Plenty of Thorchain content around lately, as tends to happen when the price pumps. As I'm writing it is sitting around $4 each, pushing ATH every time I refresh it seems.
In a word, Impermanent Loss. (that's two words, but you get the point)
My most recent pool position has been in a RUNE / ETH(bep2) pool on Bepswap. I've been in for 15 days, and so far it all appears to be going ok. The USD value is up over 50% - happy days.
However, If I wasn't in this pool, I would have been 100% in RUNE, hodling instead of LPing. So that would have been a holding of 658 RUNE, worth $2632 at $4 each.
so, in effect by LPing, I have missed out on $700 of paper profits.
Hence why I say RUNE is so good it hurts.
My plan now is to just stick it out. I like ETH, and am ok with gaining more of it. Same, I just reopened a small BTCB RUNE pool position, and am ok with gaining either asset. As much as I think it will keep going up, RUNE has to take some pauses at some stage, and let fees and pool income catch up a bit.
The other thing I'll be doing, is steadily adding to my positions each week. Once a week, I buy some eth and btc from fiat, automatically on Coinbase. My plan is to asynchronously add these weekly buys into the pool (after converting them through Binance into the Bep2 version). This should help my IL over time. Slowly, this will add to my positions, and increase my exposure to RUNE within these pools.
RUNE is pumping, IL is a good problem to have really. It means numbers go up, just up a little less than what could have been. At the end of the day, I want more ETH, I want more BTC, and I want more RUNE, so regardless of IL, it makes sense to be in the pools, and DCA in a little extra each week.
In case you missed it, here is a different view - it all depends on pool choice and timing.
@ash's article - update on my RUNE/TWT LP. Ash has made a killing, as TWT has gone up heaps from when he pooled, along with RUNE.
@khaleelkazi's article - On high conviction investments. He is not in the pools yet, and is sitting on very large gains and agonising over whether to LP.Thanks for reading, hope this little insight gives you a look at what IL can do, but remember it can also reverse as quick as it rose, and the "loss" is not real until you withdraw.
See you all in Valhalla,
JK.
