I believe we can all agree that the Inleo team and the other team in the Leofinance ecosystem that tries to follow into the footsteps of Microstrategy, are doing things worth taking a look at. Not everyone will agree with them as they have often engaged in activities that polarized various groups on Hive (I didn't and don't agree with everything they do either), but noteworthy they are, even for those who don't agree, in my opinion.
What Leostrategy is building will have a hard test during the coming bear market, whenever that may come. And that, in my opinion, must be said. Strategy₿ has bitcoin as a collateral. Leostrategy, while being small and affording to implement various techniques to make income which at its size Strategy₿ ignores or may not be easy to implement for the bitcoin network and its addressable market, we need to be well aware of the fact that LEO is not BTC. And will likely take a bigger hit than BTC in the bear market.
The counterargument is that Leostrategy will just buy more LEO if the price drops, and so it will have more collateral. Yes, but we cannot discard the market psychology from the equation. Voices we have seen regarding SURGE not being floored at $1 after the presale (despite that not being what was sold), will exacerbate during a bear market, as will people panicking and selling off. And I'm not talking only about SURGE, that may be one of the products which could do well in the bear market. But the volatile ones may suffer if people panic. And they will, they always do.
That's why I am very curious how Leostrategy makes it through the next bear market. If they do fine, they already win something: a badge of honor for a project that survives a bear market in crypto.
Leostrategy also created its first RWA - TTSLA. Since it is both in Hive-Engine and Base, I guess we may consider this is the first RWA from the Hive ecosystem? I'll probably test that out, but personally I won't go big into such a concept before I see the mechanism of holding the peg loosely working over time as the two assets fluctuate independently.
Now to the question in the title...
Why I Chose SURGE:LEO on Hive-Engine over SURGE:USDC on Base?
Over time, as LEO price shot up I sold batches of them on Hive-Engine. The bad thing is that LEO didn't really shot up in terms of USD lately (above 15c), but rather HIVE was pushed down.
Of the sold LEO, I used part of it to buy SURGE. Including after the presale was over, since the discount was still quite nice.
After doing some research, I realized SURGE pays HBD yield whether you keep it liquid or in a LP. In the second variant, you also earn LP fees but you expose yourself to impermanent loss.
There are two SURGE LPs. One on Hive-Engine, paired with LEO and one on Base via Uniswap v4 paired with USDC.
There are different types of LPs, that cater to different people or purposes. The one on Base is paired with a stable coin, so you will have a lower IL. The APR is higher and if someone sets up concentrated liquidity right, can be even higher.
That's the kind of pool you want to go in if:
- you want a higher yield (right now, you but that can change)
- have USDC lying around
- are familiar or want to make the step toward Base
- you want to preserve your amount of SURGE, more or less
- you want a set-it-and-forget-it kind of thing
The LP on Hive-Engine is paired with a volatile token and subject to IL, but it can have its own advantages:
- if you have both SURGE and LEO on Hive-Engine, and you don't have USDC on Base
- to grow the USD value of the position if LEO goes up in USD terms
- if you want to DCA out of LEO into SURGE, in various scenarios
- if you prefer Hive-Engine over Base
- if you prefer no fees
As I said from the title, I've chosen the SURGE:LEO one on Hive-Engine, after a few days of thinking about it.
Practically, besides Khal who probably kicked off the LP with the initial liquidity, only two real LPs are in this pool, and I am one of them. And Khal has 96% of the liquidity, so we don't have an impact, by comparison.
So... why I finally decided to choose this pool and not the Base one?
Well, I went on two scenarios, but both of them considering the bull market is still on.
The price of SURGE is irrelevant, since it would be the same in both LPs. Then, it matters the other token.
First, if LEO price in USD goes up, the position grows in USD value, which is fine for the coming bear market.
Second, if LEO price in HIVE goes up (but it is perfectly possible to see a reverse in trend), then we have a slow DCA-out of LEO into SURGE due to impermanent loss. As that happens, even without withdrawing liquidity, you get a higher yield on SURGE, since you'll have more SURGE in the pool, as it balances. Obviously, the DCA isn't effective unless I withdraw liquidity. The reverse is that if the LEO price in HIVE goes down then if the price of LEO in USD holds or grows slower than HIVE, it is expected the price of SURGE in HIVE would drop the same or even more, if we consider it relatively stable. That means the LP would still be squeezed toward DCAing out LEO, or at least not go the other way. There are other options—like the price of SURGE to go up in HIVE and the price of LEO to go down, while in the bull market—, but less likely (other than the 25% discount of SURGE which we don't know when it will be recuperated or short-term reversals).
Obviously, if someone chooses the HE diesel pool to grow the position in dollar terms or the HBD yield, while DCAing out LEO, the position needs to be closed at the end of the bull market or close to it. Otherwise, the whole process reverses. The pool on Base doesn't have those "worries". You can set it and forget it and watch as USDC yield is paid regularly, unless you use concentrated liquidity pools, in which case you probably need to adjust every once in a while the position.
Posted Using INLEO
Choosing SURGE:LEO over Hive-Engine makes sense for those betting on the growth of the Hive ecosystem despite its higher risks as it combines native liquidity support and the benefit of LEO's volatility rather than USDC's relative stability.
Yeah... I don't like what BTC is doing today and how things align for the short term, so we'll have to see about the direction of the market going forward. Maybe I took this decision too quickly and should have waited a bit longer. Thanks for your comment!
In my case, it' familiarity with Hive Engine. I am clueless about how Base works. The weekly HBD is the primary reason why I bought SURGE.
the current value of Surge is around $0.68 (supposed to be $1), so does the current price affects the amount of Yield? are you receiving much lower because of that?
I am not aware of the exact percentage. All I see is that I am receiving 0.432 HBD every week, holding 150 SURGE.
Just did a quick calc, it seems that you're receiving a 15% yield equivalent to a 150 HBD. Sounds good considering the price of SURGE now at $0.68... Hmm, now I'm almost convinced to buy some SURGE too 😅
May I clarify, you are receiving yield while SURGE is in liquid form, is that correct? (no need staking or putting to a diesel pool?)
Yes, in liquid form. You can sell it anytime. I actually bought 200 and sold 50 when the price reached 5.70 SWAP.HIVE. That's instant gain.
The more I look into it, the more I’m convinced that I should buy some SURGE, because there are so many ways I could grow my tokens. Assuming that SURGE holders don’t dump and the yield remains fixed at 15% (based on 1 SURGE = 1 HBD), the actual yield would be even higher if I buy now at the current price of $0.68 — roughly around 22%.
And just like you did, there’s also good potential to swap to Hive in case the price downtrend continues. Or I could simply convert the HBD (which gives an actual yield of about 22%) to Hive, since curation rewards are only around 8%. Sounds good to me! :)
The yield does not depend on the price of SURGE, from my understanding. The APR of your investment does, and it would be higher if SURGE goes up compared to your purchase price, and lower (even negative) if it goes below your price of purchase. But if you don't sell, that's not something you should be concerned about. Yield is the same, and it depends on the number of SURGE you have, not on their price. However, I haven't done the math to see if this is correct or we actually receive a variable yield. That would be easy to notice. If you have had the same amount of SURGE from one week to another, if it pays a fixed yield (15%), it should be an identical HBD yield received every week. If it is variable and depending on the price, then HBD yield received would vary from week to week. I have had increasing amounts of SURGE, so it is not easy for me to notice that. Even harder now in the diesel pool, where the SURGE amount varies constantly.
Thanks for the explanation. And to confirm, based on @rzc24-nftbbg reply, in his case it seems that he's receiving a 15% yield based on 1 SURGE = 1 HBD; and considering the price of SURGE at $0.68... buying it at that price would mean the yield will be around 22%... I'm almost convinced to buy some SURGE because of that yield ;)
Yep, sounds about right. But I would make a distinction between the potential price increase which would mean profit on your investment in SURGE, and the yield you receive every week. The yield paid is still 15% (without considering potential compounding if you use it to buy more SURGE).
I had a Coinbase Wallet for years, but haven't used it much. It's time for me to take a deeper look at Base as well, since it will definitely grow.
For me it's that too, plus the fact it has no waiting period on withdrawal, and a growth component. It's also on Hive-Engine, and it can get involved in some little defi things like throwing it in the pool.
There are also some not positive things associated to SURGE:
this makes me think that the Yield is actually lower than 15% APR because of the current low price... or Im wrong to assume that?
If it is safe to assume the price of SURGE would eventually go higher, than no, the APR is higher than 15% because of the discount. But if Leostrategy would have issues with collateral at some point, then all their products would be affected. Right now they are well over-collateralized, but the pain points would be during the bear market, most likely.
I thought Base was different from Coinbase. I have a Coinbase wallet too, though I am not using it.
Yes, it is. Much like BSC versus Binance Wallet (although this one is probably a browser extension, not a mobile app, like Coinbase app). There is a Base wallet too, which is different from Coinbase wallet. I have Base wallet too, but haven't used it; at least on Coinbase wallet I've done some things in the past.
I think that is a fairly good reason to go with that pool. Personally, I don't want to move around assets to base so it might be the better option.
You have to realize the dollar value of the pool can fluctuate drastically. For example, right after I added them, both SURGE and LEO took a nose dive, which is not what you'd want to keep the dollar value. But in time, if the bull market is still on, I expect this to go up. Regarding the DCA out of LEO part it's hard to say. Theoretically, SURGE is undervalued and should go up over time, while LEO faces serious resistance when it hits parity to HIVE. That would squeeze the pool tokens distribution toward LEO, not SURGE. DCA out can still happen if HIVE starts going up instead of down. So... if both HIVE and LEO go up in dollar terms. That may not look pretty on Beeswap for the chart of LEO and Leostrategy tokens, but in dollar terms, they would all go up. That's why I said for years we should have had the option to at least see Hive-Engine charts in USD or HBD terms too, if we don't have pairings with HBD.
that is a great explanation to demonstrate the advantage of going with SURGE:LEO
!BBH
Thanks! The reality is it depends on what you want, the timeline you have, when or if you need funds, and other expectations. That works well for me, but it might not be for most people.
#hive #posh