Good day everyone I trust you are safe and well and enjoying the wild ride of the cryptosphere over the past few months. The market has been reacting quite differently to what we are previously used to.
I remember looking at a graph that mapped the past 10 years which was quite predictable up until last year where things began to go off trend. Largely due to COVID, looming interest rate rises, new crypto markets and let's be honest new technology in the sector.
The instability and rapid changes in the market did create many opportunities for people especially those who were in the business of arbitrage. However, this sector is still relatively dominated by automated bots that regularly track all price feeds and buy at the lowest possible price point and then sell into higher pools.
For many, this sounds like an unfair advantage but it is quite the important tool within a sector that doesn't yet have a means to ensure price correlation across all pools. In traditional finance an agreed price set by central banks whom back assets and are the liquidity providers of sales ensures price stability in mainstream markets.
But in the decentralised world it is mainly bots buying and selling to balance liquidity pools with the business model quite lucrative for the person who operates the bots.
On the rise are the establishment of Arbitrage protocols that enable crypto enthusiasts to pool funds and participate in arbitration across the sector. The movement has continued to grow on Terra (Luna) Network where the implementation of a pegged algorithmic stable coin has provided market stability and a constant avenue to participate in arbitrage between maintaining the peg with Luna as well as other token liquidity pools.
One of those protocols currently available on the market for people to participate in is White Whale The protocol itself on recently launched about 3 months ago and if you're looking for a closer look at the protocol you can read my previous post White Whale launches after successfully raising $US27Million in funding.
Despite an early set back which saw White Whale scammed out of $500k worth of funds which you can read more about in KUCOIN Impersonators Scam White Whale out of $US552,000. White Whale has since bounced back and is moving ahead quite successfully. The utilisation of Anchor protocol has significantly supported the protocol in rebuilding funds and progressing in its field.
The unique feature that White Whale has implemented is its Treasury which is the main pool and provides the ability to participate in arbitration across the entire Terra (Luna) Network ecosystem. Unlike many other protocols which require you to pair tokens which may lead to impermanent loss White Whale provides a no fuss approach.
There is the ability to stake WHALE tokens in governance for a 32% APY and participation in voting and creating polls and the White Whale Litepaper states that staking Whale tokens will provide you access to all pools but currently live on the protocol is something a little different and a lot more beneficial for those wanting to participate in arbitrage.
I think this is the most advanced set up on the market and not due to being complex, sophisticated or over the top. It is leading because of its simplicity and return on investment for participants.
All one needs to do is provide UST in the vault and the protocol takes care of the arbitration in the background in all forms of markets, highs and lows. In the even the market is declining then participants will still earn an income through Anchor protocol yields.
As you can see in the display the protocol pays two yields the Anchor APY and the Vault APY which is participating in arbitrage which at current isn't that great at only 0.1% APY. But no doubt as Terra (Luna) Network grows and more exchanges and protocols launch there will be opportunity for White Whale to grow.
There are also more Arb vaults soon to join White Whale which will all be single asset deposits and operate in a modular architecture which will enable the protocol to participate in a larger share of arbitrage.
Why are multiple Terra assets required?
At current it appears the main liquidity pools that White Whale is participating in is those that are paired with UST which is also the current available vault. This means the protocol is missing out on other liquidity pools where assets are paired with other assets such on Loop Finance DEX where it is common to find liquidity pools established with Loop token and other Terra assets.
Enabling other Terra asset vaults will broaden White Whales scope and increase their arbitrage ability and increase the return on investment for those participating whilst also lifting the overall APY of the White Whale governance pool which provides access to all arbitrage pools if we follow what it says in the White Whale Litepaper.
White whale also provides an open and transparent log of all arbitrage trades it is undertaking and lists them on the UI so participants and potential investors can view the protocol and assess if White Whale is the right opportunity for them.
The inclusion of the Anchor protocol yield provided to White Whale Vault users also provides a passive income to those waiting for arbitrage opportunities and to ensure the ongoing success of the protocol. Should the protocol fail to provide a RoI due to inactive arbitrage investors will still retain the general Anchor APY.
The introduction of vAssets is by far one of the great wonders of the Cryptosphere and one that I will be watching closely due to a unique ability that is made possible due to White Whale. In summary vAssets are the minted version of the native Terra asset deposited in the Arbitrage Vault that will be used to undertake arbitrage trades.
The best time to make money in arbitrage is when the market is either crashing or going on a bull run as the price variations across all decentralised exchanges (DEXs) can become disconnected and it is in this period where White Whale works best.
In theory this should cause vAssets to increase during a market decline or rapid crash as the bot rapidly soaks up all that arbitrage bolstering the main White Whale asset and providing value directly back to the investor.
Currently the only vault on offer is the UST vault so if this is what occurs it will still be some time before we get to see a live run and a vAsset positive depegging. It would be somewhat of a first in the decentralised world and if it works as intended we could see vAssets being saught after assets because no matter which way the market slides it will always grow and then stagnate out once the market stabilises.
The use case for a vAsset is far beyond simple arbitrage but could provide a new form of wealth retention replacing the current model which sees billions of dollars flowing into stable coins. A stable coin strategy maybe a good one but still flawed as it will still cause investors loss where as a vAsset could see investors gain in a crash.
White Whale is gearing up to be a great protocol with a number of opportunities and bouncing back from being scammed the protocol is going from strength to strength.
Unfortunately that's all the time we have for today and there is still a lot more to get through including flash loans and future progress. Make sure you stay tuned as we explore more on offer from the White Whale team.
In the mean time if you would like to know more about White Whale you can follow them on Twitter Join their official Discord and stay up to date on their Medium.
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