Diamond Protocol: Thriving Amidst Market Volatility with Lucrative Opportunities for Liquidity Providers
The pastdays have caught bulls off guard, as ARB, CAKE, and BTC all fell steeply in price throughout the week. On August 15th, both ARB and CAKE tumbled. In 48 hours, ARB nosedived from $1.16 to its brief lowest at $0.96, while CAKE went from $1.48 to $1.31. Bitcoin fared no better; on the same day, BTC underwent the largest single-day sell-off of the year, sending prices from $29000 to $25000 momentarily before recovering to $26000.
Bullish speculators and hodlers took a beating last week. However, higher volatility due to increased trading activity in the market usually brings about better fees across decentralized exchanges, representing a prime opportunity for liquidity providers. As of this writing, ARB/USDC 1% Pair and CAKE/USDT 0.25% have significantly shot up in fee APR.
However, we want to remind our users of the observation in our article last week. Market data shows a large movement of ARB 1–3 days ago, which happened almost instantaneously. The fees generated from that move could significantly alter the 3-day average fee APR data on our site — it is possible that ARB/USDC volume has already returned to pre-crash levels, and the opportunity for raking in fees has already passed.
On the other hand, CAKE/USDT pair paints a different picture. CAKE’s price drop during August 15th was only 11.4% compared to ARB’s 17.2%. A lesser decline in price for CAKE means a lesser risk of impermanent loss for liquidity providers and a smoother fee APR. This is further supported by CAKE/USDT’s data on Pancakeswap, as despite there being a momentary spike in CAKE volume on August 17th, from $600k to $1.2m, the past 3 days CAKE/USDT volume has remained consistently higher than usual from $700k to $900k. Coupled with the CAKE reward from the pair, the CAKE/USDT pair could offer more consistent APR over time, with lesser exposure to impermanent loss.
So What Happened?
It’s suspected that ARB’s crash in price is due to 2 reasons. The first is intense competition from the new layer 2 market entrant, BASE, from Coinbase, which was launched the second week of August. Since then, BASE’s revenue and cumulative volume of daily transactions have exceeded that of Arbitrum and other networks such as Optimism. Second, there are indications that crypto is undergoing another deleveraging event, and institutional holders of ARB, like Mandala Capital and CAP Finance, have shed their Arbitrum token holdings and transferred them onto centralized exchanges. According to this post, these institutions transferred or sold $4.6M in ARB across 24 hours.
CAKE’s crash during the same period has no clear attributes. However, it could be assumed to have resulted from market sentiment spilloff from ARB’s sale. CAKE quickly responded on August 21st, announcing the burning of 8.2m CAKE — around $11M in value.
How Can You Ride this Wave?
We believe a volatile market holds many opportunities for liquidity providers to rake in additional fees. The heightened fee APR levels of CAKE/USDT pair on Diamond is an excellent opportunity for our new and existing users to try this new pair.
We currently have two active campaigns:
- Get an NFT that will make you eligible for airdrop:
Trade with a minimum of a 500 $CAKE position, and you’ll not only earn the coveted GALXE OAT but also secure your spot for an upcoming airdrop (only available for factory positions) Check it out here:
All you need to do is share a screenshot of your trade or deposit in the #position-screenshot channel in our Discord , and voila — we’ll grant you a special role! But here’s the twist: This fantastic opportunity is limited to the first 500 traders who seize the moment. Learn more here:
2. Participate in our LP Yield Competition and get 10% of PnL reward for securing a spot on the leaderboard!
Minimum $500 USDT position to qualify for rewards and unlock a special role+NFT!
Secure a place in the top 10 PnL to claim your portion of the prize pool!
PnL rewards capped at $100
Reward Structure:
- 1st Place: 10% of PnL + 50 USDT
- 2nd Place: 10% of PnL + 30 USDT
- 3rd Place: 10% of PnL + 20 USDT
- 4th — 10th Place: 10% of PnL
Competition Dates: August 15th — August 31st
Don’t miss this chance to prove your LP yield prowess and claim your slice of the prize pool. Let the competition begin!
Who We Are
Diamond Protocol’s Unibot is a leveraged liquidity provision platform that operates on top of DEXs. It allows liquidity providers on platforms like Uniswap to hedge their LP positions by borrowing and shorting volatile assets.
Unibot’s philosophy has always been to give the DeFi and crypto community a product that allows systemic earnings in a volatile market. From the beginning of our product design, we grappled with the question of how to earn profit in a market that is so unpredictable — our result was Unibot. This product aims to significantly increase our user’s odds of winning. We aim to create a scenario where a Unibot trader can accrue fees earned and wait for an ideal exit price even if they guess the market wrong.
Our approach has since been appreciated by seasoned traders within the crypto and DeFi ecosystem like Joshua, and we welcome everyone to join our discord, where we regularly host trading competitions and events with rewards. Come on by and meet the team and other veteran traders eager to discuss and share strategies!
🐦 Twitter: twitter.com/diamondprotocol
👾 Discord: https://discord.gg/diamond
✍ Blog: medium.com/@diamondprotocol
🔮 Galxe: galxe.com/diamondprotocol
🌐 Website: dmo.finance
☎️Telegram: https://t.me/dmofinance
