Aperture – Managing DeFi

May 4, 2024 | Defi, Dex

DeFi protocols

The first generation of defi applications allows users to swap various tokens without the need for traditional intermediaries like exchanges. It enables users to trade tokens directly from their cryptocurrency wallets through smart contracts. Users can become liquidity providers by depositing pairs of tokens into liquidity pools. In return, they earn fees from trades.

This is an efficient way for users to earn a yield on assets they already own, however there’s the risk of impermanent loss. If a token price drops significantly , the liquidity provider ends up holding the asset with the least value. Most of the defi protocols now lets the users specify the price ranges they are comfortable with. If these prices are exceeded, the user exits the pool automatically. While this helps protect from impermanent loss, it takes more management and monitoring. When a users exits the pool automatically, he stops earning yields. The users have a choice to enter managed pools where a 3rd party would rebalance and manage the pool for a small fee.

Pool managing tools

New tools like Aperture helps users to manage pools from different providers. It offers an “intent” infrastructure where users declare their goals and the platform executes them. It offers automatic rebalancing strategies, automatic fee compounding and much more. There is an airdrop campaign ongoing where you can earn points while interacting with the protocol. We recommend doing an extensive research before using the platform. You need to understand the smart contract risks associated and understand how the “position permit” signatures work. Here’s an example of a rebalancing.

How to lend your assets with Demex

Feb 23, 2024 | Defi, Dex

What is Demex

Demex is a new generation decentralized exchange designed for trading complex financial instruments and derivatives across several blockchains. Anyone can be a market maker by contributing liquidity and making money from trading fees. It offers a wide range of features including trading derivatives, lending or borrowing tokens, minting stablecoins and providing liquidity.

The fact that it is a decentralized exchange means there is not 3rd party involved and no custodial. Everything is managed by smart contracts and code.

Risks

While trading cryptocurrencies comes already with a lot of risk because of volatility, trading on a dex adds a smart contract malfunction of hack risk. If something happens no one is liable. So it’s very important to understand the risks and do your own research before using such technologies.

For example, when you supply your favorite coin to a lending pool, users have to deposit a collateral to be able to borrow it. Usually users have to provide more collateral than what they borrow, but they could do so with many different coins. Now let’s say one of the coins on the collateral side looses all its value (let’s say LUNA for example). For sure the lender prefers to get liquidated rather than paying back the loan and returning your favorite coin. So you are left with worthless coins.

As decentralized exchanges get more sophisticated they try to put some guards in place, however it’s still too early for these safety measures to be bulletproof.

You can review the risks stated by demex here.

Lending

That being said, let’s review how you can lend your assets using Nitron on Demex:

We will be using keplr wallet, which is a great wallet mostly for the COSMOS ecosystem.

The first step is to connect to demex and create your account. Once this is completed, you can click on “Nitron” and search for the coin you wish to lend:

Once you find your coin, click on “lend”. In this example we clicked on stTIA. If you don’t have stTIA on Demex, you will have to deposit some from your wallet. Click on “Deposit”

Transfering your tokens

On the next screen, you have to choose the network that has your coins and the balance you wish to transfer to Demex:

Once you choose the amount to transfer and click on Deposit, you will have to accept the transaction in your wallet. This will trigger and IBC transaction and you will have to pay for the transaction fee with the coin of your chain. In our example, the fees have to be paid using STRIDE coin. The IBC transaction will move the coins from their chain of origin (Stride) to the Demex chain (Carbon).

It is important to note that once your coins are transferred, you might not see them anymore in your wallet, unless your wallet supports displaying your assets that are on Demex/Carbon.

Complete the transaction

Once completed you go back to the previous step and you can see your coins available to lend:

You can choose how much to lend and whether you want all the amount to be available as collateral or not. This means the amount you wish to make available as collateral for future borrowing.

You will have to confirm the transactions in your wallet. Note that the transaction fee is paid in SWTH, which is the coin used for the Carbon chain.

Once completed, you can start borrowing against the collateral portion:

You can always increase or decrease the amount of the collateral later on:

Borrowing

To borrow some funds, find the coin you wish to borrow and click on borrow:

In this example, we are borrowing milkTia:

We can borrow up to 6.59 in this example, however that puts us at risk of liquidation. Always check your Health Factor and make sure it’s in a good position. You have to verify it daily and verify the interest rate as it can vary too. A spike in the interest rate can get you liquidated.

In this example, since the provided collateral and borrowed asset are all liquid TIA, we know that there won’t be a lot of price fluctuation. However if your supplied assets value go down while the borrowed asset goes up, you will need to rebalance.

Again, it’s not financial advice, you should do your extensive research before deciding to use these features.

Here’s the result of the borrowing transaction:

The Nitron dashboard is nicely done, we can see all the information easily:

We have our total asset, health factor, net APY and the “return” button very accessible.

The question now is why would we borrow milkTIA or stTIA if we already have some? This strategy applied at scale will increase our holdings and could help us farm the borrowed coin’s airdrop. It depends whether they consider the net balance or total balance for the airdrop. There are no guarantees.

We can also use the borrowed asset to lend it back, which will improve our health:

Don’t forget that by using Demex, you could be eligible for its future airdrop.

MerchantMoe

Feb 15, 2024 | Defi, Dex

MerchantMoe is developed by the same team as TraderJoe, the popular dex on Avalanche. It has a similar UI and gives us many options between swapping, staking and farming:

It’s very straightforward to SWAP on the platform, here’s an example of swapping USDC to JOE, the utility token of traderJOE:

Don’t rely on the transaction fees that appear in metamask:

The fees were higher once completed. Almost 0.18 to Approve Spend and 0.18 to swap.

Moe also offers you the possibility of farming with many available pools.

There’s also a bridge to transfer your JOE tokens between the different chains (Arbitrum, Mantle, Avalanche and BNB). However it should be expensive to use.

You can check Butter, another leading platform on Mantle.

Butter.xyz review

Feb 15, 2024 | Defi, Dex

Do you need to do some swapping on Mantle Network? You have many options, but here are two of them:

Butter

MerchantMoe

Butter

Butter.xyz is a new decentralized exchange built on the mantle network. It offers many defi features and is currently offering points and rewards for users (for a limited time). It has an interesting and interactive way of distributing rewards such as a fishing simulation.

Swapping on the platform is straightforward and besides earning points, you can earn a fishing attempt:

When you click on the fishing attempt, you get redirected to the animation where you can initiate the fishing attempt:

The first crate was empty but we got 1$MNT staked with the second attempt. The more swapping you do, the more fishing attempts you might obtain.

The catch is that you need at least 10 MNT to be able to unstake:

Fees

The fees of the platform are relatively low, however we noticed that the fees in the final transaction was much higher than what’s indicated in the dapp or in metamask.

Here’s an example, we swap from USDT to USDC, our balance is 15.39 MNT and we have 4 points. In all the screens and in metamask, it shows very low fees:

However after completion, we have 11 points and our balance is 15.15 MNT, so we used 0.24 MNT in fees. Even in metamask in the transaction history, the values are wrong.

In mantle explorer it takes a lot of time for the transaction to appear, so we used another explorer where we can see that the transaction fee was in fact 0.24 . So we just believe there’s a display error somewhere or that the transaction fee estimation is not working properly.

So keep this is mind while interacting with the mantle network.