In one of my previous blog, I wanted to convert my USDT/USDC to HBD and I had listed down the crazy amount of trouble to convert and because of so many steps, I dont even dare to calculate how many % I lost during the conversion.
So you can guess how happy I am when polycub came out with the pHBD to make things easy for me. However, after doing it, there is a few issue I would like to flag out so that you people are aware of the risk involved.
Despite pHBD is meant to be pegged to 1 USD which is 1USDC or 1USDT. Yet, do expect that the spread can be quite bad. As you can see, now I need to pay close to an extra 1.5% just to swap.
As you can see, the pair tend to be trading at quite a poor rate most of the time. So you need to really take note of the rate before you blindly swap. The chart has showed that it can go as high as 4% premium. I suspect that more people are eager to sell their usdc/usdt for pHBD.
Another issue that one need to take note is that if you are planning to swap a huge amount, due to low liquidity pool, the slippage can rise very fast. As you can see that just by trying to swap $1000, the slippage already increase to 1.5% and the rate is even more terrible. Meanwhile, if you try to swap USDT for USDC, you can do it for $5000 and the slippage not even reach 1%.
If you are trying to take advantage of the 40% APR for doing the PHBD - USDC LP, do take note that you will be getting the rewards in Polycub and not the LP tokens. Because of that, the APR is not fixed like UST earning or HBD saving. As you can see that as now the price of polycub has dropped, the APR no longer is 40%. The good thing is that you need not afraid too much about the impairment losses as it is meant to be 1 is to 1.
If you harvest the polycub reward, you also need to take note that the reward will have an 90 days of unlocking before you can sell the polycub. Otherwise you will end up losing 50% of the rewards. If you dont have the patient, you will realise you actually earn less than 20%.
Hopefully this post can let you audience know more about the risk of providing pHBD-USDC LP and not just blindly follow the APR/APY.