What is Pools DCA
In order to understand Pools DCA, first we must discuss DCA. Most likely the readers know this already, DCA is Dollar Cost Averaging. Dollar-Cost Averaging (DCA) is an investment strategy where you invest a fixed amount of money at regular intervals, regardless of market conditions. In the context of crypto markets, this means buying a set dollar amount of a cryptocurrency (e.g., $100 of SPS) weekly, monthly, or at another consistent interval, rather than investing a lump sum all at once.
Here are some of the benefits of DCA in general:
- Reduces Timing Risk: Crypto markets are volatile, and predicting price lows is challenging. DCA spreads investments over time, minimizing the risk of buying at a market peak.
- Mitigates Volatility: By purchasing at various price points, DCA averages out the cost per unit, reducing the impact of sudden price drops.
- Encourages Discipline: Regular investments prevent emotional decisions driven by market hype (FOMO) or panic, fostering a consistent approach.
- Affordable Entry: DCA allows investors with limited funds to gradually build positions in high-priced cryptocurrencies like Bitcoin without a large upfront investment.
- Long-Term Focus: Aligns with a strategy for investors bullish on crypto’s future, helping them avoid short-term market fluctuations.
DCA works in all markets and most market conditions. There are tools (bots) to trade for you if you like to acquire a large amount on tokens without moving the market too much. One such tool is https://dswap.trade/. There is a Market DCA option available which can help you buy large amount of any tokens that is traded in the hive-engine market by using numerous small orders.
DCA into the Pools
In our case, many of us use Hive-Engine or Tribaldex Diesel Pools to buy-sell crypto. This is because, it is often easier to trade large order there most easily. Especially if you trade Swap.Hive, DEC or SPS. Although the pools does have a small fee, and markets don't, they just have bid-ask slippage.
Above are the top six pools at Tribaldex arranged with the highest liquidity at the top and then in decreasing order of liquidity. Trouble is, by the time you get down to number six position, the Swap.Hive : Swap.ETH pool, we are down to $100K worth of liquidity. Now you might think that could be enough, but it is not.
Even to convert only 0.5 ETH ($925 at current prices) requires 1.35% potential price impact and 8.8 swap.hive in fees. I have done a lot of conversion in various pools like Uniswap, Pancakeswap and obviously tribaldex, and I am typically uncomfortable if the price impact is above 0.5%.
Also the reason, this particular pool is important to me is because that is the least expensive way I can buy ETH externally and put into tribaldex to exchange for swap.hive and eventually DEC or SPS.
Currently from Texas, this is the cheapest legal way to buy crypto and get into Splinterlands:
-> USD to USDC at coinbase (free)
-> Transfer USDC to Metamask (eth) (fee in cents for $10K)
-> Uniswap: convert USDC to ETH using Metamask (fee in cents for $10K)
-> Deposit ETH to Tribaldex (becomes swap.eth) for free -> Swap.ETH to Swap.Hive
-> Swap.Hive to DEC/SPS, both markets very liquid
New DCA Tool for Pool :)
It rhymes! This tool is currently alpha, so use at your own risk.
What this tool does, is breaks that 0.5 ETH order into 10 orders (or how ever many), and makes 10 small trades instead of one big one.
The results is surprisingly satisfying. I will have some data to prove and back it up.
I did this test yesterday. I used the Pools DCA tool to auto-create 10 small orders. Also I executed a single 0.5 ETH order. The sum of 10 small order got me 3455.67 swap.hive for 0.5 ETH, while the single order got me 3418.24 swap.hive. ETH or Hive didn't move in that 4 min time frame.
Now you might say 37 hive ain't much, but that is 1% of the trade. If you do a lot of trades like I have been doing lately, it adds up!
Another Test
I did another one today, and it worked out fine. The tool also have an interface to see the trades.
My only request to @aggroed is to please have a dark-mode background, just Tribaldex.
Final word, this tool is still in alpha QA testing phase, so please use small amount and be careful.
Ah, yes Alpha phase. I was wondering why it needed the "qa" in front of the link ;)
Can you tell @aggroed we also can't use swap.hive for DCA in to tokens? But Swap.HBD works fine! :D - I did already post it in the discord, so somebody will properly see it at some point :D
don't know why that is.
NoNo, ofc not, kinda why I tagged aggroed :D Nobody is really answering in the dswap channel of HE x)
Hey that is a cool way to DCA in through pools!
I usually go Coinbase:
USD -> LTC -> TDex -> Swap.LTC:Swap.HIVE...
ETH seems a little better though... 🤔
interesting way is use a credit card with a bonus to buy packs when there for sale and use the say 1000 bonus for spending 5 as a buffer sell the packs keep the remaining in crypto and you got it for free and if you don't do a lot of cards you can do quite a few before you get in my position where I have like 50 cards and its hard to find a good cc bonus lol. A good way to get some free stuff lol.
ETH deposit is free and that pool has higher liquidity
Good to know - thank you for sharing that info, I'll have to modify my behaviors to save a few bucks!
Wow I didn't realize how small the SWAP.HIVE - SWAP.ETH pool was!
You are right, that one seems pretty important!
I've seen how much it can help to break up swaps into small chunks to reduce the slippage - and usually it takes me 30 minutes to do this manually!
I'll gladly try out this tool next time!
Thanks for sharing!
Use caution please, as this is alpha version
good point :D
That is quite a difference acctualy. Didnt expect that on a 1k order.
You know in a relatively illiquid pool, over a 10 to 20 min period, a lot can happen. I suspect, sometime it will be in your favor, and other times it won't be. I simply don't have enough of a sample size to conclude one way or the other.
Trying it with real money is expensive, and it only adds value if you try it with real money. Simulations with fake money is worthless.
That is pretty cool. Until we get more users and more money in the chain we need away to keep the prices pretty stable. I think that has been a big complaint of a lot of people in the past. It's no good when the price swings that much.
We do need new users. All these are worthless for us if we don't get new people.
Bookmarked! It's quite rare for me to do even medium-sized swaps, but sometimes it happens and this tool might save me some HIVE :)
Again, use it with caution. Sometimes it may not save you any if you are unlucky. There are multiple variables at play.
I'll double check the output before using it :)
If you use small orders I think you will be fine, but then if you use too small orders then it's not much of a test :)
Ahahah I'll try not to be so much cautious to thwart the experiment 🤣
One thing I love about crypto is how the price fluctuations work in multiple tools.
Especially when looking for the best price of something.
Like how it's more profitable to swap HBD for hive on ecency then to swap that hive for any other token on hive Keychain.
Sometimes the changes aren't that much, but the changes are there so they matter...
I also like the low entry barrier, so a lot more people can participate.
Bookmarked thank you! Yes dark mode please.
My eyes are burning just during the time I spent writing this post:)
Cool to know this step by step. In the past I deposited ETH or LTC from Coinbase into Metamask then into hive-engine then used limit orders to buy Hive.
Dear Azircon, thanks for this post which is very interesting! DCAing is indeed a great way to buy/swap tokens. I used it for almost 18 months in order to get small quantity of BTC and it worked properly. I think it would be very nice to read from you about how LP works in details and some example to explaim impermanent losses. I read it several times on the net but I am still far from understanding the whole concept.
I can do that. No problem