Buy Low, Sell High, Repeat.

Somehow, there is no protocol for this yet.

Quick, in ten seconds name as many protocols as you can on Ethereum designed for you to buy low and sell high on repeat.

Yeah…zero, I was also surprised.

The first wave of DeFi was about the building blocks — think of them like money legos. One protocol allows borrowing/lending and another offers exchange; put them together and we start to see DeFi.

Unfortunately, DeFi 2.0 was more like a giant party that relied on massive inflationary emissions and less like a second set of financial tools. We all fell into this trap.

Now, 6 years after DeFi was born (with Maker and Bancor V1), we have some incredibly complex products on-chain. We have aggregators, options protocols, many perp protocols, all flavors of derivatives, and AMMs built solely for like assets, but we somehow forgot to build the most plain, vanilla, simple thing.

I May Have an Addiction to Checking Prices

I’ve been checking the prices on my phone as much as anyone else and I’m mostly looking at ETH.

I wanted to buy more ETH when I was checking prices on the train and I saw it hit $1,165, but I didn’t have good enough Wifi to take advantage.

I wanted to sell some ETH when it pumped past $1,500, but I wasn’t sure I would be available to buy it back cheaper later in the day if the opportunity arose.

If I was a dev, I would build a bot to buy ETH with USDC between $1,000-$1,200 and I would sell ETH for USDC between $1400 and $2,000. Buying and selling over these ranges is no trivial task either. Neither is doing it on repeat.

While Carbon is certainly not a bot building protocol, it is the first protocol designed to allow me to buy low, sell high, repeat. Carbon allows the creation of two rules that can run in perpetuity.

Using the example above:

Rule 1: buy ETH with USDC between $1,000 and $1,200

Rule 2: sell ETH for USDC between $1,400 and $2,000

Once I create these two rules and I add either USDC, ETH or both to the strategy, I can finally stop sitting here staring at the screen waiting for the price to move another percent or two.

Will my strategy make me money? If my predictions are accurate then I make money. If my predictions are bad then I won’t. I’m willing to take that deal.

Let’s Over-intellectualize

If I had to guess, no protocols for buy low sell high exist because the market has been searching for some solution to passive liquidity provision where the liquidity providers make low risk, good revenue. So far, we have tried using leverage, or third party managers, but we have not quite built the infinite, free money machine yet.

I can’t blame us for wanting one, but we shouldn’t hold our breath either. It has been our industry’s focus on free money that has seemingly kept obvious products like Carbon from being built.

On Carbon, it’s not “fully passive” in the sense that the trader on Carbon determines their own buy and sell ranges. But protocols have missed the point until now building solutions that ask LPs to do nothing. The only thing required of a trader on Carbon is to have an expectation of what will happen in the future, but even this is orders of magnitude more than users have ever been asked to do as LPs until now.