Yield Farming with a Bank Loan

Miscellaneous
1

Hey Guys,

I’m running a little simulation to see what a 50k bank loan would yield in the ANC LP pool farm.
On the longest term repayment: 620 a month for 120 months, the yield would be a whopping 3750USD a month scaling up every month with approx. 6%. This takes into account manual compounding.

Principle to be paid back to the bank in this case would be 75k , unless paid back earlier in which case future interests are negated. If LP interest stays at 90%, you’d be 50k in profit in 12 months time. If LP drops to 50% starting tomorrow, you’d be 20k in profit. You could arguably sell 50k, pay back the loan and cash the profit almost risk-free. Almost! And hopefully soon when OZone drops (if it covers pool protection aswell)

There are still some variables I want to put in there. For example:

-What is the expected yield curve on ANC-LP? It’s been dropping pretty rapidly as users deposit more UST, if we could get some data on this we might be able to make a prediction.

-How does the ANC price influence yield? Is it a standard yield=principleinterest(USTvalueANC price) or something else? In other words, do we harvest more ANC when the price declines and less when it booms? This would positively balance expected yield as in case ANC drops rapidly we’d still be earning that 90% to 50%.

-What about rapid price fluctuations? We could arguable sell ANC yield in weekly installments to dampen price fluctuations, use the first week to repay the monthly loan and re-invest the remainder back into the pool. Other options are staking to prevent impermanent loss, which will benefit us in case ANC price appreciates but not so if ANC price stays stable or depreciates. a 2/3 balance ratio, 1/3d staked and 2/3d compounded could be a viable strategy.

I have made a google spreadsheet for your convenience, would want to update in with more data and a variety of strategies soon. Let me now if it doesn’t work or if you want to add strategies yourself. The view-only link as of now:

Any comment is greatly appreciated!

Kind regards,

Ilo

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2

I found this fascinating! You clearly have gone deep into this. I however will just ride on the coatails of your mathmatical prowes :rofl: Seriously though… fascinating.
edited to add: I also clearly need my thesaurus today!

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3

Great idea. However, LP emissions are something that needs to be cut and are also moving over to Astro. Ideally, running this when Astro drops would be a good idea.

Why not use bluna-Luna on Astro to dampen the IL. Also, Loop has 300+ percent on ANC LP

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