The re-launch of wrapped LEO (wLEO) at Uniswap a few days ago, started a run on providing liquidity. In no time the counters shot up to 350k US$ pool value and about 1M LEO. Though I was planning to provide liquidity, for which I had 1k LEO set aside, last Wednesday, in the spur of the moment, I powered up all these tokens. No liquidity left anymore.
Still very interested in the dynamics of the relaunch, I had a few tabs open in my browser since a few hours after relaunch: LEO/ETH pair at Uniswap (through Astrotools), LEO DEX and wLEO at Etherscan.
Last Saturday morning my time (GMT+1) I was surprised by wLEO's progress after bottoming at about 18ct (kinda same value as at LEO DEX). Quick cross check with LEO DEX showed me a difference in LEO value of around 20%.
Those who know a little about trading, know when exchanges show a difference in asset prices, money can be made by circling: Selling at one exchange and buying back at another exchange. Though I usually don't like circling (gets me way too dizzy), I felt a challenge here. Mostly because the circling of funds between Uniswap and LEO DEX is not that straight forward. But also because I liked the game itself. Reasons enough to try and see if I could 'upcycle' my LEO stack. Fortunately I purchased some new LEO the day before (funds for pooling).
image: own creation with the support of LEO material
As mentioned, circling with LEO is not that straight forward and had to learn a few things along the way. The steps involved, are kinda like this:
- Connect LEO wallet to Ether wallet: done this already a few weeks ago, so I was set
- Swap LEO to wLEO: through the LEO wallet
- Configure wLEO in Metamask: my Ether wallet
- Swap wLEO into Ether at Uniswap
- Transfer Ether to an exchange listing HIVE
- Trade Ether for BTC
- Trade BTC for HIVE
- Transfer HIVE to native HIVE wallet
- Swap HIVE to wHIVE: I had to use HIVE Engine since LEO DEX didn't allow me
- Trade HIVE for LEO: through LEO DEX
I started with exactly 640 LEO. After all the steps done, I had again LEO. Though I had to leave quite bit of transfer, swap and exchange fees, I ended up with 725 LEO.
Two hours of my time and I bit of luck (the HIVE to LEO trades was filled quickly), only. Sure, I could've just purchased the open sell orders in the last step, but the spread was large and I didn't want to just give away 6 to 8%. All the other swaps and trades I've done immediately without waiting, ie buying and selling on open orders.
An hour after the initial circle, I decided to try a second one. Bit more risky since the LEO DEX showed no signs of sellers for LEO, only buyers. Also, likely more users starting to notice the difference of wLEO value at Uniswap and LEO DEX.
Second round, I started with the 725 LEO I got from the first round. Same steps, different outcome. Now, I ended up with 798 LEO and some extra grey hair. In the last step, the trade of wHIVE into LEO, I (again) didn't want to buy the sell orders which worked against me. It was only last night my LEO buy orders got filled...with very similar LEO/wHIVE trade value to buying the open sell orders the day before, immediately at the end of the second circle.
I left it at these two rounds. Learned sufficient, got enough grey hair, with some nice positive results.
- Funds at start: 640 LEO
- Funds after one circle: 725 LEO
- Funds after two circles: 798 LEO
Gain 1st round: 85 LEO
Gain in percentage: 13,3%
Gain 2nd round: 73 LEO
Gain in percentage: 10,0% (to the LEO stack at start of 2nd round)
Overall Gain 2 rounds: 158 LEO
Overall Gain in percentage: 24,7% (to the initial LEO stack)
Not sure if I can draw any conclusion from this circling, other than that it was an adventure and profitable. Within less than 24hrs I increased my initial LEO stack with almost 25%.
This is massive compared to what pooling returns are projected at (I read somewhere this will be kinda like 50% annually). It is even more massive compared with curation returns which I calculated at around 23% per annum (or something like that; I've read from others, curation returns can be close to 30% per year).
Within less than 24hrs (when I would've correctly finished the second circle within less than 4 hours) my gain is equivalent to the annual return on curation, and half the annual return on pooling.
That said: Pooling doesn't cost any time and curation can be done automated (though I don't like auto voting, so I'll never maximise curation returns).
But But But But... The method with which I increased my LEO stack is not at all a method that works all the time; In fact it will not work most of the time.
First of all: It's only possible when the LEO value set at exchanges is different enough, which is not often the case. In my case: 20% at the start of the first round and about 18% at the start of the second round. Such differences needs to be detected. I don't know of automated ways, so it cost time and effort to be able to detect these difference and the detection must be in time as well.
Secondly: for the LEO and wLEO case this worked only with small amounts of LEO. This because the trade volumes at LEO DEX is low. To minimise the risks, one need to close the circle as quick as possible. Trade risks shall be avoided as much as possible. The whole concept of circling is to increase some asset stack without risks.
I have to think about this: I do like to provide liquidity to the LEO pool. Not necessarily for the profits; Mainly to support the team and community. LEO for the win, so to speak :)
That said, the amount of LEO I can add, is next to nothing compared to the pool size. I may power-up this LEO, or keep it liquid until I know what I want to do.
NJOY the LEO ADVENTURE
all images by edje unless stated otherwise
Posted Using LeoFinance Beta