Elastic Hedge Modules: The real results
Enough time has passed since the first elastic hedge modules were launched to examine their performance on real data. Let’s consider a real situation with Alice and Bob as a result of using sETH/sUSD elastic hedge module.
Who is Alice?
Alice was bullish about sETH in a mid-term perspective and she wanted to make a profit in sUSD. But she wanted to hedge her risk of drawdown when the price of sETH fell. She chose HodlTree sETH/sUSD elastic hedge module to hedge her investment.
Who is Bob?
Bob was more risk tolerant and wanted to earn +50% of his funds. He, like Alice, chose sETH/sUSD elastic hedge module for his investments, but he acted as a hedge provider instead. He deposited his funds to compensate for Alice’s drawdown with them in case the price of sETH fell. As a reward, he was given the right to take a portion of future profits that Alice’s investments would generate, until he recorded a profit of up to +50% of his initial deposit.
Actual results
It’s time to move on to practice and show the work of our elastic hedge modules with real transactions.
On December 23, 2020 Alice deposited 1026 sUSD in sETH/sUSD elastic hedge module, and after 135 days she withdrew 1522 sUSD, having recorded a +48% profit from the initial deposit. The total amount at withdrawal was 1636 sUSD, but part of the profit, namely 113 sUSD, went to hedge providers like Bob.
On December 14, 2020, Bob deposited 28 sUSD in sETH/sUSD hedge module, and 146 days later he withdrew 42 sUSD, recording a profit of +50% of the initial deposit.
At the time of writing, the hedge pool has 1496 sUSD, which can provide a 50% hedge of potential funds up to 2992 sUSD.
And also in the hedge pool vault there are 71 sUSD available for withdrawal to potential or existing Bob.
The practical results confirm the statement that HodlTree elastic modules allow hedging risks and create win-win situations for all participants.
What’s next
You can find more details about the elastic hedge modules here. In the near future we are planning to redesign the UI in order to simplify their perception and make interaction with them intuitive even for inexperienced users.
