Plenty of Thorchain content around lately, as tends to happen when the price pumps. As I'm writing it is sitting around $4 each, pushing ATH every time I refresh it seems.
Why does it hurt JK?
In a word, Impermanent Loss. (that's two words, but you get the point)
My most recent pool position has been in a RUNE / ETH(bep2) pool on Bepswap. I've been in for 15 days, and so far it all appears to be going ok. The USD value is up over 50% - happy days.
However, If I wasn't in this pool, I would have been 100% in RUNE, hodling instead of LPing. So that would have been a holding of 658 RUNE, worth $2632 at $4 each.
so, in effect by LPing, I have missed out on $700 of paper profits.
Hence why I say RUNE is so good it hurts.
So, what will I do?
My plan now is to just stick it out. I like ETH, and am ok with gaining more of it. Same, I just reopened a small BTCB RUNE pool position, and am ok with gaining either asset. As much as I think it will keep going up, RUNE has to take some pauses at some stage, and let fees and pool income catch up a bit.
The other thing I'll be doing, is steadily adding to my positions each week. Once a week, I buy some eth and btc from fiat, automatically on Coinbase. My plan is to asynchronously add these weekly buys into the pool (after converting them through Binance into the Bep2 version). This should help my IL over time. Slowly, this will add to my positions, and increase my exposure to RUNE within these pools.
RUNE is pumping, IL is a good problem to have really. It means numbers go up, just up a little less than what could have been. At the end of the day, I want more ETH, I want more BTC, and I want more RUNE, so regardless of IL, it makes sense to be in the pools, and DCA in a little extra each week.
In case you missed it, here is a different view - it all depends on pool choice and timing.
- @ash's article - update on my RUNE/TWT LP. Ash has made a killing, as TWT has gone up heaps from when he pooled, along with RUNE.
- @khaleelkazi's article - On high conviction investments. He is not in the pools yet, and is sitting on very large gains and agonising over whether to LP.
Bring on Multichain Chaosnet
Thanks for reading, hope this little insight gives you a look at what IL can do, but remember it can also reverse as quick as it rose, and the "loss" is not real until you withdraw.
See you all in Valhalla,
JK.
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Still on the fence, but I really want to start pooling BTC-RUNE. My plan for a while has been to do it at $5 RUNE as a way to “take profits” in a way. If it goes up from there, I’d gain more BTC. Down from there and I’d be buying back RUNE cheaper than I swapped it for.
Decisions decisions. I’ll keep thinking about it and when $5 is upon us, I’ll make my final decision to swap/pool all of it or a %.
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Good plan. These are nice choices to have to make. At $5 its all gravy for you, no matter which way it goes?
Wen RUNE/WLEO?
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Good point! I'll consider this later! ''Pooling as a way to take profits''
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I miss billions. Hope to see them back
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I had a similar situation in the wBTC / Badger pool over the past few weeks but I haven't pooled any of my RUNE so that's good for the moment. I think I'll just let it ride :-)
If I wasn't already in pools, I'd be letting it run till multichain goes live.
Either way, its a nice choice to have sitting on some solid gains.
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What you think about mainnet - what it will do with BTCB? Or other coins (XRP, ETH etc) wrapped to BEP-2? Will they stay same price, or do you think they go down?
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Once multichain launches, its a whole new game. I think that one multichain is stable, bepswap will be shut down. Asgardex will replace it. Pools on bepswap will close, with all assets returned to wallets. There will be a transition period, but arbitragers will keep the prices of say btcb basically the same as native btc.
Shouldn't be much divergence, and there will likely be plenty of time to allow people to transition from binance chain assets to native.
Very good update, eye opening on impermanent loss. You might want to go out just before main net is launched tho :)
Got some IL myself on ETH and ADA, funnily my XRP/RUNE pool has given more RUNE 😁
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I have a similar situation here but I chose USDT/RUNE and I'm losing a nice amount.
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RUNE has been one of the best investments I have made this year and it keeps on getting better. When is the multichain going live? Could it leap up even more then?
Okay this beginner is so lost reading this...which is great that means there is so much to learn.
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It is an effective strategy if the prices of the two assets are less volatile, or more importantly moving together. It is also effective if fees and income earned in the pool is sufficient to cover potential impermanent loss.
It definitely has risks, that need to be fully understood and accepted before jumping in. The best way to LP is with 2 assets you really like, that way price moves are unimportant as you are effectively trading your existing assets for a new asset that auto-balances your holdings between the two, and earns fees along the way.
Not for everyone, but good as part of a long term plan.
ETH has a high initial investment required, RUNE not so much as it is currently on Binance chain with much much lower fees.
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