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DeFi Conservative Goes Full Degen Ape: How I Doubled My Bag in a Week

For the last seven days I ignored my own advice and went full-on DeFi degenerate ape. The results were pretty surprising.

Image: PixTeller

It is not the young people that degenerate; they are not spoiled till those of mature age are already sunk into corruption — Baron de Montesquieu

It all started on Coinbase

I woke up in the middle of the night a week ago and couldn’t fall back asleep. I booted up my laptop and started poking around. I hadn’t used Coinbase in months, so I decided to check in.

To my surprise, there was about $850 worth of Matic in the account. I forgot I had it there. I remember I didn’t want to do anything with it because on Coinbase, it’s not really Matic — it’s just ETH with a purple wrapper.

But because it was early in the morning, ETH fees were pretty low. I thought, ‘what the heck’, and moved it to Gate.io. And by ‘low’ fees, I mean that particular transaction ‘only’ cost me $17 (ugh).

Not a great start being down 2% just for moving some coins. A couple articles back, I talked about some pretty crazy APRs on Fantom, specifically on Tomb and 3omb. My impulse was to put it all in Tomb, which was earning around 75% APR at the time for the TOMB/FTM liquidity pair.

I’m not sure what got into me, but I decided to try a little experiment. In terms of relative risk, I think Tomb is a pretty safe bet. There’s a billionaire venture capitalist publicly backing the project and it has around $600 million total value locked (TVL).

What I did instead was divide the money into two piles. I put $700 into 3omb and the remainder into the biggest degen yield I could find on WhatTheFork. The degen play I went with is Ripae Finance.

Basis.io and Tomb.Finance

For those not familiar, Tomb is actually a copy/pasta version of Basis.io. Basis was a US based company and it died because of regulatory issues with the Securities and Exchange Commission (SEC). It launched on Ethereum though, so even if the feds didn’t kill it, the gas fees would have anyway.

The basic concept is to issue a token that is algorithmically pegged to a chain token, like ETH. This way, it functions like a stable coin, except instead of being pegged to fiat, it’s pegged to another crypto. It accomplishes this by issuing a Share token and a Bond token.

The Share token emits Basis tokens if the Basis token rises above the value of the chain token. Thus, an investor staking the Share token receives Basis tokens (inflating the supply) until the price reaches the peg. Once at, or below the Basis/ETH peg, Share tokens stop emissions.

If the price goes below peg, then an investor can purchase Bond tokens. Buying Bond tokens burns Basis tokens (deflating supply), but the Bond cannot be redeemed until after the Basis token is above the peg. The higher above peg the Basis token goes, the higher reward for the Bond holder.

I imagine this might be a little confusing. I’ve found reading the documentation does little to clear it up. The easy answer is: Basis/ETH are supposed to track 1:1. If Basis is higher than 1:1, Shares bring it down. If Basis is below 1:1, Bonds bring it up.

Tomb works the same way. Tomb is pegged to Fantom (FTM) at 1:1. If Tomb is trading at a higher value than FTM, TShares bring it down. If Tomb is trading below FTM, TBonds bring it up. This is what it looks like:

Image: Tomb Finance

As you can see, TOMB is below peg (0.9907 per FTM). Thus, TShares are not emitting anything (no APR). But, TBonds are for sale now, which can be redeemed once TOMB goes above the peg (TOMB price > FTM).

In turn, Ripae is a Tomb fork (another copy/pasta) with different graphics and names. It works the same way though. Here’s their homepage:

Image: Ripae Finance

Here, pFTM is (I think) supposed to be 1:1 with FTM, but it is way over peg. Thus, PAE (share token) is emitting a ton of pFTM. bFTM is the bond token, but they aren’t available to purchase because pFTM is over peg.

My DeFi wheels fell off the first day

In almost all of these protocols, the share token has the higher APR. When I first got in, the APR was around 3000% for PAE and about 2100% for the 3Share (the 3omb share).

I put $350 into the 3omb/FTM liquidity pool and bought $350 of 3Shares on the market to stake in the 3omb share pool. For Ripae, I bought $150 in PAE on the market and went straight to the share pool. 3000% degen APRs after all, why not?

I didn’t look at the charts, I didn’t research Ripae, I didn’t do anything except ape in. I created my pairs, I bought my shares and I hit submit. And, that’s when the markets gave me my first swat on the nose.

Less than one day (about 15 hours) after I bought the 3Shares and PAE, they dropped 40% in value. Had I looked at the chart, I would have seen prices were in a steady decline. It wasn’t like I bought a floor that dropped further. I just caught a falling knife with my foot.

Whoops.

At it’s lowest, my $350 worth of 3Shares was worth $189, and my $150 of PAE was worth around $87. Those share pools pay high APR because the shares have (very) volatile market exposure. That’s the gambling pool, because the shares can (and 3Shares very much did) both tank and moonshot.

Image: Coinmarketcap

A True DeFi Degen: Let it Ride!

I couldn’t find a chart for PAE. There’s one on Coingecko, but it’s missing data for a few days. Not really important, save for being a little sketch. Point is, I basically did the same thing there too.

I got lucky because the 3Share price recovered and I pulled all staked 3Shares the second it did. Counting myself lucky, I converted that to a 3omb/FTM pair and added it to the pool. One of the reasons FTM is so awesome is these transactions were costing me around $0.02–$0.06 each. Sweet!

As we all know now, prices across the board were taking a pretty big dump. But because the APRs were so high, I was still ahead in both dollar terms AND I was receiving a pretty good amount of FTM in the process. Double Rainbow!

The Ripae shares recovered too, but all the pFTM I received I converted back to PAE and compounded. Let it ride baby! That PAE might moonshot too, mirite?!

Freaky Friday

By last Friday, the 3omb/FTM APR had dropped to around 900%. Ripae was still pumping at around 2200% and pFTM/FTM had dropped from 5:1 to around 3:1. What kind of degenerate would I be if I tied up all my money for 900% when I could be getting 2200%?

So on Friday, I yanked my 3omb/FTM liquidity, converted to pFTM/PAE and hit submit. If it actually went to peg, I’d face a 14% impermanent loss. But I figured the roughly 5% daily APR would more than make up for it. I compounded all rewards (PAE rewards to PAE pool, pFTM rewards to pFTM/FTM).

I was checking this pool about every 10 minutes. It was super obsessive and extraordinarily anxiety inducing. But FTM was building like crazy. My greed meter started hitting the red zone. I think I was going bonkers.

Sunday, Sunday, Sunday! This week only!

By Sunday I couldn’t help myself. I started researching Ripae. The website was registered on 22-Jan-2022, 14 days before Ripae launched. Over the weekend, they launched an AVAX portal, which still isn’t functional yet. The TokenSniffer score is 60/100. My greedy ape brain thought, ‘gee, maybe it’s legit’.

And then I bailed.

I just couldn’t take it anymore. If nothing else, I found a limit to my risk tolerance. Ripae is still chugging along, but I’m out for good. Their share pool locks funds after a deposit for six epochs, which are six hours long. I pulled my pFTM/FTM liquidity, converted to 2omb/FTM liquidity and parked it there instead.

My PAE are still locked as of this writing. I have about 10 more hours before I can pull that too. Despite the big lurking bear, I’m hoping PAE doesn’t drop too much further. As you can see, I’m up in cash value, despite the big bear. And, my starting PAE stake was around 0.19, so a pretty big gain there too.

Image: Ripae Finance

Once it releases, it’ll go to 2omb/FTM as well. I seriously said out loud to my nephew today that I’m only earning 825% APR now. Three months ago I was pretty stoked to be able to earn 20% APY on Anchor. For reference, an 825% APR compounded daily is an APY of around 350,000%.

I think a screw might have come loose.

DeFi Degen Ape Results

Because of the big ol’ bear, in dollar terms I’m about even. But I started with around 425 FTM. If my calculations are correct (and the PAE price doesn’t completely poop the bed), I’m pretty sure I have a little over 720 FTM from this experiment. Not quite double, but better than a kick in the shins.

Now that I’m here, I’m cautiously optimistic about the Tomb/FTM ecosystem. I feel waaaay more comfortable in the ‘official’ Tomb chains than the copy/pastas. I’m going to let the 2omb/FTM pair ride for a while longer. I’ll never be in a share pool ever again.

I also think this might be a decent strat for long bear markets. Time will tell if the T1|2|3omb experiment holds up. After all the recent drama with TOMB and the market dump, I am pretty bullish on it. It’s been completely solid through the whole ordeal.

T2|3 seem pretty solid too, but I’m still wary. They’re all holding peg pretty well and there’s a ton of liquidity though. At least with my 2omb/FTM pair, I don’t feel compelled to look every 10 seconds. But I still look.

Nevertheless, I’m keeping other APR generating assets working on other chains. Stable pairs and single-sides make me feel cozy. I’m glad I indulged my degen ape though. I don’t recommend it, but I certainly wouldn’t knock you if you tried it.

With Tomb forks, short time frames (24–48 hours) with large up fronts might be an interesting play for a quick buck. Up to you I suppose, I’m not a financial advisor and this definitely isn’t advice. Either way, at the end of the day, I have to remind myself I’m using ‘found’ money. How bad could it be to lose it if I didn’t even know I had it, right?

Until next time, be safe, be smart and be sure to tie the camel.

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