 0:23
You’re talking about using it to delta neutral?

Hutch 0:26
Yeah, so I want to use it to get more LunaX. I want to take the original DrCle4n video where he talks about shorting silver to get more LUNA, and all you have to do is just replace the LUNA on his video with LunaX, which is coming. So essentially my LunaX is autocompounding for me. There’s no love loss there, I’m getting my autocompounding yields, and I can just park the ledger token of LunaX. And what I don’t know for sure, but I suspect is that I can’t really go long anything, I have to go short to get the third bite of the apple. And so how that works is I post LunaX as collateral, I borrow an asset, it’s an asset that I feel comfortable shorting because as soon as I borrow the asset, I frickin sell it right away. I sell it for UST, or I swap it for LunaX, in which case, it’ll just be a route on the TerraSwap, to get more LunaX. And I just rinse and repeat that as many times as I’m comfortable with. To get to an LTV that I’m comfortable with I would probably over collateralize it because I’m dealing with two volatile assets. But essentially I want to… I need to do something that I think is going to stay stable, like there’s a JNJ on there now, there’s S&P, or something I think is going to go down. And so I’m going to propose on Mirror, I’m going to find some other short gold, I think GLL is a short gold gund, which I think I’m long term bullish on, not financial advice. But if I can short that, the short gold, essentially I’m long. [chuckle] And so then there’s… I’ve not only picked up more LUNA or LunaX by looping this, but there’s also a windfall if gold spikes at some point, am I thinking of it correctly? I just wanted to run it by you and anybody else who has an opinion on it.

Cephii 2:21
I haven’t analyzed it close enough to be totally sure how to optimize that system. I have to play it and try to try it.

Hutch 2:30
I’ll send you the DrCle4n video, because it’s the original one from early December. It’s it’s pretty interesting. And I think there’s something I think there’s a whole new avenue of degen-ing. And he says in the video, the reason he liked it is because even though there’s a subsidy on Anchor, he wasn’t really comfortable with a double digit loan. And when you borrow assets on Mirror to short them, essentially, it’s like a loan for perpetuity. And at some point, you’re gonna pay a 1.5% mint fee, which is pretty cool. And if I can just…

Cephii 2:59
It’s just that one mint fee, then?

Hutch 3:01
Yeah. And if it goes against you, if LunaX falls in price, or the thing you shorted goes up in price, you’re gonna have to throw more LunaX at it, so you don’t get liquidated. But as long as it’s staking, who cares?

Cephii 3:15
Got it. Yeah. Anyway, what he’s talking about is the use of LunaX that was announced as a collateral asset just like aUST on Mirror Protocol. And there’s some tactics you can use to short something, which gets you UST because you sell it, and then you borrow against it and then buy some more LunaX and then do the same thing again. So there’s a looping strategy available there potentially for you guys to look into, but yeah.

Hutch 3:43
Quick question on LunaX, Cephii, ’cause I know you’ve done it. And so I asked you publicly and a lot of people answered so I think I get it. If I just swapped LUNA for LunaX, or bLUNA for LunaX, it’s essentially somebody gave up their staking… Whatever share of the staking pool they have in LUNA and now it’s mine. So when I hold LunaX I have a cut of the total staking pool in there. But what I’m wondering, I’m looking at the swaps and as it should be, one LUNA only gets me 0.99 something of a LunaX, as it should be because it’s growing and autocompounding. If I go to stake it directly, and because right now I have some LUNA and I’m there and it doesn’t tell me what the ratio, do I get one for one LunaX if I go directly to Stader?

Cephii 4:25
No, there’s a slight differential there too.

Hutch 4:28
How do you see it?

Cephii 4:30
You have to go to their site and there’s a button there when you hit “Stake”, it shows you… There’s a little arrow with LUNA to LunaX and shows you the difference.

Hutch 4:38
I wonder if it went away because I’m at the point where it’s like I have to say yea or nay and I haven’t seen…

Cephii 4:44
I don’t know. It’s in the simple staking section, not in the LunaX section, by the way. If you have LunaX, it’s different. You can only swap it on TerraSwap. And you can’t mint one fresh, I don’t believe. And then what you do is it’s your wallet. It’s a snapshot in your wallet to figure out your yield.

CryptoML 5:02
It’s on the pool page, Hutch.

Hutch 5:04
Yeah. So I’m there. So I pick a pool, I’m going to pick Community Pool. Okay, so I’m here.

CryptoML 5:08
No, go to liquid staking pools.

Hutch 5:13
Oh, but I don’t want to liquid stake it.

CryptoML 5:16
That’s how you get LunaX. LunaX is liquid staking. When you put into the staking pools, you don’t get LunaX.

Hutch 5:23
Oh, you don’t

CryptoML 5:24
No. I originally thought you would. And that’s why I originally put in there. But no, I have 1,000 LUNA in there. And I can’t… I would have to just 24 day unstake it. It’s not LunaX.

Hutch 5:36
Oh, that makes sense. And that’s where I saw it before because I do have some of the pool.

Cephii 5:41
Oh, the pool is earning Stader tokens right now that’s a different thing.

Hutch 5:44
Right. But I can just stake it there and then not provide it into the pool. And then essentially it is almost like I’m staking, like you did CryptoMoneyLife, in Stader. I just didn’t go that route, and I’m paying a little bit more commission or whatever it is. Is that right?

CryptoML 5:58
Yeah.

Hutch 5:59
Hey, let me ask you a question, as long as you’re on here, that covered call thing, is it live for LUNA now? Or is it just for Solana?

CryptoML 6:09
It’s on Solana, but there’s covered calls for LUNA.

Hutch 6:14
Okay, what’s the premium about? I wouldn’t want to do it now, but like…

CryptoML 6:19
Yeah, no, I’m actually doing a chart that’s tracking where price would be and, taking a loss and stuff. But no, it’s been good. I mean, they’re weekly calls, and it’s been about 2%, maybe a little less, per week.

Hutch 6:39
But you don’t get to choose your strike? So I wouldn’t want to do it… If we hit a new fib, that’s where I’d want to do like $130, or whatever that next fib is, if we did that, I would want to… You don’t get to choose that, right? Or if I’m entering the pool then, am I essentially picking that as my strike price, if you will? Do you know?

CryptoML 6:55
Yeah, you can’t pick the strike. In those vaults, it’s… They’re managed vaults, so they’re… I’m not quite sure if they’re going 1.5 or 2 standard deviations out or something, but they’re picking the strike for you. But there is a new options market opening up on Monday. So hopefully, they’ll open a LUNA market. The thing is right now, all the options markets where you could select your own strike, there is no LUNA.

Hutch 7:25
Just Solana?

CryptoML 7:26
Yeah, they have Solana, ETH, Bitcoin markets, but…

Cephii 7:30
Before we go too deep on the deep end with these different things, let me try to get back on subject a bit because some of these guys are waiting with questions, but Rock Hard…

Hutch 7:32
Thanks, guys.

Cephii 7:38
Yeah, no problem. Rock Hard. Did you have a question? Sorry, for the wait.

Rock Hard Crypto 7:40
Yeah, no worries. Appreciate you having me on. For those who don’t know, I’m a crypto influencer, focused in the LUNA ecosystem. And I’ve been having trouble explaining to my followers the beauty of UST and was hoping that some of you could help me articulate it better, because I’m sure you all get it. But the point is that UST is unique as a stablecoin, because it’s just equal to one. It has nothing to do with the US dollar, it just equals one. And whereas USDC equals $1, UST equals one. How do you explain this to your followers in a way that disconnects their mind from the US Treasury?

Cephii 8:20
Yeah, the simplest way to describe this is, UST does not have… The important distinction is it’s not backed by dollars. So therefore, there is nothing to back it and therefore it functions just like any other commodity, which is the CFTC, if you’re talking about US regulatory regimes, the SEC has nothing to do with UST, it has nothing to do…

Rock Hard Crypto 8:20
Right, but neither does the dollar. The value of the dollar has nothing to do with UST either, because if you think about it, my parents probably bought a house in the 80s for like $200,000 and it’s worth $500,000 today, and so UST is just one.

Cephii 9:05
No, no, that’s not correct. UST is arbed to the value of the USD. It’s not going to stay one, and then like… Let’s say for example, I think you’re trying to imply that you have a stablecoin that is essentially internet native that is not going to track the value of the dollar. So UST actually does peg to USD ultimately, but it’s done so with a mix of algorithm and it’s done so with a mix of arbitrage bots. So it’s not what you’re thinking, which is just an asset that always stays one forever and therefore, theoretically, the USD would be falling in value versus it, right. That is an idea, an internet native stablecoin that does not track the US dollar is something that can be done on Terra. Like for example, it has to just arb to some fixed oracle price, let’s say for example, the global temperature or something, something that relatively theoretically constant on a moment to moment basis.

Cephii 10:12
So you could do things like that to any oracle, which is fixed forever. And that would be a new native stable Internet currency. UST does actually follow the price of the US dollar. But the way that it does it is what makes it immune to something like the SEC, which basically looks at USDT and USDC, technically as securities, and the reason why they’re securities is, in particular, Tether, their shit is not backed by actual dollars, but by commercial paper, so you’re handing an IOU saying that you own part of this, supposed Treasury. It’s no different than selling a stock that represents the value of, say for example, an ETF, there is no difference. So the SEC has its opportunity to have a field day with the Tether organization in particular, because it’s not actually backed. It’s truly a security, that’s what USDT is, it is actually by every definition, a security. UST though is not a security, it actually functions more like a commodity, just like Bitcoin, in the sense that it is not actually backed by anything. In fact, nobody promise it’s backed by anything, either. The algorithm sort of does its job and pegs it, and then also arbitragers across the globe, who basically feel like, okay, let’s say, the price of UST drops to 0.99 relative to the dollar, they’ll buy it and then later sell it when it’s you know, 1.01 relative to the dollar. So the arbitragers create, artificially, the peg, along with the algorithm, it additionally creates the peg. So you have a dual mechanism, ultimately. And that’s how this works. That’s why it’s out of the reach of the SEC, and has no relationship to that at all.

Rock Hard Crypto 11:55
I was curious if you think that in 2022, we’ll see a pump in UST to $1.5 or even $2.0. I’ve been holding on for six months now. And it’s stayed flat at one and I’m waiting for it to follow the path of LUNA to the moon.

Cephii 12:10
No, are you just trolling me at this point or what? [chuckle] Is he just messing with me? Okay. He just started dicking around. Montana, go ahead,

MontanaHaus 12:20
Hey, I might lose you, I’m kind of up in the mountains here. But thanks for taking my question here. Just trying to understand and maybe you talked about this in the beginning and I missed it, but infinity bot, is it essentially… If I’m doing that on KuCoin, essentially, if I’ve got it set at 1%, it goes up 1%, it sells 1%, and it becomes…

Cephii 12:43
You’re disconnecting pretty badly. So let me just tell people what an infinity bot does. Your voice is being lost big time here, so we’re not hearing a word you’re saying. I just had to mute you because your mic’s not working at all. But let me just tell you what an infinity bot is. So one of the things you can do when you borrow UST is… Or if people are trying to figure out an optimizing strategy how to buy something, the bot-based strategies tend to be good if a asset goes up relatively slowly, like over a period of, let’s say, a year. Like for example, an infinity bot would have done a great job on Bitcoin between 2015 through 2017, as an example. It’s kind of like a slow, but highly bullish sort of growth pattern. What an affinity bot does essentially is extracting USDT along the way. So it’s not natively autocompounding, necessarily. So if you’re really bullish on something, I would generally pick something not that takes profit along the way, but something that autocompounds along the way. So I think 50:50 rebalancer probably is perfectly good if someone was wanting that outcome.

Cephii 14:04
So I think that’s what I would do as opposed to infinity bot, only because it’s not autocompounding. Now, if you want to have some yield that comes off of it so that you can spend it on something else or whatever at some point, then a infinity bot’s fine. What it’s doing is it’s selling a little bit along the way, buying the coin back on the way down a little bit, and trying to optimize for… Basically just taking away some of the risk of the volatility by extracting money along the way. That’s what an infinity bot does, which is pretty good, it has a specific function. And the way you set up an infinity bot is, let’s say LUNA’s price right now is $82, which I think is what it is. And I think the lowest that LUNA can go is, let’s say $60. Why do I think it’s $60 because well, it just was at $60. I feel comfortable with setting the bottom price at $60. What it’s going to do is, it’s going to hold Tether in reserve just in case it goes down to $60. But if the price continues to rise, then it’s going to sell a little bit of your position on the way up every 1% or so, and then it’s going to buy it back when it dips a little bit. But each time it sells, it’s not buying back all of the position. It’s basically trying to keep the original position size the same, but it’s trying to extract Tether along the way so that you can mitigate volatility time risk, essentially. But it’s sort of derisking that position a little bit with the infinity bot. The reason why it’s called an infinity bot is you don’t have to keep adjusting it for the top.

Cephii 15:35
A grid bot is where you have to set a range between the bottom and the top price range. And that’s always dicey. Because the problem is, you don’t know where that is exactly. And then you end up being very inefficient with a grid bot if you don’t pick a sufficiently narrow range. That’s the reason why an infinity bot makes sense. Both the grid bot and the infinity bot, both extract Tether. So a lot of people turn me more on to the rebalancer bots, because if I really want to build the position that I’m wanting, I want to have all of the capital that I’ve earned on the arbitrage trades, or the volatility trades, as they’re called, I want them all to go back into my pool for buying more, let’s say LUNA. So if I have a 50:50 LUNA rebalancer, let’s say I do a 2% rebalancer, when LUNA’s price goes up and it’s now higher value than my USDT position by 2%, it’s going to sell that upper 2% that is in profit, and it’s going to sell half of that, actually, 1% of it, and then sell it to USDT, so that the Tether pool gets bigger. And now your LUNA and Tether pool is rebalanced again. But the next dip, you have more Tether in the Tether pools so the next buy will actually be bigger each time. So if you did this 20 times in sideways movement, each time the buys are getting bigger as it does an up and down 1% move.

Cephii 16:58
So rebalancers are cool in that they’re natively autocompounding, which is cool. And again, all of these things work better if you’re not going to moon next week. So if you expect that LUNA is going to hit $150 next week, it doesn’t make sense to do any of that shit. Just hold your LUNA and call it a day. Because you won’t make a whole lot extra otherwise, if you do it that way. I was looking at some articles on rebalancers, and some people have had demonstrated mathematically very good luck with backtesting rebalancers with crypto where… And KuCoin doesn’t do this, by the way, but you have some others that… Well, I think Pionex does. But where it rebalances at 5%, or 10%. So it’s not non-stop buying and selling. On the way up, you don’t miss the big moves because you’re only selling every 5%-10% upwards, and then rebalancing that. As opposed to every 2%, which you’re just whittling away at your possible gains on the way up, unless it’s very volatile. So if you get a lot of sideways chop, those types of rebalancers can be a great way to earn income in your life. Like for example, if I have, I don’t know, pick some coin that goes sideways all the time, like a Litecoin, or an XRP, or some garbage, then if it goes sideways forever, then that would be a perfect situation.

Cephii 18:24
The problem in crypto is things don’t really go sideways forever. Anything that goes sideways long enough just simply goes down. So the problem is, is that now your asset’s going down and you’ll have to hope that your volatility arbs made you enough money to solve the problem of the price of the coin going down. So it’s, I don’t know… It almost makes sense to only do these things if you’re really, really bullish on something and not expecting sideways action. Where you might get great arbitrage would be if mirrored, like Apple for example, right, on Mirror Protocol. If someone could create a sideways functioning rebalancer bot between, say for example, I don’t know, mirrored Apple and mirrored Google, and you just let that sucker run, you’ll probably make great money on that because if you look at intraday volatility, Apple may go up and down 1% every day, and Google may go down 1%. Or pick maybe two different sectors that’s just completely random that just go in different directions, but you’re comfortable holding that asset and just running it. Sideways action where you don’t get extremely bullish impulsive moves, those can make you good money on a arbitrage yield type situation.

Cephii 19:41
Unfortunately, when you go to Pionex and you go to KuCoin, they don’t have anything like a mirrored asset that consistently goes sideways a lot. And so you don’t really get to play that game. Stock market volatility arb bots on big hedge funds and whatnot, those guys, what they do is they’re basically just leeching off the public’s money by basically stealing the volatility yield off of all these stocks for almost no risk. So you’re like a dumbass for putting your money some random mutual fund buy and hold position on some stock that doesn’t go up that much. And then in the background people are arb-ing the shit out of that stuff and just leeching out all the yield. So yeah, it’s kind of a funny but sad truth that yeah, they provide liquidity in a sense by doing this, but at the same time, they’re just extracting value out of that market and then buying Lambos or whatever with it. So, Cedric. Yeah, go ahead.

Cedric Diggory 20:44
How’s it going, man?

Cephii 20:45
Good, good.

Cedric Diggory 20:46
Yeah, so I want to talk a little bit about the Anchor strategy. There was like a… You were involved in the tree or whatever where the guy was talking about you’re better off just taking the yield… What was he saying? That you’re better off like getting the staking rewards as opposed to borrowing on Anchor? ‘Cause you get a opportunity cost of not staking. You know what I’m talking about?

Cephii 21:09
I didn’t hear that conversation. You’re talking about between danku and LUNAomics?

Cedric Diggory 21:13
No, not that. There was someone that was… He was saying pretty much that there’s an opportunity cost of not staking your LUNA, when you… Say people that don’t take their loan to, say, over 40%. If they’re very risk-free on their loan, then they’re missing out opportunity.

Cephii 21:34
Oh, yeah. So yeah. So what they’re saying is, let’s say you have bonded LUNA and you borrow off it, don’t do a 10% LTV, because Anchor is taking all of your extra yield. And they’re just taking it instead of you getting that yield, right. So typically, you want to manage your LTV, have it somewhere in the 30%-40% range, probably, for most people. And you don’t want to give away the yield off your bonded LUNA to Anchor just for the hell of having a super low LTV. That’s what he was saying.

Cedric Diggory 22:06
I think he was going deeper than even saying 10%, I feel like. The way I took it, and I kind of actually used it to my advantage, because he wasn’t completely true. I mean, he wasn’t completely correct. If you want to get price exposure to LUNA, if LUNA 2x-3x this year, you’re better off taking the…

Cephii 22:22
Yes, no, you’re right. You’re right. Like for example, if I have a 10% LTV… What Cedric’s saying is if I have a 10% LTV, yeah, I’m giving them my yield. But if I feel really safe about it, and I bought a bunch of LUNA and it 10x, well, then who gives a shit? That’s basically what you’re saying. Which is true. Yes. So if you’re not worried about those nuances of yield optimization, then yes, you could just… It doesn’t matter what your LTV at that point is.

Cedric Diggory 22:45
And from reading this, I actually developed a different strategy. Me personally, I was staying in the 28%-30% range, because I’m pretty reckless in the case that I borrow UST and then I switch it right to bLUNA and then provide it as more collateral. So in a downtrend, that could get ugly, especially if we went down deep. And I’m already at 30%. Everything’s already collateralized. So what I’m doing now is I took it to maybe like 42%, but all I took past 30%, I just leave it in UST in Earn. So I’m making, say $8 a day. And then I could just manage it on the way down if it does go down, just feeding in the UST. But you should always take more and put it in UST in Earn, so you could at least make that money.

Cephii 23:25
Yeah. So for example, right now what he’s saying is… So yeah, exactly for right now I’ve got… So as LUNA’s price is going up, my LTV has dropped to 42%. So I’m going to sort of borrow here… I’m going to just go ahead and borrow the max amount possible in UST right now. So I’m going to go ahead and hit that. Alright, I’m gonna do it while we’re talking, because I need to do it anyway. [chuckle] So what’s going to happen is, is if I borrow now the benefit of that is, even if the LTV starts to go up, because I am now… Let’s say the price of LUNA starts to fall, I’m in cash, so I can always pay it back if I want to. But the flip side to that is, this is the point where I can borrow the max possible, is at the top of my… When LUNA’s price is at the top, that’s when you can borrow the most. So if you manage risk on the way down, and you’re comfortable with that, this is the time when you can get the max possible leverage out of the system. So you’re sort of like… A bank wouldn’t allow you to do this, right. Because a bank would say, “Okay, the housing market… You’re borrowing off your house, but the housing market could tank 30% or 20%. We’re not gonna let you borrow off the full value of… In other words, we’re gonna actually pick an LTV that maybe is even lower,” or something like that, right. Whereas in this case, you can do whatever the hell you want, as long as you’re comfortable with dealing with the LTV management situation.

camilo salah 25:03
But, Cephii, the new amount that you’re borrowing, you put it into UST and you just let it sit there, right?

Cephii 25:09
Yeah, right now what I did is, I just took my money out, I just threw it in Anchor Earn and I just put a ton of money into Anchor Earn just now by taking it out of my borrow capability. And what we were talking about earlier today was, what could you possibly do with your money. And the basic options are, I can create a UST-LUNA LP, which functions essentially like a dip buyer on the way down while earning the yield, and then I could suffer a mild amount of impermanent loss on the way up. I could just leave it in cash, which is what danku was saying. And basically, I could just buy dynamically on the way down as the price drops, which is what I tend to do. Or you could just go and spend your money wherever the hell you want. But the only problem is that, you want to have enough of your cash available for LTV management. And when you’re in Terra and not out of the ecosystem, you don’t have the problem of rushing to find a way to fix your LTV. So it’s a mixture of risk management and max borrow power, both.

camilo salah 26:09
And by the way, now that you’re talking about that have you seen the option where you click on “Withdraw” on your bLUNA, there you can see something that says “Withdrawable amount”.

Cephii 26:20
That’s correct.

camilo salah 26:21
Can you comment on exactly how is that withdrawable amount of bLUNA calculated?

Cephii 26:26
Yes, if you have bonded LUNA in your wallet, that withdrawal amount… What he’s talking about is if you open up your wallet right now, go to Anchor Bond, and you go to the claim section, there is a little thing that says “Withdraw UST”. And that “Withdraw UST” is any bLUNA that’s just sitting in your wallet doing nothing, the bonded LUNA is earning LUNA yield, right, so that’s actually just coming in as UST and you can claim that direct. So all of its being converted to UST on Anchor and then it’s basically giving it to you.

camilo salah 26:58
But I’m actually speaking about where it says “Collateral list”. And you see that there’s bETH, and below, bLUNA.

Cephii 27:07
You mean in claim section right?

camilo salah 27:09
No, in the borrow tab, if you go below to the bottom of the page, you see the collateral list.

Cephii 27:16
That’s where you provide collateral to…

camilo salah 27:20
To provide bLUNA. But then if you click on “Withdraw” your bLUNA, let’s say you want to cancel the…

Cedric Diggory 27:27
You can withdraw up to 45%. So you’re only able to… If you’re not at 45%, it’ll let you withdraw bLUNA to take you to 45%.

Cephii 27:35
Yeah, so your options are, you could… Let’s say my LTV is, let’s say 35%, and I’m like, “You know what, I don’t need my LTV that low,” then go ahead and withdraw some your bonded LUNA and burn it so that you can do the arbitrage trade again, for example. That’s one of the things you could possibly do with your bonded LUNA, which is what I do a lot of actually. About a third of my LUNA is being burned at any given moment cuz I especially wanted to be ready for Prism Protocol to do the refracting and all that shenanigans. So I just kind of had that ready to go. So I did do exactly what you’re talking about. Take out the bonded LUNA, go to the Burn section, burn it so I get 1:1 LUNA again in 24 days, or whatever. And then I can use that fresh LUNA to then go refract on Prism and do all that shit. So that’s what I was waiting for. So I was sort of planning for that.

Cedric Diggory 28:25
And if you do withdraw your bLUNA like that, if it just sits in your wallet, that earns interest and that comes in in UST or how does that work?

Cephii 28:31
Yes. If you leave bLUNA in your wallet, you’ll get some UST. So let’s say you’re like, “Oh, I need to top up my UST ’cause I need some for fees,” or something, you just dump it in your wallet for a few days and you’ll have UST. Yay. [chuckle]

Cedric Diggory 28:46
Cool.

Cephii 28:46
Yeah. But hey, Evelyn, what’s up?

Evelyn 28:49
Hey, man, I’m just here to learn. I’m just, you know, learning new things about all this, yeah, soaking it in.

Cephii 28:55
That’s cool. Do you have a question or anything? I think you hit the speaker button, so I didn’t know if you have a question or something. But if you don’t, that’s okay. Let me get Alex on, because a couple of these guys are waiting for things.

Cephii 28:56
And guys by the way, the other guy that joined earlier, he’s a troll because he was in other Spaces of Rebel Defi and he was saying exactly the same shit.

Cephii 29:18
Yeah, there’s always some fuck nut out there doing stupid shit. [chuckle]

Cedric Diggory 29:20
Real quick, I have one more comment to make about the Anchor strategy. So I see a lot of people on stock tweets, what they’re doing is they’re taking their LTV… So 45%, and they’re doing like what I was speaking about, where they just use UST by more LUNA, bond it, provide as collateral. And I just want to stress, if we do go down, you’re going to have to take a lot of hits, you’re going to have to withdraw and then go right back to UST from bLUNA which you take a hit on. So my point is, after 30% you should probably keep the rest in UST. Going past that and keeping it and LUNA just cause cascading liquidations and a lot of issues along the way.

Cephii 30:00
Right. It’s always gonna be about be able to manage the LTV on the way down and be able to pay that down in a way that doesn’t lose you any LUNA and doesn’t make you sell low. That’s the key. If you’re having to exit bLUNA and quickly sell it because you’re gonna have the negative arb, you’re gonna lose like 1%, or 2% LUNA and then you’re going to sell it low, you’re losing again, and then you’re repaying your loan in UST. You literally are making the worst possible freakin trade you could because not only are you selling low your LUNA, but you are arb-ing in the wrong direction which causes the… You lose some LUNA when you suddenly TerraSwap it from bLUNA to LUNA. So all of that is just a mess of nonsense. So yeah, there’s not a great reason to go that aggressive with your borrows and such, which is why I would say… So right now, take all the UST that I’m piling up in my Anchor Earn right now on borrow, I’m not gonna use all of that and buy LUNA with it on a dip, right, because I don’t know how deep the dip is gonna be. I’m staying liquid in UST because if I want to pay off my loan, I could. But on the way down, I can just keep getting more, and more, and more LUNA and then maybe just read provide it as bonded LUNA at the bottoms, and try to capture some of those bottoms. And in crypto, typically, the way trends work is usually if you look at the charts that I have and the…

Cephii 31:25
If any of you use TradingView, the indicator that I recommend is… There’s a guy that actually created this indicator and his name is… I don’t know how you pronounce it. It’s some Norwegian name or something Bjorgem, B-J-O-R-G-E-M, or something like that, Bjorgem. And he calls it the reversal indicator. And what you’ll notice is, is that on the daily candles, you’ll see them and I have them colored in blue-gray and I have them colored in yellow. And what you’ll notice is, is that on the daily candle, once that thing turns gray, the odds that you have a substantial reversal especially in LUNA is pretty good. It’s probably going in the… From yellow to gray, it’s probably going to turn blue if you just look at the charts I posted. On the other hand, on the downward trend if all you ever did was just start buying LUNA when my indicator was yellow, you won literally every single time. It almost didn’t matter if you got the price perfectly, you won every time. And that’s because in crypto 20% volatility to the downside is pretty normal. Even if you didn’t get the perfect bottom at 30%, or 40%, if you start buying it 20%, 30% and 40% down from the tops, you’re usually doing pretty well. So I think that’s by itself a reasonable management strategy and you can get quite a bit of LUNA when you have that much dry powder and borrow available.

Cedric Diggory 32:55
Where do you normally keep your LTV at on Anchor?

Cephii 33:01
Normally, if I’m not paying attention, I’ll just take my UST and dump it in there and pay off so that I’m getting… if I’m going to get on an airplane or something I’m going to keep that shit at 30% or something, right. It depends on how much attention I’m going to able to pay to it. So I think depends on what your situation is.

Cedric Diggory 33:19
You more strategy, price exposure, maximize the amount of LUNA you hold through Anchor or do you prefer to stake? Which side are you on of that argument? Do you think you should stake all of it or you think you should bond all of it and borrow for more?

Cephii 33:34
Oh yeah, well if I’m going to go ahead and buy LUNA on the dips, which is the primary reason I’m getting the UST and borrowing in the first place, then I’m going to go ahead and buy LUNA and bond it, and arb it for the extra 1%, and provide it as collateral all simultaneously on those drops, right. But keep in mind I’m not trying to spend all of my UST, right. I may only spend 50% of it, and even then I’m doing it dynamically so I’m actually buying larger on the way down so I’m actually… Most of the time my position’s in cash, right. Does that make sense? So it’s not like I’m going nuts… I’m not taking all… Great example, I’m not taking all of my UST right now and just going and buying LUNA with it and then bonding it and then providing it on Anchor immediately. I’m actually just converting to UST on the way up, hoping that I have a nice big impulse move, and then after a big top happens, then I’m looking at, okay, now I’m going to start looking at downward trajectory, right. Because right now…

Cephii 34:37
Let’s say today. Do any of you know if LUNA is going to go down to $70 again today or if it’s going to go to $100 today? No. Nobody knows what the hell is gonna happen, right? You don’t really know for sure. So you plan for both possibilities and if I have LUNA coming out of burns and I want to sell some of it because if it goes up a little I could do so if I wanted to. On the other hand if we start going down again, I’ve maximize the total borrow power in UST. And I can manage my LTV on the way down just like LUNAomics does. And I can buy more LUNA on the way down and reprovide it. But I don’t have to go crazy doing that, right, I can leave half of the cash in Anchor Earn earning yield. And only in an emergency, I can just pay off the borrow with it, right. And then remember this, if I’m buying my bLUNA at the bottom, right, it has the maximum effect on lowering your LTV. Why? Because I’m getting more LUNA. If I buy my LUNA at the top, I don’t have as much LTV lowering power also, right?

Cedric Diggory 35:39
What is your strategy on the way down? How do you deploy your capital? Like when you drop 5%?

Cephii 35:45
Yeah, every 5%-7%, I eyeball it, but every 5%-7% I’m doubling my buys. So first, I wait for a good solid 20% drop, that’s when usually those color indicators switch colors to yellow. And then there’s usually further downside for number of days, four or five days, I’ll just keep getting more as the time goes on. So if I feel like it’s… And there’s no way to really be sure how low it’s gonna go, right. So I just get bigger and bigger on the way down. And then on the way up, right, because now my LTV is improving, right. So on the way up, I can just go ahead and get more UST and suck it out of there and then throw it in Anchor Earn again and do it on the way up too. And then if we have further dips, I can then, again, I can go and buy more bonded LUNA on the way down if necessary. So there’s different ways to look at this. But either way, I’m not going so crazy. And I’m not going to be perfect every time too, that’s not the point. The point is to be able to get as much LUNA as possible, as little risk as possible of liquidation and always have enough cash sitting there to not get liquidated and have to sell LUNA low. If you’re selling LUNA low either through liquidations or because you have to manage LTV, you’re just fucking it up. Don’t do that, right. And clearly a lot of people are getting liquidated because otherwise Kujira wouldn’t work. So a bunch of idiots basically getting liquidated here on purpose or something, I don’t know what that is all about. But anyway, you gotta use a little math.

camilo salah 37:08
LUNAomics was speaking about a good option is to use an app, which is called cryptoalerting. Where you get a call to your phone, when LUNA drops under whatever amounts.

Cedric Diggory 37:21
They don’t service the US either though.

Cephii 37:24
Well, you should do whatever… At the end of the day, you should do whatever you feel like you can do while managing your work, and your sleep, or whatever. Because constantly trading all day night is a whole thing, right. So some people can, some people can’t. So you want a strategy that works for you that is not going to cause a lot of sleepless nights. And shit, if you just have it sitting in Anchor, it’s just sitting in Earn, right, you’re getting the yield off it, wonderful. It’s very similar to staking yield. And no different than if it’s on Nexus Protocol in that sense. It’s ready to go when you need it. And if let’s say you miss it, and the dip goes lower, sometimes it’s good that you miss it. Sometimes it goes even lower than when you would have bought it and then you just get lucky and just buy lower.

camilo salah 38:05
So when it’s in Earn it’s not locked?

Cephii 38:08
Yeah, it’s in Anchor Earn. It’s just sitting there right, so you just use your UST at that point and just deploy it. But, psychologically…

Cedric Diggory 38:15
Do you get the rewards in ANC or is that in UST? It’s in UST right?

Cephii 38:18
I just leave it in UST in Anchor Earn. Yeah. So it’s earning yield.

Cedric Diggory 38:20
But then it comes in as UST, it doesn’t come in as a ANC, right?

Cephii 38:23
No, it sits in Anchor… Yeah, but I’m getting the Anchor tokens too for borrowing, don’t forget that, right. So I’m getting that. So I have to use that effectively as well. So anyway, let me get Alex real quick, because he was waiting a bit here. Go ahead, Alex.

Alex Bentley 38:38
Yeah, just quickly about not going crazy with buying LUNA, bonding LUNA, looping LUNA, etcetera, etcetera, because you just become crazy collateralized. If you look at LUNAomics… I think he might have updated the spreadsheet, I was looking at this earlier today, he has a new model in place where he doesn’t actually collateralize and borrow against new LUNA until it hits a certain price target. So for instance, if you borrow in Anchor, buy some LUNA with that, he wouldn’t then bond that and collateralize and repeat until LUNA hits a certain price target which might be maybe 1.5x or 2x, I can’t remember the exact number. But that seems to me like a really sensible strategy.

Cephii 39:20
Sure, the higher the price of LUNA goes, the more secure your prior borrows become.

Alex Bentley 39:28
Well it becomes your LUNA right, after a certain point. Because if you’re borrowing against borrowed against borrowed, you’re entering this vicious cycle. Whereas what he’s saying is borrow, and you’ve got your borrowed LUNA there, and when that hits a certain price target, maybe half of that becomes your actual LUNA. And at that point, you can then collateralize and borrow against it. To me that just makes sense.

Cephii 39:50
Yeah, and my intent to pay this off, if I’m going to pay this off, my goal is to 10x a few coins that I have sitting on KuCoin, which I think is fairly feasible actually, over the next year or two. And if I do that, it’s going to overwhelmingly be more than the amount borrowed otherwise. And therefore, I’m going to be able to pay off my borrow with coins, and now pay taxes on that shit, but then I’ll pay off the Anchor loan with that, and not necessarily so my LUNA, or whatever. So there’s different…

Alex Bentley 40:25
That’s exactly my strategy as well.

Cephii 40:27
There’s different things you can do with how you’re going to “pay this off” or whatever, or just leave it and never pay it off, I suppose. There comes a point where you’ve made so much money, the cost of borrow becomes just who cares? There is a level of that at some point, too. So it depends.

Alex Bentley 40:43
Cephii, I wanted to… You might have touched on this, I’ve come to this space a little bit late. Have you talked about the discussion that went on with danku and LUNAomics over the impairment loss pool?

Cephii 40:54
Yes, a little bit.

Alex Bentley 40:55
What’s your take on that, if you can give me the kind of…

Cephii 40:58
So if you’re basically borrowing UST at the top, and you want to deploy this UST somehow, that’s pretty much been the whole conversation today, more or less, you’re using your UST at the top…

Alex Bentley 41:08
Without wasting your time. I understand the mechanics of it to an extent. I want to know your take in it. My conclusion is that it feels like you might be able to get LUNA at a discount, but you would ultimately get less LUNA. If you were sat on UST right at the bottom of that dip, you would be able to buy hell of a lot more LUNA.

Cephii 41:25
Yeah, so what danku was saying was if you could time the dip reasonably well, if you can make your way to the bottom and buy a lot there, right, then that is going to have the high magnitude effect, okay. And it also depends also, by the way, on how much extra dry powder you have outside of your borrows and whatnot. If that’s all you have, that’s one strategy, if you have you have extra, you may have other strategies. But the way he was saying it is essentially, instead of entering LUNA-UST at the top, which… The benefit of being the LUNA-UST at the top would be is if LUNA keeps going up and you’re wrong, well, there’s a little bit of impermanent loss, yes, but you’re at least getting some of the LUNA price action on the way up, right. That’s one benefit.

Alex Bentley 42:15
And with just UST you could buy more LUNA.

Cephii 42:17
And also if it turns out you have a lot of sideways chop, you’re going to get the APY yield on the TerraSwap, or whatever. So the problem is, is that depending on what future market conditions do, either one of the solutions might be right or wrong, depending on what happens. So in this last dip, if I just had my UST waiting, and I just simply did exactly what I said, just borrowed the heck out of it at $100 LUNA, I just max borrowed and I left my UST in Anchor, then what I would have been able to do is I would have been able to… I tend to go with an exponential buying strategy. So I would have gotten to the bottom with the highest amount of money. So I would have just blown away the LUNA-LP concept. There’s no way you would have beat a exponential buying strategy. But the thing is, what LUNAomics is saying is, you don’t know exactly how far it’s gonna drop. So the thing is on an exponential buying strategy, a lot of your capital may end up being unused. And when you use either a rebalancer bot or you use what he was showing, which is the LP strategy, then if it goes up, it’s not bad. If it goes sideways, it’s not bad. If it goes down, it’s not bad, because you can use the UST from that to manage your LTV if necessary. And for most people, it’s like an automated auto… It’s like buying… It might be not the perfect buy. But it’s pretty damn good. And for most people, it’s going to be pretty effective and simple. So I think it really depends on… I don’t think any of them are really wrong. But which one is the best way to do it? There’s no way to know unless you know the future.

Alex Bentley 44:02
Yeah, I think the question is, how good of a trader are you, or how good how good is your crystal ball type thing.

Cephii 44:09
Yeah, nobody is good enough. Yeah, I can tell you this much. Nobody is good enough to be perfect at this every time. So in retrospect, with the depth of this particular dip this time, you would have very much done better if you just simply held and bought the bottom if you could tell where it was, right. So it really depends. But at the same time, you don’t know. There’s people even now they’re like, “Oh, yeah, it’ll go to $50 next,” or whatever, right. Are you going to believe that? Or are you going to believe that it’s going to go to $120 next? You don’t know for sure. There is no such thing as being some kind of perfect technical trader and what you want is strategies that work mathematically in any circumstance, right, and can handle the problems of your LTV and can simultaneously get you fairly decent buys at the bottoms without having liquidation risk. And if you can additionally get, say, for example, an arbitrage gain, like for example, if you can LUNA-bLUNA arb an extra 1%, leech a little bit of juice out of it right. And let’s say you could leech a little bit of juice out of the fact that you throw some of that shit and Kujira, and you make a DCA buy on maybe a 4% Kujira bid hits, and you got some of that with that, right. So you’re ultimately dollar cost averaging in the end anyway, the question is what strategy of DCA are you actually doing. And the more times you can get some sort of discount, you’re doing better than Joe Blow that’s buying it on Coinbase, right. So the reality is, is we’re sort of splitting hairs, because a lot of what we’re doing, we’re kicking everyone’s ass anyway, right. We’re getting way more LUNA than Joe on Coinbase, which is buying shit and just watching and go up and down. So the reality is, is that we’re winning almost no matter what. Now you’re just talking about optimizing the nuances and not wrecking your LTV. So don’t get too greedy, because we’re already doing really well. So just don’t fuck it up basically. That’s basically the bottom line.

Alex Bentley 46:09
Yeah, I agree. I mean, history is not necessarily something to go by. But if we look at trajectory of some LUNA last year, the kind of aggressive dips that we’ve had over the past week or so are few and far between. So again, it’s not a science, right. But I don’t think we can expect those kind of super aggressive dips that often. So the benefit of being able to sweep the floor on these super aggressive dips, I think it’s just worth looking at.

Cephii 46:36
This is why I keep posting… In other words, if you’re trying to determine the depth of a LUNA dip, how far can it go, the reason why Kaleo’s comment that this shit was going to $10 again is completely asinine is because you won’t get to $10 ’cause I’m sitting right here. I would fucking sell all my Apple stock and buy LUNA at $10 again, if that’s what happened. It ain’t going to $10, okay. It’s not going to $20, it’s not doing any of that shit, it’s just nonsense. If you’re sufficiently rich enough, you can buy enough of this to not make any difference. So the reality is, is I usually am on five exchanges at one point, because if I buy enough, I cause slippage across the entire planet, and I’m just basically charging myself more. So yeah, it’s not going to fucking $10. He’s on drugs.

Alex Bentley 47:20
I don’t want to rub off too much here, but there’s so many people who have those assumptions, right, conflicting assumptions. They’ll have money sat in Kujira that’s not earning any kind of yield on the assumption there’s going to be some crazy aggressive LUNA dip. Why do you want LUNA then?

Cephii 47:39
But you’ll notice that on Kujira… I have fun with it, ’cause by the way, this is… What I’m playing in LUNA is still kind of play money for me. So I’m not necessarily… I don’t have any risk in my mind in this whole shenanigans. I could lose all of this, and I’d be fine. So, first off, don’t do anything I do, okay. The first thing in Kujira, I kind of posted about this, I had my Kujira bid, and when I got a 4% bid, it was at maybe $70 or something, right? Like $68, I think, but I got a 4% discount, so I think I got my actual… I got my Kujira bid in and it averaged in at $64, which wasn’t too far from the bottom. So even though I made a mistake in the price that I bought, the 4% Kujira bid discount helped mitigate the fact that I chose the wrong… Instead of waiting, right, I stuck it in Kujira hoping that that would give me a better discount than had I bought the bottom, right. The point is, you don’t have to be right 100% of time, you just have to be partially right some of the time and get sufficient discounts along the way that you’re beating the rest of the market. Don’t get too greedy with this shit, right.

Cephii 48:51
So then what happened was I had more in Kujira, my 5% bids didn’t fill and, okay, now what? Then everyone already managed their LTV, the price went even lower, to whatever it was, $64 or something. And I’m like, “You know what, fuck this. I’m just gonna get out of Kujira.” And now that’s all UST, right, so it’s dry powder. And I just spent all the rest of it and just bought LUNA at the bottom. So that would be an example of where you don’t have to necessarily get everything perfect. You just have to be reasonably right enough times to where you are sort of stacking LUNA to the best of your ability to a large extent. So there’s different tactics that you can use. And they don’t… Again, the key is not to try to be perfect. If you’re trying to be perfect every time… For example, you have to know, okay, wait a minute, Kujira… I have my money sitting there. It’s not doing anything. I was intending to buy the dip obviously, because otherwise, why the hell would I have all this money in Kujira? It doesn’t hit at whatever discount, 10% discount, or whatever, like you said, unless it’s earning aUST, it makes no sense sitting there doing zero, right, unless you’re going to hit that dip. And then at some point you have ask yourself, wait a minute, maybe I should just extract some of this bid and just buy some along the way.

Alex Bentley 50:04
At which point the actual market price doesn’t look so sexy anymore. I’ve been through this so many times. [chuckle]

Cephii 50:12
So the actual price of the market went down even lower than where my Kujira bid hit, right. And then it went sideways for a while. And then by that time, everyone managed their LTV, and it was too late to get any cheaper dips, right. So you get into these situations where at the end of the day, all you’re doing and all these tactics is some form of DCA that hopefully is more aggressive and more useful than, again, Joe on Coinbase who’s just buying. That’s what you’re trying to do is you’re trying to outperform the rest of the market most of the time. You don’t have to be perfect all the time. Yeah, very key thing. Yeah. TTLG, you have your hand up. I forgot your name, by the way. Tell me it again.

TTLG 50:13
Hey, Cephii. Georggi.

Cephii 50:55
How do you spell it?

TTLG 50:57
Georggi with two gammas.

Cephii 50:58
Oh, Georggi was great.

TTLG 51:00
It’s the Bulgarian George. Hey, thanks. I raised my hand because I had some relevant questions to the discussion, hopefully will add a little bit of nuance. Obviously, completely agree with having things liquid and being ready to buy on the dip. Not always was able to execute on that. But I’m talking about a scenario where I have old LUNA right, and I just don’t have any more… I have some loan burden. And I don’t have any more ability to buy new LUNA. So what do I do with this LUNA? And considering the LUNA… Sorry, go ahead.

Cephii 51:34
No, go ahead.

TTLG 51:35
Considering the LUNA-UST versus LUNA-bLUNA, I wanted to hear your perspective, because the APR does matter. But in effect, it’s a bet on where is the liquidity… Or sorry, where is the volume going to be going long term. And because on TerraSwap, you’re making money on those from the fees, right. And the LUNA-UST is an impermanent loss, where if the APR is very low, that risk is too high, unless you’re really entering that on the way down, and you’re using it as a bot as we talked.

Cephii 52:10
Well what you might consider just because Prisms coming very soon is, you might want to wait for that. You may just sit and wait, do nothing with it for a little while. Something to consider because…

TTLG 52:22
The way you’re doing that?

Cephii 52:23
Yeah, the Prism refracting and some of the community farming, this and that. Again, I don’t know the exact dates and everything, and who knows how long they’ll delay or whatever. But that could be a very good potential opportunity for your LUNA. So you might think about that before deciding to do anything with it either way. But yeah, you know that you get 9% or so on a Stader autocompounder, or just straight staking. It just depends. If you’re intending to borrow off of it at some point, obviously, you want to have it in some form where you can quickly convert to bonded if the time were to come. So it really depends on whether you intend to borrow or not. That’s the biggest distinction in terms of what you do. All the other nuances, and yields, and whatnot… I think, a way to look at is this too. Right now, while we’re in a rapid growth phase for LUNA, your biggest opportunity is to stack LUNA, not necessarily worry about the subtleties of the yield unless you can do both simultaneously. So if we can get stacking methods on LunaX and whatnot, that’s going to be awesome. The yield is great and everything, don’t get me wrong, but for most people, that’s probably not the things you’re trying to optimize for at the moment. So we’ll see what kind of games you can play with yLUNA and pLUNA as well. So…

TTLG 53:46
Great, thanks.

Cephii 53:47
In that regard. Hey, Dan, you there?

danb 53:49
i Yeah, I’m here. Hey, um, I had a couple of thoughts on some of the points people brought up throughout the conversation. One was, going back to just the Kujira discussion a few seconds ago, one of the lessons that I learned because I was trying to get multiple bids in too, and I was constantly getting frustrated with the 10 minute wait time, and I felt like I was missing out on some opportunities because of that. So I think if this happens again, I’m just gonna go ahead and put in… Take my thing, divide it, put some of them into the 3%, some into the 4%, and some into the 5%, and then when it gets close, and I’m watching the chart, I activate the one that I think has a chance of getting best filled.

Cephii 54:31
Yeah, well, the more popular Kujira becomes, and if they add that aUST deal to it, the thing is, more and more people are going to be like, “You know what, I’m just going to want to get this filled. I’m going to pick the 3% or 4%,” right. Because remember, even if you’re getting a… Now, keep in mind also, if you were to just buy LUNA spot, you can oftentimes get the LUNA-bLUNA arb of 1% too. I don’t remember what Kujira’s fee and everything comes out to if it’s 0.5% or something, but I’m not sure Kujira make sense, unless you’re at least at maybe the 3% discount, perhaps. The 3%-4% probably is gonna become fairly popular, I think.

danb 55:11
Yeah. And then if you have the Kujira tokens, because I was using that to pay my withdrawal fee as well, too, and that basically cut that in half. I did pretty good on that I was able to get it in around $59. So that worked out pretty well for me.

Cephii 55:27
Fortunately, I put a pile of Kujira tokens aside just for the utility function, and like the coin is mooning or something. So now I can do… [chuckle] I can actually use it. I didn’t buy a bunch of Kujira as an investor, I just bought it for the utility function and just left it there.

danb 55:41
Yep, no, I bought it just so that I could withdraw from Kujira.

Cephii 55:44
Exactly. If it works, it… Yeah, if it goes up, great. If it doesn’t, who gives a shit kind of thing. That’s kind of how I looked at it.

danb 55:51
Yeah, speaking of withdrawal, they’re talking about this in the Space earlier today, too. But on Anchor Protocol, when it says your “Withdrawable amount”, that is not the true withdrawable amount. That is the withdrawable amount if you go to 45% LTV. But you can still slide that up to 50%, 60%. And you can exceed the amount that it says withdrawable. Right now for me, it says “Withdrawable 735”, but I can slide it up to withdraw 939. So it’s just like a safe recommendation, because I think someone was asking about that earlier. I just wanted to clarify on that part.

Cephii 56:34
Just let me check that again for a second. Cause I’m… Withdraw it here on mine, see if that works the same way. It does. Yeah, it is. I think you’re right. It says recommended to keep LTV below maximum. But are you sure that it’s going to execute if you try to proceed?

danb 56:53
I was able to hit proceed. And it asked me to sign the transaction. I didn’t sign it because I didn’t want to do it. But you can, technically, do it.

Cephii 57:01
Yeah, no, I think with with crypto volatility as it is, 40%-45% LTV is not an unreasonable place to be, probably. It depends also, like I said, usually if I’m going to be on a plane or something, I don’t have access to this thing, and I don’t want to watch it while I’m sleeping or something, I might lower it. It depends on your situation. ‘Cause you know how those wicks can go. I mean, they can get wicked.

danb 57:25
Oh, yeah.

Cephii 57:25
Yeah. The wicked wicks. [chuckle] So KURAMA, you there?

danb 57:32
Actually, I have one more thing I wanted to chat about real quick. We were also talking about Anchor cash flow as well, too. So… I’ve got an echo going on.

Cephii 57:42
Yeah, I think it’s your mic.

danb 57:45
Okay. Sounds good now. Yeah, so we’re talking about when you have bLUNA, and if you don’t have enough… If your LTV… So the whole strategy of taking your bLUNA, borrowing UST and throwing it into Anchor Earn. So, there’s kind of two different sides of it, right. There’s the side where you’re trying to use that to buy more LUNA at some point in the future at a discount, but the way that I was initially looking at, it up until we just have this discussion today, was I was thinking of it as cash flow. Because at a certain point, if you have LUNA sitting… If you borrow UST from your LUNA, it’s sitting in Anchor, you’re earning just the 19.5%. So say that you have a 10% LTV, and you’re bonded. It’s 10% times the Anchor staking rewards, right. So it doesn’t make sense from a cash flow perspective to put money into Anchor Earn unless your LTV is sufficiently high enough. Because otherwise you would have gotten more cash flow from just holding onto LUNA.

Cephii 58:55
Yeah, I was thinking about this too. The other way to look at it is does it come out… Yeah, ’cause there’s Nexus too, right? You could put it Nexus for the same principle, you basically stick your…

danb 59:11
Yeah and Nexus is awesome. Because you could go much higher than you could manage as a human.

Cephii 59:16
Although I don’t know if that actually comes out the same way. Because when you when you borrow manually, you’re also getting the… Well, it depends. Here’s the thing, let’s say your Anchor token price is low, it actually may not make sense to necessarily go the route of Nexus, because you could actually just acquire the Anchor token low. And you’re basically using part of your leverage essentially to get ANC. And then you could either just simple governance stake it or whatever for 15% yield, and then let Anchor go up and then sell that too. So there’s that. Whereas Nexus is doing more of a pure 45%, you’re not doing this extra thing. But the way LUNAomics described is the same thing, if you have your UST, instead of just handing it to Nexus to do that thing, the benefit then is you can manage your LTV yourself, run it higher than 45% for periods of time if you need to. And then you can buy LUNA on the dip, either outright with your UST or do the UST-LUNA LP kind of strategy that he talks about, too. So there’s all these different…

danb 1:00:25
The part that I’m excited with is that right right now it’s 45%. But they’re gonna get to the point where they’re going higher than that, right. They’re gonna be at like 59% at one point. And because of the way they have it set up, they’ll be able to stay at that super high LTV. And then, I don’t know if you saw the tweet of… It was either early today or yesterday, where they’re talking about, instead of selling everything, selling the ANC, selling the UST for Psi, they’re going to give you the option to get it back into the Terra native tokens as LUNA, and I think it’d be cool if they offer ANC too.

Cephii 1:01:00
Yeah, they’re gonna have… For all the bonded assets, bATOM, bSOL, bLUNA, they’re going to have… You’ll be able to just stack those instead of the Psi token, which makes perfect sense because it just makes sense. [chuckle] But anyway, that’s just… Yeah, it’s among the possible strategies. So that’s basically using your yield to sort of DCA. But it’s not that much different than just using Stader. The only difference is your borrow powers available. So I think the thing is, if you’re intending to use your bLUNA to borrow, then these things make sense. If you’re just wanting to leave your shit alone, and you’re just wanting to have a similar yield, just like autocompounding staking works fine. So it really depends on what you’re trying to do.

Cedric Diggory 1:01:46
The thing I’m confused about that strategy, though, that he’s speaking about, let’s say you take it to 45%, right, and you have it all on UST in Earn, and you want to buy on the way down, I guess, to then provide as collateral. It still won’t affect your LTV enough to just continue providing collateral. Wouldn’t you have to pay back some with your UST?

Cephii 1:02:04
Yes, you’d have to pay back some. Yes.

Cedric Diggory 1:02:07
Gotcha.

Cephii 1:02:07
You’re actively managing your LTV. Whether you do the LP strategy, or whether you do just UST hold and then by the bottom strategy, or whatever the hell you’re doing, you have to manage your LTV on the way down if you max it out on the way up, right. That’s a given. Yeah, unless there’s some system that’s developed eventually that does it automatically, like Nexus builds an actual automated system to do exactly what we’re talking about. Yeah, I think two ways to build the bot, which is going to be Nexus does what LUNAomics is talking about, which is basically the UST-LUNA style LP/rebalancer philosophy, which is a sufficiently liquid position. And then Nexus would automate the process of selling part of the LP, putting that UST back to fix the LTV. And there’s just multiple steps involved. Or B, a Martingale bot, which essentially is a similar thing, it’s taking all the UST as, basically, like buying the dip exponentially. So you don’t do all of the LP part of it, all you do is you do essentially a pure Martingale bot, which is literally going to buy the dip, because basically it’s a pro rata bot. And the way you would design that would be every 1% the price drops, it automatically gets bigger, and bigger buys, logarithmically larger, so you’re basically… On a logarithmically rising asset, you want to be buying logarithmically down the price, that’s just mathematically the most efficient way, where you’d also will be, similarly, mostly in a cash position. The difference is, is Nexus or whoever would automate the borrow process for you. So it’s a little bit different, conceptually. But yeah, whether Nexus can get to the point where they can push those LTV to 55%, or 60%, if they can do that, then that’s a wholly different situation. Because either way, if they do that, then what happens is, is then it’s gonna beat the ability to do it manually one way or the other. And that would be pretty cool.

camilo salah 1:04:09
And you were mentioning Stader. Does Stader autocompound? Yeah, but if we do the manual compound on Terra Station, we would be getting the same APY or does Stader do anything extra?

Cephii 1:04:24
Manually compound… Yeah. Stader is just doing it automatically for you 24/7… Or every week, or 24/7. So it’s gonna be better than manual because manual you have to do a ton of little transactions and deal with all the dust and this and that. So if you’re trying to stake, Stader’s definitely the way to go. Plus, remember the Stader autocompounder is buying off every dip with your yield. So it’s a fairly efficient way to stake, really. Whereas if you have to pay attention to that and do it every day, it’s gonna be a waste of your time probably. The other way would be like even if you did it manually, let’s say you wanted to manage manually and you’re like, “You know what? Dips are pretty deep with LUNA, I think I want to manage my staking manually.” And then whenever you have enough UST, if you have a larger amount of money and your UST’s substantial, then when a dip happens then you claim your rewards and then you buy your LUNA with it. So you might do better manually. But Stader’s pools are basically buying the dip automatically, 24/7, essentially DCA-ing it, right. And then, not only that, but yeah, the UST portion’s fixed. So basically, yeah, the lower the price of LUNA goes the more Staters autocompound is buying LUNA.

camilo salah 1:05:39
What’s their APY? For Stader?

Cephii 1:05:42
It’s going to be 0.5% different than manual, so it’s probably 9.5% or something, maybe.

Cedric Diggory 1:05:49
You also got the airdrops, too.

Cephii 1:05:51
Yeah, you get the airdrops of course too. But although, it really depends on how much you have and how much that’s worth to you, obviously, but it adds up. Everything adds up a little bit at a time. KURAMA, are you there?

KURAMA 1:06:03
Hey, bro, I’ve been quiet for a few days now. I’ve been locked out Twitter basically for cursing Kaleo. [laughs] I’ve got another four days to go. So any of my friends who are in here who’s been messaging me, I can’t message you back. Yeah, exactly I’m in jail right now. So I’ve done was took 25k UST as a collateral, and I bidded on Kujira. I did what you did actually, I put it on 5%. But I wasn’t getting anywhere for quite a few hours. So I just took it out and then I ended up buying Kujira at 90 cents and then sold it at $1.60. And what I did with the US, I actually got something like 67% profit out of that. And with half of that I bought bLUNA and the other half I actually kept it as UST just to be able to manage my TVL basically. And I added the bLUNA as a collateral so I can just stack more LUNA in the future, basically.

Cephii 1:07:32
Yeah, the key thing there is the LUNA that you buy at the bottom, you’re going to be able to buy the most LUNA, obviously, and as it rises your borrow power is obviously greater. So any way, in theory, one could optimize the amount of LUNA bought at the bottom, the better off you are. What I tend to do is, if I have extra capital outside, if I get a really good LUNA buy, even if my LTV and borrowing power is plus or minus, I’ll just add more cash and throw it at Coinbase or whatever, buy a bunch of wrapped LUNA and call it a day. I still buy LUNA on every dip even now and I was there like buying it at low prices…

KURAMA 1:08:09
Yeah, same. I’ve been buying it. I bought at $60s, I bought at $70s, I’m gonna buy at every level to be honest. ‘Cause I know what it’s worth.

Cephii 1:08:20
Every dip is worth it if you can find the capital.

KURAMA 1:08:23
I always kept on tweeting saying LUNA under $1,000, any dip that you get, you buy. And obviously for now, anyone can say that, but in a few years we’ll be talking different scenarios and different ways of autocompounding and stuff like that. But what I want people to be careful of is, I know everyone’s talking about 50%, 55% TVL, I’ve got a few friends who lost around 80,000 LUNAs back in May crash, I’ll be really careful. It will hurt me to lose one LUNA let alone…

Cephii 1:09:03
Yeah, I don’t I don’t play with the high TVLs. We were just talking about how Nexus’ optimizers might be able to do it accurately.

KURAMA 1:09:12
I just want people to be careful on that. Just make sure that… And some of these influencers or wherever, they’ve already got their bid set or they’re shorting it, or they’re longing it or whatever. So don’t listen to them. Don’t don’t let these people buy your LUNA at a really low price than it should be.

Cephii 1:09:34
Right. Don’t sell low or whatever. But, xulian, you there?

xulian 1:09:42
Yeah, thanks. I know we’ve been kind of jumping in between different protocols. I wanted to mention the Stader LunaX-LUNA LP, I don’t know if anyone has been using that, versus the bLUNA-LUNA LP.

Cephii 1:09:58
I had it in there for a while to earn SD tokens. But then what happened was when the price of LUNA was falling, I actually wanted… At the bottom of Lunas price, I actually converted the LUNA in the LunaX pool, I converted that to bonded LUNA because I got the arb and then I borrowed off of it and I bought a whole bunch more LUNA at the bottom with that. So I exited that and I’m like, okay, I sacrificed from SD token farming or whatever. But I felt like that would be the way more lucrative play at that moment, and I just sort of did that. So I’m out of that pool at the moment, but I was earning some of the rewards from it. The APY on the actual LP is kind of weak though, so I didn’t feel like I was getting a horrendous amount of SD tokens out of this. So at that moment, I exited that for that purpose. But it was a reasonably liquid position, so I could… And then I think I even converted the LunaX to bLUNA at that moment, also, at a very, very favorable rate, I think was close to 1:1, and so I actually borrowed off of that too, and I got more LUNA. So yeah, like I said, I go nuclear on the dips. Whenever I see that kind of dip, 30%-40%, I’m literally calling every family member I know at that point, right.

Cedric Diggory 1:10:34
But don’t you have to wait the 21 days to exit that?

Cephii 1:11:31
What’s that now?

Cedric Diggory 1:11:32
Don’t you have to wait 21 days to exit that pool? I’m into one and I feel like I’m kind of stuck.

Cephii 1:11:37
No, no in the pool, you can… The pool, you can exit at any time. You just simply close out your LP position by withdrawing. And there’s nothing special about that.

Cedric Diggory 1:11:47
Are you talking about the first one where you put it in the blue chip airdrops…

Cephii 1:11:50
No, no, we’re talking about the LP.

Cedric Diggory 1:11:53
Oh, okay.

Cephii 1:11:53
The second section. Yeah, the community farm section.

Cedric Diggory 1:11:55
So I’m pretty much stuck for 21 days in that pool until it…

Cephii 1:11:59
Yeah, that’s just a staking withdraw. That’s a standard staking withdrawal time right now.

Cedric Diggory 1:12:03
Yeah, I didn’t know if you could pull it out, and then like arb it to bLUNA though.

Cephii 1:12:06
No, if you pull that out now, too, you’re gonna lose a lot of your Stader tokens too. Don’t forget that, because that’s a vesting period thing. So yeah, that investment is your belief in the long term progress of Stader as a major multi-chain player in staking games. And what that is, is you’re hoping that the SD token does really well over the long run, as a result of the progress that they make. And they have a pretty good sizeable TVL, and they’ve executed pretty decently. And yeah, we’re going to do an AMA in the morning with them and I think we’re gonna do some question and answer type stuff that they asked me to do with them. So I was like, “Yeah, sure.” But yeah, the SD tokens, that’s like you’re farming it as a like long term investment at this point. It’s not necessarily to go in and out of those pools and play around.

Cedric Diggory 1:13:01
And you’re also autocompounding LUNA as well.

Cephii 1:13:04
You are, yes, yeah. Which is actually a pretty good chunk of LUNA every week. It comes out every week, and it’s a good constant income, that you could actually withdraw that LUNA and sell it if you wanted to. You’re not locked in where… It autocompounds it and then you never see the actual yield. If you don’t claim that LUNA that’s being rewarded there, it’s actually autocompounding also. So you can withdraw it… The next time it calculates, it’s actually including that LUNA as part of your LunaX pool or whatever. Not LunaX, but your total LUNA to calculate your next reward, right. So it’s staking that for you. And you can undelegate that too, and just sell that portion if you wanted to at some point. So in the future, if you just needed cashflow of some kind and you wanted to just like have this be the way you live off of it, then you can just use the money. So let me see here, who else we have? AJ, what’s up?

AJ 1:14:13
Hey, quick question. I can always count on you to stay on longer than anyone else. I stepped away about an hour and a half ago to go eat dinner and I shouldn’t be surprised that you guys are still… You’re still helping everyone out here, which is awesome. But the quick question is is kind of a newbie quick question. And I meant to ask when you and LUNAomics did, I think, a Space last week, I didn’t get on in time. So I did my my first borrowing a couple of weeks ago with… My ETH over and then just Lido, and then bonded that, etcetera. And I used it on the ANC-UST LP, staked that but a question in regard to if I were to take… Say, I have whatever it is, 200 LUNA. And I took 100 LUNA and borrow against that 100 LUNA. If my LTV gets too high for my liking, can I bond the other 100 LUNA and add that in as additional collateral in order to bring it down?

Cephii 1:15:33
Yes, yeah, that’s just what we call looping, tou can just kind of reprovide, or reproviding, you just reprovide the LUNA that you bought. The only downside is that, if you don’t have enough liquid cash, and there’s a massive chunk drop in the market, then you don’t have anything that you can sell to correct for that, right. So you have liquidation risk at that point. So feel confident looping, if you feel like you have a way to manage that LTV if it drops a lot.

AJ 1:15:59
What I put in initially, I’d say 25% or so. Nothing crazy. Is getting over…

Cephii 1:16:06
Yeah, no. Exactly. If you’re not looping like crazy, you’re just doing it once or something or twice, it’s probably nothing.

AJ 1:16:11
Yeah I’m doing it once or twice. Rather than adding UST, I just add more collateral for the time being.

Cephii 1:16:21
Sure, yeah. It depends on how big is your position.

AJ 1:16:24
Rather than paying off some of it or taking the position out, just adding more collateral. That was my question, I guess. And how would I do that?

Cephii 1:16:32
Depends on how big. If your position’s in the gajillions, and you don’t have enough money to pay back this thing no matter what you do, then that’s a different problem. If you have money elsewhere, and you can just manage your LTV by sending it in, that’s certainly an option. So everyone’s situation is going to be different, as far as that’s concerned, yeah.

AJ 1:16:49
Right. And then when I add that extra collateral, can I just add that directly in? Or do I have to withdraw everything and then go back in again with the total collateral? You understand what I asked?

Cephii 1:17:05
Not exactly, I mean, you can pretty much do…

AJ 1:17:07
If I have $100, and I borrowed 20… I mean, if I have $200, I bonded $100 of it, I used 25% of that, right, and then it starts getting a little uncomfortable for me. So I take the other $100 that I have, and I bond that. Can I just add that $100 in so I have now… I’m only borrowing 12.5%. Or do I have to…

Cephii 1:17:42
You can do whatever you want. But the thing is, the only problem is if you only have a tiny LTV, the discussion we had earlier is you’re just giving up your yield from your bonded LUNA to the Anchor people, basically, which is fine, I guess. But having a super low LTV doesn’t necessarily make sense. So you’re generally better off managing your LTV in that 30%-40% perhaps, and not borrowing so little that it basically is either a meaningless amount of borrow or, B, you’re just giving up the excess…

AJ 1:18:19
I mean, that’s what I meant. I’m sorry. Say, I started… 45%, and I add in another equal amount of bLUNA into it to drop that in half, for example.

Cephii 1:18:31
Yeah, that should be fine, that should be fine. A single loop is usually not bad. If you’re triple looping at your probably using up all your money. So that’s how you think of it.

AJ 1:18:43
And I know you touched on this a little bit, I heard a little bit of it before, but you were anticipating some pretty potentially awesome things from Prism in the next few weeks. Can you give just a quick overview, a high level…

Cephii 1:19:03
Your mic is sort of dying so I’m going to drop you here, because nobody can actually hear what you’re saying. But you basically were talking about Prism. Yeah, we covered it a little bit. There’s gonna be a lot of interesting strategies there regarding, mainly arbitrage strategies, and I’m gonna and I’m not sure if your mics gonna work again, AJ, but I think I got the gist of your question about using Prism and such. But basically the Prism… Price differences between yLUNA and pLUNA are going to be interesting. The fact that the price of pLUNA and yLUNA are going to differ by plus or minus, let’s say, 5%-10%. I would think it’s going to have fairly decent intraday volatility versus primary LUNA, creates some significant bot arbitrage opportunities. We’ll have to see what that intraday volatility looks likem because that could represent some amazing simple bots that you can run, Or some of the LP opportunities with yLUNA-pLUNA, or PRISM-yLUNA and PRISM-pLUNA. So there’s gonna be all sorts of interesting LPs and things that people are going to get involved with. LUNAomics was doing with the UST-LUNA pool, there could be some interesting side effects or effects in the PRISM-pLUNA and the PRISM-yLUNA pool could have interesting dynamics when prices go up and down. Or you might be able to find some interesting arbitrage opportunities there as well.

Cephii 1:20:53
So let me try to get you back on for a second, see if we answered that question, but like a lot of the strategies, we’re still gonna be working on them for a while. I think we have to see all the price action going on before we make some decisions about what the actual strategies are. AJ, did I answer the question correctly? More or less? [chuckle] But I’m mostly interested in the intraday volatility between yLUNA and pLUNA. And the idea that I might not care which one is cheaper, I just keep acquiring the one that’s cheaper in a constant dollar cost average at any given moment. And then I can sort of arb those back to LUNA at some point during… So in other words, the price action of the individual coins will give you exposure to LUNA, but a different price action than just the price movement of LUNA itself. This is where rebalancer bots can just create major amount of money, maybe even more so than the staking yields, and maybe even more so than just the principal yields. We want nutty ass volatility. Because remember, pLUNA and yLUNA are probably going to trade in different directions, which creates some amazing rebalancer bot opportunities in terms of just constant arbitrage yield. Meaning what the bot will do is if yLUNA price is lower, it’s going to sell pLUNA to buy more yLUNA, and if yLUNA’s price, as a portion of the portfolio goes up and pLUNA goes down, it’s going to buy more of that. And it’s just going to go back and forth, back and forth. Just constantly buying up cheaper pLUNA, cheaper yLUNA, over and over and over again, until your stash is just keeps getting bigger, and bigger, and bigger.

Cephii 1:22:37
And it really almost doesn’t matter how many people participate in that. You don’t actually devastate the arbitrage. It just creates actually more trading volume. So arb bots between those two to me could be magical. But it depends also how well did those do compared to the various LPs and other tactics. But even with the fact that yLUNA actually differs in value compared to LunaX, if in the background Stader could actually liquid stake yLUNA, and could actually liquid stake LunaX, in theory, you’d have a really, really nice system where both sides are exposed to LUNA, you’re getting the price arbitrage between the two and create an arb bot between the two as far as rebalancer. But then on top of that you’re getting all of the LUNA yield on LunaX side, or the yLUNA yield on the yLUNA side. So you’re basically just making all of that yield plus all of the volatility arb. And it’s gonna really depend a lot on how much volatility we’re talking about. But if these things are wildly volatile, it can be really, really lucrative between just the price volatility movements, which can be pretty exciting. So we’ll have to see, I think, once we get to see what the performance looks like, we can see what kind of bots can be built. And Jimmy and I were talking a little bit, and LUNAomics was talking a little bit about how you can sort of play this game to make really cool shit. Jimmy knows how to make some nice simple bots that he can release to us and we can… You just have the coins in your wallet and it just kind of buys and sells shit in between. It could be pretty cool, but it may be a problem for people that want to report all this shit for taxes. That’s a wholly different problem. But from a perspective of pure yield, it can be pretty amazing. Regular guy, you want to hop on for a sec? Or mas, Luna24?

mas 1:24:48
Hey Cephii, so much education. Thank you. My question is what do you do with all the aUST that you get off Earn? Is there a strategy you have to use that? Or what do you do with yours?

Cephii 1:25:00
Well, if I just simply want to hold on to that… Well, no, you can use the aUST. For example, you can use it on Mirror Protocol to do some… You can borrow off of it and such. Other things that have emerged recently, is you can provide aUST on Loop Finance. So you could do like an aUST-LUNA pool, which sort of like what LUNAomics was doing with using it as sort of like a buying strategy, actually. But while it’s sitting there, you could earn aUST. aUST is going to have utility pretty soon in Kujira, so you can use that to place your bids using it. But for the most part, it’s just used as just an Anchor Earn system right now. In the future, there’s gonna be a lot of cool things that can be built using aUST. My vision is to have basically like rebalancers with a 50:50 aUST on one side, and LunaX on the other side. So you’re running a bot, but both sides are earning yield 24/7. So there’s some different tricks and tactics that can be done with that, ultimately.

mas 1:26:11
Are you doing anything with yours?

Cephii 1:26:14
I’m not right now. I just usually use it to buy the dips, I just park it in Earn and… Because I borrow, and then park it in Earn, and then if we get a decent dip somewhere, then I’ll take some out and then just buy some LUNA with it. That kind of thing.

mas 1:26:28
Right. That’s how I’ve been using it. But I see this pile of aUST sitting there. And I’m like, “I gotta degen. I gotta do something else with this. Why is it just sitting there?

Cephii 1:26:35
Right. Well, yeah, we’ve been talking about that for weeks as far as with protocols, with Nexus, with Kujira. Kujira actually executed and decided to follow our advice and use that aUST for that exact reason. Yeah, the problem is, is anytime you have something sitting in an order, like a limit order, or like you said, just sitting there doing nothing, it’d be nice to be able to use that aUST while it’s sitting in a limit order, for example. So imagine if you had aUST and you could park a limit order for LUNA at, let’s say, $70. You’d be happy with buying LUNA at $70, right, but the whole time it’s sitting there, it’s doing nothing. So that’s the primary problem of going to a traditional exchange, for example, Coinbase, or KuCoin, or whatever, while your money’s in a limit order, your money is doing nothing there, right. On the other hand, they’ll have sections of their protocol, sections of KuCoin where you can get, for example, UST yield, right, or USDT yield. But you can’t be in both an order at the same time and getting yield, that’s the magic shit we can do on chain that can’t be done on centralized exchanges. So that’s gonna be really nice, ultimately, is to basically be able to use your aUST in order. So while you’re waiting for something to fill, you’re making money the whole time.

Cephii 1:27:56
And that’s one of those things too. When you’re all LUNA rich and shit. And LUNA is $1 million or whatever. And you’re just like, “I want to find a way to get more LUNA, but I don’t really want to risk that much anymore. But if LUNA drops 20%, I’d be willing to buy some more,” right. And so you have your aUST sitting there and you’d have an order in a limit order for maybe some lottery play, right. Because you have all this aUST that’s doing nothing. And you want to like okay, maybe if LUNA drops 50% I’ll buy a whole bunch more, or something like that, then you could just park it there in aUST and then deploy it automatically in a series of limit orders, or a Martingale bot like I mentioned before, where a bot will automatically execute those when you want them, in the meantime it’s just earning aUST yield. So those are the different… There’s a whole lot of utilities that can be built with that. Any utility you can think of where UST is otherwise sitting idle would be a possible vector for using that.

mas 1:28:55
Thank you very much. Awesome community love it. Thank you.

Cephii 1:28:58
Yeah, no problem. Regular guy, are you there? Is your… I think he was kind of… I’m not sure if he’s AFK or something. [chuckle] Let me remove him because he didn’t pop on. $cott , you want to ask a question?

$cott 1:29:14
Hey, Cephii. How you doing?

Cephii 1:29:16
Good, man.

$cott 1:29:17
Good long talk. I like it. I spend more time with you than I do with my wife.

Cephii 1:29:23
Little college seminar going here. [chuckle]

$cott 1:29:25
I like it. The wife’s getting jealous, though. All right.

Cephii 1:29:29
Yeah, that’s how it goes.

$cott 1:29:31
Okay, so I’m not too clear if y and p are kind of like an LP. So if the y and p LUNA are going to be a pair to where you need to put an equal amount of p back in in order to convert it back to LUNA to either cash out some money or to acquire more LUNA. yLUNA is moving in opposite directions from pLUNA, and you get appreciation of y because you bought it at a low, and p is moving the other way it’s depreciated or it’s decreased. How do you actually make money then? Because don’t you need… Wouldn’t you offset whatever gains you made on y when you go to convert that back, because you would need the equal amount of p?

Cephii 1:30:12
That would assume that the market price doesn’t vary. But if there’s a lot of volatility between them, you could get some good deals in the sense, right. We’ll have to really watch that price action. And in particular, see what happens during times of market volatility and different trackers. So we just don’t know yet what are people gonna really want.

$cott 1:30:37
You speak with so much certanty. [chuckle]

Cephii 1:30:36
Yeah, it could be that, let’s say, for example, LUNA is at $1,000, and a bunch of people are like, “You know what, I’m out of here, I need to… I need cash flow.” And then they decided, okay, everyone’s gonna go nuts and go refract their LUNA, and then they sell their pLUNA, and then they buy a bunch of yLUNA. pLUNA may fall in value at that time, right. But then, as the price of LUNA falls, you might have people going, “Whoa, that pLUNA price is really ridiculously low, I’m going to get some of that,” or whatever. And so it’s going to lead to automatic arb opportunities, because at the time when everybody else wants yLUNA is probably when you shouldn’t get it. You should not get it. It’s the time when like you should do one of two things, you would either go straight cash, because everybody’s gonna be wanting yLUNA at that time, and then wait till it comes to a better value, and then use your cash, deploy it for yLUNA, or you go, alright, look, all these people went to yLUNA, you know what, it’s at an extreme discount, I’m just gonna buy pLUNA here. Why not? I’m going to get triple the exposure or something like that. So there’s different tactics. And then when you have Levana with the 2x Levana, and what have you, you’ll have some other theoretical opportunities for your… And then we don’t know… The other thing is with Mars Protocol, it’s not really clear what kind of LTV you can borrow off of with pLUNA also, by the way. So there’s going to be some interesting shit going down with Mars and everything to where… And then Kinetic Money. So yeah, there’s gonna be so many strategies in the next few months. We’re not gonna be able to figure them all out. There’s gonna be a lot of great ways to make money that it’s just kind of silly.

$cott 1:32:20
I assume. Yeah, that’s all good. I get it now. And definitely, it’s gonna be a wait and see. And to see how it plays out as well.

Cephii 1:32:30
Yeah, it’s all about the price action and where you can find an opportunity. But you might have weird situations to where pLUNA and yLUNA are both too high. In other words, let’s say, LUNA is $100. But yLUNA and pLUNA for some reason are both $55 for some reason, then the immediate situation would be is you would refract your LUNA, you would sell all of it at that moment, you sell both your yLUNA and your PLUNA and then you just go and buy LUNA again with that money, right. So then you would arb that. So at some level or the other, the price of these things is going to come under control, because arbitrage will make them come under control, right. So you’ll have weird times when you’ll want one or the other. And then later when the price of one or the other is less, or you have the opportunity to convert LUNA, you could refract LUNA and get the second half of the puzzle that you need. So for example, let’s say you’ve got a whole bunch of pLUNA for super cheap. But then you know you can convert your LUNA to yLUNA and pLUNA on a 1:1 basis, then you would have enough yLUNA to actually combine with the pLUNA that you got cheaper, convert that shit back to LUNA at the time that you want to, right.

Cephii 1:33:52
You may not want to have all of your money refracted, you might want to have some LUNA ready to play this game. And then you have also the 1% arbitrage on bLUNA still. So if you don’t find a good arbitrage value, you could do that arb potentially, make the 1%, then come back later and then sweep the floor with the… So yeah, there’s a lot of power in having regular LUNA at that point too, to get the other side of the coin if you found a good deal on one at some point, right. So this is all part of the dollar cost averaging strategy at that point. Whatever you can find for the cheapest, you get some of that periodically as a DCA and then you can play games with your going back and forth whenever you can see a way to make free money. Oh, and it’ll be pretty much non-stop because everyone’s doing this in different directions. So basically, some people bought yLUNA while it’s cheap, and you bought pLUNA while it’s cheap, and other people are refracting in one direction, other people are selling the other direction. There’ll be just volatility all over the place. It’s just this weird system that creates just strange trading volatility, right.

$cott 1:34:34
And you track… I’m assuming that you track pretty closely your returns over the long term. Other than for the gamification of it, do really feel that the returns outweigh holding an LP against maintaining your apex asset and then borrowing against it, and then using that to go just hold in an LP that’s doing 100%? Like a MINE-UST LP, or maybe pushing it to another chain?

Cephii 1:35:39
Or the LUNA-UST LP for that matter. Yeah, if the APY is high enough that it’s gonna like… I would say while we haven’t an.. Wait, your question was, when am I beating the market?

$cott 1:35:54
Am I breaking up a little?

Cephii 1:35:55
No, what were you saying about the…

$cott 1:36:00
Not just you, I mean, just the strategies. These 17 million strategies that I love, because I like the gamification of it, are you beating the market?

Cephii 1:36:10
So I’m funny in that I’d beat the market for every market 100% of the time my entire life. So I don’t lose ever for any reason whatsoever. So my strategies are always picture perfect. In the sense, they’re mathematically 100%. Unless a stock or a coin literally goes to zero. I always figure out how to win. So that’s a little bit different thing. Now, when it comes to yeah, LP versus other tactics, what I would say is this, because LUNA is in its extreme growth phase for the next few years, your most likely strategy is to have max LUNA exposure while stacking LUNA. That’s why most of the conversations end up being around that. Even compared to other sub Terra tokens, even compared to sticking your money in some DAO or something. The reality is, is that there’s very few tokenomics that can beat LUNA, which is why we’re sort of perservering on the LUNA game, right. That’s where we kind of go back to. So that’s kind of like our time is now kind of a thing. So that’s why we talk more about that. So why would you do other things.

Cephii 1:37:14
So every road leads back to LUNA, essentially?

Cephii 1:37:19
Yeah, yeah. Could you do things that are less either risky, or maybe gravitate towards earning the APY yield, as opposed to straight LUNA exposure? Yeah, you could do all sorts of different tactics, if you are sort of concerned. Because I am more hyper bullish on LUNA than I have been in for almost anything, literally, I kind of dig through all these charts and try to find what was better. Keep in mind, I’ve been posting little charts on Bitcoin and stuff for many years on StockTwits, and this and that, I’ve been watching all these different mathematical strategies, and kind of excluding all the ones that back test poorly. So I’m pretty analytical as far as quantitatively looking to find the methodologies that are essentially flawless as possible to optimize my buys to the best of my ability. But right now, my global intuition is that you should not… You want to stack the shit out of your LUNA, that’s all there is to it. I don’t know what else to say. You can try all sorts of other tactics that don’t involve that or suffer from, say, the impermanent loss of staying in a LUNA-UST pool and hope that the APYs cover that.

Cephii 1:38:40
But if I was going to be wanting a position that’s maybe 50:50, that I’d rather have it just traded for me, I might just do a rebalancer bot at that point instead. Because then I don’t have any impermanent loss suffering, and then it’s going to build up both my UST side, and it’s going to build up my LUNA side. But the LPs somewhat do that, too, as long as the APYs are super high. If those APYs start to fall, then they won’t be as good and you’ll just have suffered the impermanent loss for nothing. So yeah, there’s a lot of different ways to look at that. And so once they get the kind of bots that I need built, get built, then that’s going to help a lot with maybe increasing the yield compared to what we’re getting now. So that I can better use the borrowed UST and how to best optimize that is most of the topic of this discussion. If I can get a Martingale bot on chain where it’s exponentially buying for me and sort of does that in some automated fashion then awesome, I’ll probably use that. Then we don’t have to sit there and mess around with manually doing orders and all this other stuff. I think all those things will come in due time here. They’re not difficult to build, they’re very doable. I’ve talked to the guys, different teams about building them. They’re coming. Once we have all those things every thing we’ve talked about should be like, push a button, deposit your UST there, and call it a day. It should be nice and easy to… It should be nice and easy to accomplish these tasks at some point. So yeah, Crude2Crypto.

Crude2Crypto 1:40:17
Yes. Thank you for your time today. I’m looking at the lower level Anchor Borrow situations, I mean, you were talking earlier about collateralizing your bLUNA and then taking that money and put it in Anchor to make your 19%. But if your LTV is in the 30% or so wouldn’t you pretty much make out the same just keeping your bLUNA in wallet and earning UST rewards?

Cephii 1:40:51
Yeah, if you put your bLUNA in your wallet by withdrawing it from your provide position and you just drop it in your wallet, yeah, you’ll make the UST. Ir you could put it in Nexus Protocol, and they’ll do something similar. Right now because Nexus Protocol’s yield is like 8.5%-9%, and your bLUNA yield is also about 8.5%-9%, it almost doesn’t matter which one you use right now. In the future, far away from now if LUNA’s yield drops significantly, then the Nexus Protocol yield, because they’re optimizing your Earn section, is going to be better. But I think what happened was is that Nexus Protocol version one was actually built based on LUNA’s yield when yield on LUNA was 4% and 5%. And this was going to be a better way to optimize yield. What ended up happening was is when TFL decided to burn most of the community pool into UST to do the Ozone Protocol. And then our immediate next two years yield for LUNA skyrocketed, that changed the value proposition of Nexus version one vaults. So that’s partly why Nexus has evolved as not as interesting because the yield is not that different from your bonded LUNA yield if you just stick in your wallet, like you said. So these are just different ways to handle that.

Crude2Crypto 1:42:17
Thanks. So you could just keep your bonded LUNA there. And then when the dip happens, then collateralize it, take the UST and go from there.

Cephii 1:42:26
Exactly. Or… Yes, you could collateralize it or you can simply provide it if your LTV is low. So whatever you want to do with it at that point.

Crude2Crypto 1:42:36
Thank you for your time.

Cephii 1:42:37
Yeah, cool, man. Ben, what’s up?

Ben_Gainz1 1:42:40
Cephii, thank you for all of this. Just wanted to give you guys a heads up, there’s this person named Humble Trader that is imitating somebody from YouTube that is pretty big, offering courses and things so be careful. It’s very clever handle. Just be careful with that.

Cephii 1:42:58
Okay, yeah, these people show up all the time for some reason. Yeah, they’re trying to grab your seed phrases and shit. So yeah, there’s no fuckin tech support that once your seed phrase’s online, okay, guys. Obviously. So guard those with your life, and that’s all there is to it. But anybody else? Or I guess… Yeah Sanjeev is here, had a question maybe. Let’s see. Let me get you on for a second. Yeah, we covered quite a bit. Go ahead, Sanjeev.

sanjeev Rawat 1:43:33
So I was just listening in on Nexus. So contrary… The chart looks terrible, right. I mean, it was, I think, 30 cents or something. It dropped to four cents now, right. So, I mean, I think if the yield difference is what is killing it, do you think it’s a better time to buy for next two years, and maybe when LUNA yield drops, maybe this becomes lucrative? What are your thoughts?

Cephii 1:44:00
Oh, the token itself? I don’t know. I mostly stuck mine in Astroport, and I’m just like… I was farming the Astroport token with it. And then, I’ll just leave, I was just gonna… I locked it for a year or whatever, to just farm ASTRO with it. So I’m not too worried about it. Because it wasn’t that popular of an ASTRO LP farm, plus or minus the value of the actual Psi tokens, I’ll probably make it up in the ASTRO rewards that I’m going to get, s I’m not too too worried about it. Because that pool was undersubscribed. So you get more ASTRO in that pool than you do in some of the other ones. But that’s what I did with it. But as far as buying more Psi token, yeah I mean, the team is really competent, by the way. They know what they’re doing. I think they are working on some of the tokenomics issues with it. And if they get rid of the vault where it’s paying you in Psi token, and everyone’s selling it for nLUNA, then I think it would work out better for the Psi token holder the moment that new protocol change comes out. Because the problem is they’re distributing way too much Psi token right now. And once that goes down, I think it’d be less of a problem. So I would watch for, yeah, maybe you could get some of those at lower prices, and then maybe DCA it, get some and then hold it, and then earn the yield from it at least. And then, once they get their shit together, maybe the coin price will go up. So again, it’s your confidence in that team that is what you’re investing in at that pont.

sanjeev Rawat 1:45:36
Yeah, I’m not buying Psi. The way I’m doing it is I’m buying Anchor, because I think after LUNA, Anchor is the best protocol. I may be wrong, but that’s what I think. It’s one of the hottest one, right? And then because you have Anchor, you get Psi tokens anyways, right.

Cephii 1:45:52
Yeah, right. Right. True. Yeah.

sanjeev Rawat 1:45:55
And what about Anchor? I mean, because the chart for Anchor… Because I think bATOM is coming, bSOL is coming. It doesn’t react at all, right, I mean.

Cephii 1:46:04
No, actually, the price of Anchor could dip more, because if more people are borrowing Anchor, right, the more rewards are going to be coming off, right. So there may be more sell pressure, in theory. I’m just holding my Anchor rewards that I’m making from borrowing because I’m using them to… Because while Anchor price is low, I’m just holding my ANC tokens.

sanjeev Rawat 1:46:29
And then you will trade it off and probably do something else, probably.

Cephii 1:46:33
Yeah, well, I mean, usually what happens with Anchor tokens is when the market’s down ANC token sort of drops, and everyone swaps their ANC token for LUNA. And then when LUNA goes up, ANC sort of goes up because people start hoarding it again. And then what ends up happening is, it has a very cyclical behavior. So I’m using it to lower my cost of borrowing, and I just sell my Anchor at the top theoretically, and then just pay off some of my loan with the Anchor rewards after they’ve gone up in value. So it’s just basically a leveraged position on… You’re using your leverage, essentially to buy ANC at that point.

sanjeev Rawat 1:47:09
Makes sense. And then how are you reading this 20% yield? Because I think the yield reserves have dipped, right. They were around $70 million, $73 I think,

Cephii 1:47:19
Yeah, yield reserve is going to go up when bonded SOL and bonded ATOM come on, because ATOM has a 14% yield, so that thing’s gonna churn out yield pretty quick. So depends on how many Cosmos users show up, of course, and it’s going to depend on how many people show up from Solana to borrow as well. So that should make a big difference. All the FUD and worry about the yield reserve, TFL will figure that shit out one way or the other, they have like a gajillion billion… I gotta remember how much their LUNA is worth, but 30 some odd billion or something, they will figure something out, I promise. On the road to decentralization Anchor is like a startup. It’s a big experiment, Anchor. And if they have to raise some funds or do something to support the yield reserve for a while while they sort out all this shit, they’ll figure it out. But yeah, these higher yield assets like Polkadot and such and ATOM, these more hyperinflationary ones will build the yield reserve quicker because then Anchor can sell that yield, and that yield is actually paid in kind, like in ATOM and Polkadot, not in UST. So we could basically fuel the Anchor system using other tokens’ inflationary concepts. So we basically would leech off of ATOM and we’d leech off of Polkadot by borrowing over here. So it could be… Those hyperinflationary coins will basically really help with fixing… It’ll help Anchor a lot compared to the 8.5%, 9% yield of LUNA, or what is SOL’s… Anyone know what Solana’s yield is right now? I’m not totally sure. But maybe, if someone knows, you can hop up.

sanjeev Rawat 1:49:14
I mean, I think I know for ATOM it’s around 14.92% or something, right?

Cephii 1:49:18
Yeah, right now for ATOM it’s amazing, because I own a lot of ATOM. So I’m just soaking in that yield, which is pretty nice. The junior can go to college. [chuckle]

sanjeev Rawat 1:49:28
One last thing, do you have any idea on LFG? I mean, which is what Kwon is pumping.

Cephii 1:49:34
I’m not sure what all that means. But I don’t… I think it has something to do with… I don’t know it’s all related to Bitcoin, is it… And there was that massive Bitcoin withdrawal from today from Binance? Is that us? What is that? Because Jo mentioned Bitcoin, and she’s like, “Oh, $1 billion Bitcoin is going to be really important,” and Do counter-tweeted her saying like, “Think bigger,” or something. I’m like, “Uh…” I don’t know what he’s talking about, but we’ll see what comes of it. [chuckle] So, Oz are you there?

OzCosmos 1:50:12
Yes, I am here. I’m calling from Australia. How’s it going?

Cephii 1:50:15
Good, man. Shoot, we can hear you fine.

OzCosmos 1:50:17
Yeah. Firstly, just from a teacher perspective, thank you so much for what you’re doing in this space. You and a couple of the other guys too, LUNAomics, you guys are just really providing really good leadership and education for newcomers to the space like myself so… But as a teacher, I’m blown away by what you’re doing. So thank you so much. There’s so many cool people in this space. And I’m just blown away. I’m learning so much every day. And so I just got a technical question today. For somebody like myself, who’s new to the technology, when I’m connecting Anchor with my Terra Station, on my phone, or whatever, do I need to… Once they’re connected, and I set up my investment and I set up my strategy, can I then switch my phone off or switch the computer off and these two… The protocol from Anchor, it still stays connected with my wallet? This is just a question on my mind that I’ve been worried about.

Cephii 1:51:20
Yeah, it’s gonna use a cookie or whatever. And it’s gonna keep the connection between the two while your computer, or whatever, is off. But it’s not like it’s staying “connected”. It’s just the webhook is basically connected. And when you… That protocol’s not gonna be able to run a transaction against your wallet without your approval, you have to get them approved, and you have to run an approval. So it’s not connected connected, you’re just basically… Your web browser was given permission to connect to your wallet. That’s it. But any transaction on the blockchain has to be approved by you through one of those approval transactions, yes.

OzCosmos 1:52:04
Okay. And that rule or that concept with the blockchain still applies if somebody is using Anchor Protocol through their phone with their wallet, yeah?

Cephii 1:52:14
Yeah. Whether you use Wallet Connect on your phone, or whether you use the web extension, it’s the same principle.

OzCosmos 1:52:20
And do you know, many folks out there that are in the LUNA game, are they using Anchor on their phone? Or am I like… Is that rare? Or is this…

Cephii 1:52:28
Well, back before March or April, they did… There wasn’t a phone version at the time, which was a real pain in the ass if you had to manage your LTV. Finally getting the phone app and Wallet Connect for Terra was a true game changer in terms of people being able to get out of the house, away from their computer, and still be able to look after the shit. Of course, that made it a 24/7 problem for people. [chuckle] So you’re always playing on your phone now. So now here we are on Twitter just fucking around the whole day. So yeah, but basically, yeah. Everyone’s yeah… I think you can use your phone thing pretty confidently. Yeah. But now remember, you can only use your hot wallet that way. If you are using your Ledger at home, it’s a slightly different process than… Because you can’t lose your Ledger on your phone, obviously.

OzCosmos 1:53:19
Cool. Yeah. Thank you. Look, yeah, I won’t hold up too much of your time. Other people want to speak but wow, man, you’re doing such amazing leadership here. And I’m blown away by this whole community. This is the right kind of just amazing people everywhere in this community. So thank you so much, man. Have a good day.

Cephii 1:53:37
Yeah, no problem. Yeah, early BTC and whatnot, it actually took quite a long time for people to figure out what the hell’s going on. And part of why you see the price action network growth of Terra as quickly as it is, is because not only is the UX and UI much better nowadays, on and off-ramps are much better. But on top of that, you actually have killer apps on Terra, which is really, really critical, where you don’t really have to go to other chains. Things like Anchor Protocol create true utility out of crypto that you can’t find elsewhere. Especially if you look at the cost of borrowing on other places like centralized exchanges or whatnot. You’re getting a killer deal right now on Anchor. And it’s like a borrowing opportunity of a lifetime comparatively to what you have to pay normally for borrow fees. And so that has been part of Anchor… The Anchor feedback loop is a big part of why people are using Terra. And so using that effectively can be a very good thing.

OzCosmos 1:54:47
I’m just looking at this from… I mean, I’m a primary school teacher here in Australia. So I look at everything, I look at every activity and every development through the eyes of a learner and a teacher, and I can’t say enough positive feedback to the LUNA Terra leadership. You’re providing so many educational tools to help new customers engage with the product and from an investment perspective, from an engagement point of view it’s just amazing. So keep up the good work, man.

Cephii 1:55:20
Yeah, in my line of work, I do a mixture of, I guess, teaching total amateurs, all the way up to tip-of-the-spear type professionals. So I do have to speak to a lot of audiences generally, it’s kind of what I do. Someone’s got to run the world. [chuckle] So yeah, both in like medical and other areas, companies call me to fix their shit and stuff. I do a lot of different things. And I kind of go to all sorts of different agencies and speak to media and all sorts of folks. So it’s a fairly… The way I engage people and such is not through lack of practice, so to speak. [chuckle]

OzCosmos 1:56:14
I can tell, and from one teacher to another, power to you, man. Keep going. Keep going. Thank you so much.

Cephii 1:56:21
Oh, thank you. It might be much harder to teach a little children than it is to do what I do. I have a general saying too, in my my line of work, it’s like, I can take someone that’s, usually pretty darn good and make them really good. I’m not your special needs teacher. I wouldn’t last that long in that kind of situation.

OzCosmos 1:56:48
It’s a patience game.

Cephii 1:56:50
Yeah, I’m not that patient. But usually I do well with people that can keep up for the most part. I can dumb it down to an extent, but at some level, it’s like… I prefer to stay at a level where I’m chatting with people with reasonable technical expertise on these things, as opposed to a total newbie.

OzCosmos 1:57:13
Well, I’m sitting here with… For example, with myself, I’m sitting here with questions in my mind that are really basic about connecting Anchor and Terra Station, but actually, the level of conversation about technical aspects of the protocol that you guys are talking about, I’m getting so much from that as well. Amazing. So it’s just… The depth of knowledge is wonderful. So thank you all so much.

Cephii 1:57:39
Yeah, no problem. Yeah, that was the big thing. Back in the day, it was like, you had a bunch of people come on to deal with Bitcoin and this and that, and really knowing what it was. And so that’s how I know where the supercycle situation, similar to how I dealt with Apple and a bunch of other different technologies, and through healthcare and other things, there are a lot of hallmark features to a supercycle and it’s not just price and whatnot. It has to do with developer activity and the type of users that are coming on and the accessibility to normies, so to speak, of all of these different things. And things are gonna get easier and easier as time goes on. But the thing is, once things are really easy, really, really easy, 10 years from now, most of the yields and the growth will be leached out of that. And you’ll be looking for something else for growth mechanism. So we are in that extreme growth phase. Some of the most potent part of the S curves have a lot of the layer one blockchains and stuff, like I said, and it’s a great time to be alive if you’re in in crypto right now. So yeah, hopefully everyone’s having not only a tremendous amount of fun, but generating wealth and figure out how to keep it. So on the newbie side, I think the things I think, probably the quantitative trading aspects I think, even a lot of people who reasonably have been in crypto for a long time and have either lost a lot of money or whatever, those are the things that I try to bring to the table for people that sort of understand the nuances of crypto already, but maybe don’t have a clean philosophy in their mind of what their buying strategy is or what they’re… Well really just how to have a very high success rate in terms of preserving capital and that kind of thing. So that’s kind of like why I bring those kinds of topics up periodically along the way.

OzCosmos 1:59:39
Yeah, yeah. They’re very, very relevant, very universal topics. So thank you.

Cephii 1:59:43
Yeah, let me get BNardo on for just a second here. And then Phil.

BNardo 1:59:47
Hey, thanks a lot Cephii. Ditto to all the kudos that have been thrown your way.

Cephii 1:59:53
Yeah, it’s cool. Thanks, guys.

BNardo 1:59:55
And it’s funny, and I agree. My wife’s a kindergarten teacher, so yeah it’s a whole different ball of wax with patience with the little ones. But I have some questions. Specifically, I wanted to follow back up with what Sanjeev was talking about with Anchor, and just kind of curious, do you LP with your Anchor? Or do you strictly just hold on to it and sort of watch the charts and kind of wait for it to go back up? Because I hadn’t really thought about, as more borrowers come in, the price is going to drop. I mean, to your point, I do think it’s cyclical. I’ve been kind of trying to look at the charts.

Cephii 2:00:34
It’s super cyclical. It’s just up and down, right. It’s like a sine wave, almost.

BNardo 2:00:38
Well, it’s down now though, of course, when I jumped in thinking I was hitting the bottom, it has continued just plunged. And I was in Spectrum, so at least that was autocompounding. But Spectrum moved out and everything went to Astroport. So I’m basically still LP-ing, but I’m just holding it, right.

Cephii 2:00:58
Yeah, what happens is, when the volatility is down, and the borrowing sort of settles, there is an autobuyback. Anchor is like buying Anchor tokens too. So you’ll start seeing the price climb after some point once the sellers get exhausted. So you’re noticing, now it’s starting to trickle up again. So the last week or so I’ve been just holding on my ANC tokens. Just throwing them in governance or whatever so that they’re earning something while they’re sitting. And then when they go somewhere north of $3.50, or $4 or something, I’ll just sell them again maybe. Once there’s a better value accrual mechanism for Anchor you might have wished you held on to them, possibly. But remember, right now, I’m getting them from my borrowing rewards, right. So holding them is a conscious decision that you’re making, because you’re paying for those ANC tokens, because there… Otherwise your interest rate on your borrow is 15% or 16% right now, right.

BNardo 2:01:58
Actually what I did… Didn’t mean to cut you off, but what I did, I actually borrowed from my bLUNA, and basically bought half ANC, and then use the other half UST, and just put it into a liquidity pool. So I’m also taking my Anchor rewards from the borrow position, and then the rewards from the LP, I just put that into governance as well. But I’m just curious…

Cephii 2:02:24
Yeah, it’s got a high yield on it, and Anchor does tend to come back up, so you’re probably not going to suffer a lot of impermanent loss, or just value loss. The ANC-UST LP has been fine for the most part, because it just goes up and down, up and down. And it’s earning a high yield, and autocompounds pretty nicely and that kind of thing. So yeah, you can do that. It’s perfectly fine. But you could also just simply just get ANC from the borrow rewards and then just pair that with UST instead of buying ANC outright. So just different ways to look at it.

BNardo 2:02:57
Cool, cool. Yeah, I appreciate it. So you yourself, though, do you typically put it into the pool or you just hold it? You just take it from the rewards from borrowing and just put it into governance?

Cephii 2:03:09
I have basically just been parking it in governance right now, because the yield… So when Anchor price is low, and everyone’s selling in the panic, people tend to take it out of governance and sell it, right. So that’s the exact time when ANC’s price is low, I hold it and the yield is crazy high. Right now it’s 14%, 15%, which is crazy. So then I just run it there because 15% is the same as the cost to own it in the first place, right? Because that’s the cost of borrow. So it’s actually meeting my loan borrow rate by holding it and then some, because when it goes up, I can sell it and then pay off even more of my loan. So it actually works out pretty good to just trade it like that.

BNardo 2:03:58
Gotcha. All right, cool, man. Thanks a lot.

Cephii 2:04:00
Yeah, no problem. But like you said, if later when ANC awards dry up years from now or whatever, you might wish you held your Anchor token. That’s quite possible, so I don’t know. Or you hold some to participate in governance long term or whatever. So people can do different things with it. But tokenomics wise, if they do make some changes and fix it, you’ll probably have a big spike in the price and you’ll wish you owned it at that time. Buying it after they make a tokenomics fix you’re going to end up buying Anchor more expensive. So that is something to keep in mind. So part of the reason why I keep some of my ANC just rolling in is just in case the gang actually makes a fix soon. And then the ANC price moons for no reason other than everyone just suddenly apes into it. And then I could sell it then if I want to. So at these prices, it looks pretty attractive I think.

BNardo 2:04:54
Good stuff, man. Alright, thanks a lot. I appreciate it.

Cephii 2:04:57
No problem. Phil, you’re there still?

Phildo UST. Baggins 2:04:58
Yeah, yeah. Not to backtrack or get back to the esoteric stuff or whatever, but on the education content and Bernardo said his wife is a kindergarten teacher, he’ll probably understand this. I’m sure you do, Cephii. I think reverse learning, if anyone has heard that term, reverse learning is a really popular learning style now, and it works very well. That’s what’s gonna feel like the next adoption cycle, is like a massive reverse learning cycle. Because everyone… Oh, my toast is done. Everyone is seeing Bitcoin occur, and they’re about to like reverse learn it all at once. I can see it happening with my really intelligent family members, they’re going to catch up extremely quickly because they’ve been seeing it play out. And they’re now going to learn it, because they’ve already got the material.

Cephii 2:05:44
By reverse learning, you’re saying people are hearing really high level conversations like, “Whoa, people are making all sorts of money doing all sorts of shit,” then they go and learn it backwards, because they now realize like… [chuckle]

Phildo UST. Baggins 2:05:54
Well I guess there’s flipping the classroom, the term… Have you heard the term “flipping the classroom” in college?

Cephii 2:06:01
No, what’s that?

Phildo UST. Baggins 2:06:02
Okay, so it’s like a learning style for ADD people nowadays that’s… It really does work better. It’s basically a reverse style of traditional methods, which is like, you teach the material, they go home, they study it, they come back, they take a test. And now it’s more like, they are basically flipping it. You take the test immediately, and then you go home and you study what you did and what you got wrong. And you learn the material that way. So it’s kind of like a paradigm shift in the way people learn, but it allows a really rapid catching up, essentially, instead of a long slogging through all the material.

Cephii 2:06:39
Pretty inquisitive people. And certainly, money makes you pretty inquisitive pretty quickly. [chuckle] Then it tends to be this kind of dialogue works really well, where people come up with different theories are doing, and then you go in like, “Hey, wait, that sounds interesting. Let’s go see if that works.” And you just experiment your way to it.

Phildo UST. Baggins 2:07:00
So I’m seeing my PhD brother do this. And he’s like, within days, you guys will love this. He’s like starting to obsess over LUNA and I can see it. He’s sending me these little, “Well, what about like, this? Is this how staking is done?” And I’m like, “Oh, your fucked, dude.” [chuckle]

Cephii 2:07:13
My son was listening to… OB on one of the Voyager Spaces was like, hey, you know what, the debit card for Voyager is gonna pay 3% interest rate. And… I’m sorry, 3% cashback. And KuCoin has a 1% fee to use your debit card, right? So he was like, “Yeah, why don’t we go and use our Voyage or debit card, and then just loop that shit and go get ourselves some USDC on KuCoin, arb the 2%. This stuff is my son talking.

Phildo UST. Baggins 2:07:52
It’s gonna be great. They’re gonna come in and rock our worlds, we’re gonna be like, “Holy shit, you guys are geniuses, I forgot.”

Cephii 2:07:58
After thinking about that, I’m like, “Oh, that’s why Coinbase has only like a $2,500 at a time transaction or something like that on their debit card.” Because people are… They’re gonna take that 4% cashback yield, and they’re gonna go buy something on some… Like KuCoin, you’re gonna pay the 1% fee, you’re gonna go get yourself USDC on it, you’re going to send that shit back to Coinbase, Coinbase doesn’t charge you much for USDC transactions, and then you take that USDC and it loads up your Coinbase card again immediately, right. So you could just go do the same thing again and do it over and over again.

Phildo UST. Baggins 2:08:37
And the cycle continues and we learn from the new participants.

Cephii 2:08:41
Yeah, he’s like, “Yeah, you know what, I’m going to be in my dorm and I’m gonna pay my rent with this shit.” And I’m like, “Really? You’re gonna sit there and loop your Coinbase to KuCoin, and keep arb-ing 2% for your freaking…”

Phildo UST. Baggins 2:08:53
Don’t count him out yet, man. Don’t count him out yet.

Cephii 2:08:56
Exactly. You start getting creative pretty quickly on those things when it comes to money, it’s funny. [chuckle] So yeah, that would actually work for small amounts of money I suppose, as long as the different trading fees or whatever don’t add up. But we’ll have to see how that works. But anyway, actually, I was gonna let you guys… I’m gonna go catch them dinner. I haven’t… We spent the whole afternoon hanging out here. [chuckle] So as usual, it’s been fun and hopefully… Well, what is it LUNA is price right now? We’re at $81 bucks. I don’t know. So here’s a classic scenario, is it going to drop again or not?

Phildo UST. Baggins 2:09:39
You can’t leave, you’re gonna dump it dude.

Cephii 2:09:42
So what I did on Coinbase was when the price was down as low as $63, I went and actually bought wrapped LUNA on there. And I just got a bunch right there. And then I just put a… What did I do? I put a limit order to actually sell it at around… What was it? Maybe like $70 something. Anyway, and then it dropped again, I bought it back. And then I put a limit order to have it sell at $81. And then I put an order already to buy it back. So basically, because wrapped LUNA and LUNA are named differently, I figured I can just get away with having a small trading portfolio. And then once I’m done back and forth arb-ing this volatility, then what I’ll do is… And I’m already ahead so I’ve already arbed it, any more gains I get is fine. But then I’ll just send it to Terra, I’ll find a time to arb that extra 1% bonded, and then I can borrow more UST off it, and playing games. So that so I was kind of doing a little bit of trading on it only because why not? It was sort of like… So you might as well take advantage a little bit of the volatility, even if it’s not your whole position, it’s perfectly fine. [chuckle] So just kind of stacking a little bit of it to optimize a little, so we’ll see how it goes.

Cephii 2:11:17
Anyway. But yeah, I’m not sure what the price will do or anything. But typically, the intraday candles for LUNA easily move 5%, 6%. So you could just gamble a little bit after any big move and you look at the size of the candles, you’ll usually have some little pullbacks and I don’t get too greedy on the buyback, I’ll just buy it back at $77, for example. So even that $4 difference makes a pretty sizable difference if you do it a few times. And then I’ll send it to my wallet and I’ll stop trading and at that point and just arb it. That’s kind of how I play with it. [chuckle] Or I’ll just stake it for yield forever on Stader or something. So every single dip I just do this, I’ll just go up and down, play the volatility. ‘Cause remember, when it’s volatile is when you’re able to make some kind of traded arbs on the… Not the arbs, but the… The volatility arbitrage is available when you have that high volatility time. And that’s usually after a big dump and you can kind of get a lot of movement and then countertrade it to optimize that a little bit better.

Cephii 2:12:20
So that’s what I’m saying. You don’t have to be perfect at the bottom to buy it. You can kind of play this game a little bit. Even if I have money that I can’t spend on LUNA right now, like I just emptied the bank account, at the bottoms I’ll do that sometimes just to kind of ride it up and sell some and then buy it back and do that a few times. If I need to send some back to my bank account, I will. [chuckle] So anyway, guys, it’s been fun. We’ll catch up later.

Finn 2:12:48
Thanks for checking out another episode of The Ether. That was part two of a two part Cephii Space, Anchor Borrow Strategies for LUNA Acquisition. This episode of The Ether was brought to you by Orbital Command, a community validator on Terra dedicated to educating, expanding, and promoting the LUNAtic community. Take advantage of their Terra Luna Intel Report on Telegram which brings you the hottest news and updates on all things Terra everyday. Use the link in the show notes to find it. For more information on Orbital Command visit orbitalcommand.io. TerraSpaces appreciates their support. For terraspaces.org, I’m Finn. Thanks for listening.