CIRCLING was the name of the GAME to increase my LEO stack (approx 25% return)

in LeoFinance4 months ago

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

The Circle

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

The Results

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.

Some Analyses

The Funds

  • Funds at start: 640 LEO
  • Funds after one circle: 725 LEO
  • Funds after two circles: 798 LEO

The Numbers

  • 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)

The Conclusion?

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.

And Now?

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.


a LEO / HIVE original
all images by edje unless stated otherwise

qsounds music & story library | A...K | L...Z |
hive curator for curie

Posted Using LeoFinance Beta


Arbitrage (what you call circling) is a perfectly viable process. Many make a ton of money leveraging arbitrage situations across exchanges or even currencies. For example, you might find circling opportunities using three currencies. For example, you might find that UNI-ETH-wLEO could offer the potential to trade and end up with more wLEO, as an example, than you started with.

Posted Using LeoFinance Beta

Cool, learned something; Didn't know the official terminology was 'arbitrage'.

You made a good point regarding other trade pairs. I have experimented with HIVE spread trading, and now with this circle of LEO through Ether and HIVE. I didn't realise a type of trader exists going for arbitrage type of trades, but sounds logical since it doesn't matter to much what value or how dynamic the value of the various tokens are, therefore a relatively risk free method to create more money. I suppose the trick is to detect the possibility for an arbitrage trade at the right time.

Posted Using LeoFinance Beta

You lost me, so much math in here... and this circling seems so demanding :))
I got the point though, you earned some coins and that's great.
What I noticed though on leodex is that volume is kind of low and that might make the price easily manipulable.

Posted Using LeoFinance Beta

Owwww, am so sorry the numbers became a little much... I spend extra time to make it clear. Guess way too complicated still :) Ah well, the main take from this is what I wrote in the title, about 25% gain without any risks.

Volume at LEO DEX is low indeed. As it is on Uniswap. But because of the auto market making and the large swap pool, one needs more funds to get the value of LEO moved in one of the two directions. Wrt manipulation: When LEO DEX didn't caught up with Uniswap, someone stepped in with 12k LEO to set a buy wall. I have no idea who this may have been. The LEO team? Some LEO whale? It was clear this buy wall was set to not let the LEO price drop below the 1.75 HIVE at which the buy wall was set. When I was sleeping, either this buy wall was take away, by sellers, or by the wall owner, I can't tell since the history of transactions at LEO DEX is very limited.

Posted Using LeoFinance Beta

It's not your fault, but my limited level of understanding.
You seem to be a numbers guy following LEO DEX that much in detail.

Posted Using LeoFinance Beta

Euhmm a numbers guy, not sure, but I'm beta educated and love math and theoretical physics :)

That makes sense...

Posted Using LeoFinance Beta

Glad it does, since it doesnt with me LOL

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