DeFi Portfolio Tracker w1.0

Typically, I write these insights on Sundays, but life has its own pace. Today marks a special occasion, my first public journal entry.

Understanding Concentrated Liquidity Pools (CLPs)

(Imaginary Scenario)
Imagine you are a bank, a market maker within the decentralized space. Imagine Seneca, seeking to exchange USDC for ETH on a decentralized exchange (DEX) like Uniswap. In this situation, I, Epictetus, provide the necessary liquidity for Seneca’s trade (my: ETH & USDC). By offering my tokens into a vault (liquidity pool), I enable these exchanges to happen and collect a fee for each transaction.

This process involves some risk, known as impermanent loss. Where the value of the tokens may fluctuate. However, if the fees earned outweigh this loss, profitability is achieved. This strategy is my method of dynamically cost averaging (DCA) into or out of tokens, therefore compounding my profitability over time.

Active Positions and Strategy

The core of my strategy revolves around maintaining the Satoshi value of my portfolio, with a secondary focus on the Ether value. I accumulate tokens in deep value regions and distribute them in overvalued regions. These regions are subjective to my view on the token’s potential and intrinsic value, based on the strength of the base/quote pair system.

Current Positions Performance

ETHBTC

• Current Status: The position is performing as expected.
• Market Outlook: I anticipate Bitcoin dominance (BTC.D) will increase over the next 2 to 5 months. ETHBTC is likely to decline until BTC.D reaches above 58%, though this is uncertain.
• CLP Position: My position is within range, collecting trading fees as the price fluctuates. The asset ratio in the pool adjusts with price movements, increasing or decreasing each asset dynamically.
• Strategy: DCA buy ETH with BTC as BTC strengthens into Q3/Q4 of 2024.
• Goal: When rebalancing or closing the position, lock in impermanent loss at the CLP min range. At this point the weaker asset in the pair will be the one I'm fully converted into. I.e. BTC fully converted into ETH.

MATICBTC

• Current Status: The position is functioning as planned and intended.
• Market Outlook: Monitoring for MATIC/BTC to consolidate and form a base over the next few weeks to months.
• CLP Position: The pair are within range, collecting trading fees and earning income.
• Strategy: Compounding the earned fees back into the position to maximize growth.
• Goal: Overall, this position remains on track, with ongoing consolidation expected to provide a stable base for further strategic decisions.

MATICETH

• Current Status: The position is performing as expected.
• Market Outlook: Monitoring for MATIC/ETH to consolidate and form a base over the next few weeks to months.
• CLP Positions: Both positions are currently within range. CLP1 is nearing the maximum range. Once it breaches, I will close CLP1 and lock in all MATIC converted from ETH.
• Strategy: I have two CLP positions open to gain aggressive exposure to MATIC. The assumption was that ETH would strengthen against MATIC, causing the MATICETH pair to decline.
• Next Steps: Continue monitoring the ranges and be prepared to close CLP1 upon breaching the maximum range to secure gains.

AEROETH

• Current Status: Currently the range is out of the money.
• Market Outlook: Waiting for ETH to strengthen against AERO and for a drop in AERO's value. Which may not happen as deeply as expected.
• CLP Position: The goal is to DCA into AERO at desired valuation.
• Strategy: Not chasing this position; patience is key. Considering adjusting the CLP range to a higher level based on market structure and sentiment to ensure exposure to AERO.
• Goal: Adjustments to the CLP range may be required to align with market conditions and maintain the strategy's effectiveness.

Remember it’s the first step, and the first day.
There are some things I can't control, and that's ok.
Because I control the most important spirit, the creature within.

EE - Epictetus Evolved
EpictetusEvolved.eth
@EpictetusE