How Unsustainable is CUB Yield?

in LeoFinance3 months ago

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APR on CUB has been bleeding every day since the day it was launched: and for good reason. Every coin that gets minted reenters one of the three farming pools and increases competition in these pools, pushing the APR down with unavoidable persistence.

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At over 1000% a year, this yield is still insanely good and unsustainable. I'm making $1000 of magical internet money every day as long as the price holds (big if) and liquidity remains intact. But truly, how unsustainable is it? What can we expect long term?

Well, CUB mints about 1M coins every 5 weeks, but these first two weeks were ramped up and count as 5. On Monday, inflation and yield will be cut 50% from 2 coins per three second block to 1 coin. We're about to see how many weak hands are left to be flushed after this extreme hype is over and the APR's crash further back to Earth.

If we were at the base inflation level, current APR in the main pool would be around 500%. By the time Monday actually rolls around I'm expecting more like 400%-450% from increased competition.

After that we might expect APR to get reduced by 50% every time the supply of CUB gets doubled. That'll take 5 weeks after Monday, reducing the APR on the main pool to around 200% I'm guessing.

5 Weeks at 200% APR stilly sounds pretty damn good if you ask me. That is especially true if the price of CUB catches a bid to the upward direction, as this will increase APR in the farming pools by a proportional amount (100% proportions in non-cub pools, 50% in the CUB LP pools due to underlying collateral being worth 50% more than the new yield increase).

Once we get to that 200% APR level in 5 weeks, it would take 10 weeks after that for total coins to double again: a reduction to 100% APR... theoretically if token price is stable. That's 15 weeks of farming with yields that are absolutely unheard of in the legacy economy. Impossible even. Welcome to crypto.

15 weeks is a good chunk of time, and if Khal launches new functionality by then (he will) and if the token price is higher than $3.50 (it will) then APR will still be higher than 100% in the main LP pool even four months down the line.

APY

Assuming an average APR of 200% over the next 15 weeks, that's still 77% gainz if we compound the farm until then. Again, if $3.50 can be assumed to be a stable price (or undervalued), that's a legendary return for a four month period, and Q2 is likely going to be very good for the alt-market.


Considering many users are publically declaring they will support the $3 level, I'd say it's a safe bet we aren't going much lower than that.

What about LP farm?

It's also easy to overlook the farm we are getting from Pancakeswap LP tokens themselves. That's because the yield on basic LP farming is so tiny compared to the CUB bounty smart-contracts. However, it is there!

0.17% of all money sloshed around the pool gets trapped in the pool and distributed to all LP token holders. CUB got a listing on https://coinmarketcap.com/currencies/cub-finance/ today, and already we see high volumes of up to $500k a day... which is 25% of the total pool itself... being traded every day. Legendary volume.

Doing the math for myself is interesting. I own like 1% of the LP tokens in the pool... 1% of 0.17% of $500k comes out to $8.5 dollars a day. It's not much, but it is something, and this is a yield that many users aren't even going to know exists. It's just there in the background giving free gains to everyone farming the big pools. Imagine $250 being deposited into your bank account every month and you had no idea where it was coming from. It's kinda like that.

Future

Will we have 1000% APR a couple months from now? No... but that hardly matters. Especially in crypto where it's the base token price that matters the most. This community learned that the hard way in 2018. And 2019... and 2020. ROI doesn't mean much when the underlying token price bleeds out.

Regardless of the FUD, it's pretty clear that CUB will continue to have good returns for months even if zero functionality is added to the protocol. As we all know Khal moves pretty fast on these things, and I see no signs of slowing down: only more airdrops and rapid agile development.

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"Will we have 1000% APR a couple months from now?"

Just going off what you've been saying, no, and you won't have it next week (or even tomorrow), either. Perhaps saying 1000% per year is a bit misleading, since we know that even next week it's going to be far less, let alone after another 52 weeks. Maybe "about 3% daily" conveys the same info without the ridiculous notion that rates will hold relatively tight for the next 365 days.

What's the FUD being spread? Just curious. Haven't heard any. Only heard rocketship pumps so far :)

As we reach out to other farming communities on the BSC ecosystem we get grilled pretty hard. What makes CUB different than all the other bullshit? How is this going to be sustainable? Blah blah blah blah blah blah blah.

It's just a matter of adding some utility and building trust in the roadmap.

Unlucky timing, they launched their “own” farming platform yesterday. For sure they were not willing to dilute their community investment power.

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Please keep in mind that APR is displayed. APY is still and will stay in the thousands for a while.

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The posted APR for each den and farm changes on the Cub Finance in real time. I do not believe that anyone is being misled, far from it.

A person that has not done research into yield farming which is much like currency speculation (FOREX) should maybe not jump into the fray. Just a thought.

I am a pessimist and extremely critical by nature, but I see nothing but an upside with Leo Finance and their projects. Sure there will be bumps along the way.

I have done well as have others with this community. Unlike some other projects, it is never an if with @leofinance, it is a matter of WENTM.

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and i have no idea what are you talking about, so i will farm, compound till the end of the year and then see what is going on :D

SORRY, FRIEND!

What I meant to say was: NUMBER GO UP!!!!!11

PHAT LOOTZ!
FREE MONEY!

Easy peezy lemon squeezy.

number go up and free money i do understand.

LOL

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Exactly the same ... it’s too advanced for my old brain cells. It took me a week to get my airdrop into DENS. Now I'm just going to watch ...

the thing is i should kinda understand it, but there are too much numbers and they are changing :D

what i learned in last few years is that i could trust Khal to try to do best he can so i am happy with that :)

I recognize these yields as utterly unsustainable; I'm just hoping for a a gradual deflation of this balloon, as opposed to a sudden pop.

I have a lot of faith because Khal and LeoFinance has an actual proven track record and we're not talking about a project centered purely on a fancy White Paper and otherwise nothing but vaporware... which seems to be what a lot of crypto projects are about.

Investors are weird, though... just look at the price of Tesla stock; a company that had made more money investing in Bitcoin than in 13 years of making cars...

=^..^=

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Sorry to ask, but what is the proven track record of Khal and Leo? I've heard about it a lot, but I don't actually know what it is.I use the LeoFinance front end to post some of my content, so I'm aware of that site. I assume it's more than that, though.
I have a little money in their token but I'm not sure about adding more of it. It would help if I knew about their proven track record. Thanks.

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There was a hack of the wLEO/ETH pool many months ago. Investors were made whole 100% by Khal and the team. Everything was fixed in an open and transparent way.

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He got hacked, but nobody lost anything? Good to hear. Fixing things is good... though I imagine if he hadn't fixed things we wouldn't be having this conversation.

I agree. So far we have seen nothing but integrity from Khal.

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 3 months ago 

Feels like I'm invested in Blocktrades, Yabapmatt and Khal as individuals; rather than their projects. Brilliant guys with clear visions and a history of delivering.

Even keeping a level of 3$ seems very promising. Other Defis have much lower yields, so i am wondering what´s the magic behind? Is it that Cub doesn´t pocket the money like the others do, but instead goes for a long term approach?

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LEO community propping the price up hard.
4% deposits allocated to buy and burn certainly doesn't hurt.
This market is propped up on trust that speedy development will continue.

Well let´s hope then. So far the track record is flawless!

As the APR goes down, the value of the token is bound to realize some more of its potential. If we maintain confidence in the future of our platforms, we can see that the APR may go down, but the price of CUB is bound to go up with its utility.

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That's the idea.

I see the initial price as a psychological support level under which will may give birth to FUD for the investors who know nothing about Lions or devs.

I expect to see the departure of weakhands on Monday, I hope that we can stay above $3 to prevent any possible FUD among the investors

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I'm actually hoping for $2 CUB, but that's just me.
Doesn't matter what price CUB is I'm buying on Tuesday/Wednesday.
It's all about the timing: Panic dumping + supply crunch = golden opportunity.

Are you going to stake on Den? For now, I'm planning to provide liquidity on BUSD pair but Den is also the second choice

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I like to put my farm into the Den in case the price moves higher.
If the price moves higher I sell half and move back into the LP for stability & higher yield.

History repeats itself, does it not? Weak hands make others rich, always do. I am with you. With my small amount of discretionary income available for investment I will always look for opportunities for long term gains.

I am a boomer, so really do not have the immediate gratification mindset that is so prevalent in the cryptocurrency culture.

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thanks for the math. Unfortunately I can only follow people smarter then me. Math was my worst subject. How @trumpman does this makes me think he's a savant of some sort

Sick @trumpman burn.

$100 to anyone that can get under his diamond skin.

Like this guy?

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@trumpman savant 🍆🍆🍆

If Cub token “dumps” I’m definitely going to buy more. @ $2 or lower would be a good entry point for me..

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Definitely feels like a 'let it spin in the background' and check back in on it in a few months...

Yeah the days of freaking out about the crazy high yields is coming to an end.
Time to just log in once a day... compound the farm... and leave it alone.

In fact, when the yields go down in a few weeks CUB might actually attract more investors because people will be less skeptical of the lower yields. :D

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That plus a huge supply crunch from reduced supply.

Reduced flow should help somewhat. Also, hopefully the token burns will accelerate from increased use from something like the bridge.

I think involving the community was a good idea. There are a lot of people willing to give constructive criticism.

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Definitely shows the importance of being an early adopter in cryptoland.

Yield farming is like going to the casino in my view!

Funny that you say that though... because the LPs (farmers) are the house of the casino and it's the traders who are the clients (suckers).

Well, in this case the farmers still holds the shit tokens, and if they go down in value they have losses, or am I missing something here?

gamble gamble

So far I have been compounding my earnings by investing it back. At the end of the day if the worth of my holdings is more than my initial investment, I would be very happy. Right now I guess it not the case yet.

For that to happen, the price of CUB has to stay at around 4$ at least for two days. Hope the capital stays as it is and let the growth happen slow and steady.

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it will balance out sooner or later.

There is a fixed number cub printed. If 10x TVL = 1/10 APR from now ( not 100% true but close).

I see early apr as early adopter bonus :)

Considering that if Wall Street could find a trustworthy vehicle to get a liquid, sustainable, fixed yield of 6% that vehicle would capture billions of dollars, I'm not too worried about this yield falling to "only" 100%. lol The idea is to build the stake while the building is good. Rome wasn't built in a day. Just keep accumulating and staking and let Khal do his thing. As the platform fleshes out, influencers will find it and the community will grow.

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You answered the exact question I was hoping to receive an answer to! How long namely these yields will last, especially since I am in with a small stake in 2 weeks time I got budget I can add, so instead of drawing that out and investing in some other stuff I'll stick it into the cub farming for the next few months most of it. See how much I can grow from a small start.

Thanks for the great post $WINE and !BEER

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Thanks so much for this one, I was wondering how to look at yield reduction I do appreciate this break down, I can't imagine how much this is going to set us ahead of other holders its kind of like a low key pre-mine but not as backhanded. We're the angel investors and we should be rewarded for our faith in the project.

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Market balances itself at some point, and I think that when many people realize that CUB farms are having a great APR, more capital will get in and therefore diminishing the APR as there will be a lot more people farming

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in addition to the analysis of the farms, could you do one on the dens as well?

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In a few words #defi is a complicated matter.
Thus far it is the way if you are deep in crypto
you need to encompass and ride along.
APR,APY are just a way for the math to stay complicated.
Glad to beat my grey matter to see light in a few weeks.

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magical internet money

Yeah.

1000% годовых через пару месяцев? посмотреть будем!

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where does this money come from? who is losing this?

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Bagus