Building long term holdings through LP's

The way I am managing my crypto assets has been changing lately. Up until the last couple of months, Most of my holdings were Hive based. The begining of my diversification was to build a Rune position. @khaleelkazi's post yesterday was a great insight into why a few of us have been getting into RUNE.


Image source: Pixabay

Nowadays its all about the Liquidity Pools.

WLEO/ETH

My biggest single holding is obviously the WLEO/ETH pool. The key point I see with Liquidity Pools is that you should be happy to have funds invested in both sides of the pool. If I didn't like ETH as a long term holding, I would not have been as "all-in" with adding to the pool. Building my ETH position was as much a goal in this process for me as WLEO. The Bounty is a drawcard, but for the long term, being happy to hold both sides of the pool is an important consideration.

I'm super bullish on WLEO, but more than happy to hold ETH also. Impermanent Loss is a thing, but if you believe that both assets are good long term HODL's, a short term impermanent loss is not a problem. In a way, being in an LP creates a kind of portfolio balancing, whereby the pool will regulate your holdings to maintain balance. I see this as a positive, as I am not great at keeping that kind of discipline.

RUNE/BNB

This is currently my second major LP asset. Again, I am in this pool as I am long term bullish on both assets. There is a growing body of content here on LeoFinance related to RUNE, and the Thorchain project. Like Khal, I find diving down the rabbit holes of the project fascinating, and the cross-chain, native asset pools and swaps will be the next big thing in DeFi I think. RUNE at current prices is a bargain - IMHO. Not Financial advice.

How many projects have a built-in "self destruct" type of feature. Thorchain does, it is called Ragnarok. Basically, if the chain comes under attack, or bad behaviour from nodes, or something threatening user funds happens, the chain is designed to shut down, and it automatically liquidates all the pools and returns all the assets safely to the Liquidity Providers wallets. I have not heard of a feature like this anywhere else in crypto (It could well exist, but not sure). There is another rabbit hole for you to dive down @khaleelkazi. ;-) I haven't put a link as I couldn't find one at the moment, but it is a thing.

BNB is another asset I am happy to hold long term. Binance, I think, is the Cex most likely to survive and continue to prosper despite the rise of DEX's. The coin is becoming important in a growing DeFi (and CeFi) movement to find options outside of Ethereum, and in a big way a BNB holding could be seen as a potential hedge against ETH failing to scale. That's one way I am looking at it anyway. I'm not as fully commited to it as other assets mentioned here, and when a RUNE/BTC pool opens up, I'll probably swap some of this asset into that pool.

BAT/ETH

This is a position I have recently added, on the Balancer platform. I have written in the past about Balancer and remain impressed with the platform. I did close my positions I had opened as an experiment, but I have now re-entered to build a long term position. I was surprised to find some BAL tokens in my Eth wallet, a result of a short period of being in a couple of LP's. Uniswap only offers UNI mining on 4 selected pools, whereas Balancer allows for mining BAL on nearly all tokens. There is a token whitelist, but most major tokens are on it, and more get added in regularly.

ETH I have explained above, but BAT is the other token I am looking to build a long term holding in. Again, bullish on both assets, otherwise I wouldn't LP.

Where to next?

My goals:

  • Slowly build my WLEO/ETH position.

  • Assess and probably join other pools that WLEO ends up in, depending on the other tokens in the pool.

  • Save up RUNE and BTC to add to the upcoming Thorchain linkage to native BTC cross chain swaps. I think this will be a game changer, native BTC in a pool, and swappable cross chain is a very different thing to Wrapped BTC on Eth. Very keen to build a BTC/RUNE position for the long term. Very, Very, Very Keen.

  • Keep adding to my BAT/ETH position when I can.

  • Monitor Balancer for other opportunities - maybe a pool with BAL token in it. Possibly a multi-asset pool - which is one awesome feature of Balancer.

  • Be ready for a WLEO/RUNE pool. I still beleive that this is acheivable this year. See this recent post for all my thoughts on this in more detail.

So there you have it, my current positions, and plans for the near future.

Thanks for reading, feel free to share your thoughts in the comments.

Post dividers courtesy of @barge (5% beneficiary set)

Cheers,

JK.

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