DeFi 2.0 Strategy — Defi Degen Challenge.

There are many strategies in decentralized finance that help to limit risk and maximize return. The most common strategy for DeFi is to lend and borrow any cryptocurrencies to make one or more loops until collateral allows us to.

DeFi 2.0 — The new era of decentralized finance

The new projects propose one operational to end the reliance on liquidity mining that characterized the capital attraction dynamics of the first generation of DeFi protocols.

Liquidity Mining.
Explained simply and bluntly, liquidity mining is like a rewards program in which a protocol offers its native token to so-called liquidity providers in exchange for depositing assets that are made available to users through lending services on platforms such as Compound (COMP) and AAVE or crypto active trading, such as the decentralized exchange (DEX) Uniswap.

The new generation of DeFi protocols is within the DeFi 2.0 concept which is creating alternative strategies alternative strategies to attract capital, constituting its own treasury to sustain its financial operation without the need for the funds of users attracted by the mining of liquidity.

So, with the concept of Protocol Controlled Liquidity is central to the DeFi 2.0 protocols, the developers have created different and innovative economic logic to achieve it.

Olympus DAO.

Olympus DAO (OHM) is an incredible DeFi project attempting to create a global stablecoin asset backed by crypto, not USD. Some stablecoins, such as DAI, already fit that description, so what makes Olympus DAO and its OHM token different? The Olympus DAO treasury.

Olympus is a “non-pegged stablecoin” that attempts to be less volatile than traditional cryptocurrencies while not being pegged to any fiat currencies. Instead, the value of its OHM token is meant to float based on the value of its underlying treasury of assets and parameters set by the DAO.

Olympus has been called one of the most interesting economic experiments in the DeFi space for several reasons. Olympus owns a treasury that mints and sells new OHM when it is trading above its price floor of 1 DAI and buys back and burns OHM when it is trading below that.

Today we’ll try to solve a Defi Degen Challenge.

You have 5k USDC that you have to stake at Olympus DAO for 60 days, for at least 95% of the time. Your goal is to make as much money as you can (or to lose as little as possible). You can do anything within the Olympus ecosystem and anything outside of it for 5% of the time.

My goal is to lose as little as possible, because of that my strategy attempted to protect the initial capital against the volatility of the OHM pair, depositing 100% of the capital in protocol AAVE(Avax) for 2.5% per annum and generating loans for 70% of the LVT on 2 times, giving a deposit of $10950.

The last borrowing with a balance of $1750 was used for staking for 5 days in Olympus DAO, through the purchase of gOHM token in the avalanche network generating a profit of 0.86% at the end while continuing to generate.

Describing the operations of the strategy including all approvals, transactions, etc.

Fig 1. All the steps for the strategy.

Based on the image we can calculate the ROI of the strategy 9,53% % in the next 55 days, you can check the data from the next link

https://docs.google.com/spreadsheets/d/1j3vpycEG-aQ1bTp_nKy4JG85e_Xky-5NYCbB62uUvFY/edit?usp=sharing

Date of Date: 04/06/2022

Fig. 2 Calculate the ROI

The total return could be (9.53%) The fees and gas transactions in the AVAX Chain, nor the volatility of gOHM in the next 55 days, have not been calculated in the profit.

Fig. 3 ROI

Describe all the steps needed to apply the trading strategy. I’ll assume you have a new computer, no custody setup, etc.

• I am going to use a phone wallet
• Download your MetaMask Wallet in your preferred browser (Brave, chrome, etc.)
• Install the software MetaMask
• Set up an account and security features
• Write down your 12 or 24-word recovery seed phrase (it’s important to keep this offline to avoid hacker attacks in the future)
• Create a password or pin of at least 14 characters.
• Log into your preferred exchange
• Buy 5k USDC in AVAX
• Send the AVAX to your Metamask wallet from your preferred exchange
• Using coinmarketcap.com to find the contract to add the USDC.e in to the Assets list on AVAX chain
• Swap AVAX to USDC.e in your Metamask
• Lend 100% your USDC.e in AAVE protocol
• Make a loop to lending and borrowing for 70% LTV of the capital 2 times
• Making the last borrowing with the rest of capital
• Swap of the rest of the capital to gOHM in the TraderJoexyz
• Start skating the gOHM for 55 days.

Holding crypto thesis.

Based on a recent research paper running from May 22, 2022.

I explain to you what is the DeFi 2.0, how relevant is in the crypto space, and why they constitute its own treasury to sustain its financial operation without the need for the funds of users attracted by the mining of liquidity.

Also, I talked about one of the most important protocols in the DeFi 2.0, OlympusDAO, which owns a treasury that mints and sells new token when it is trading above its price floor of 1 DAI and buys back and burns its token when it is trading below that.

Finally, I solved the Defi Degen Challenge step by step. My strategy uses the Avalanche tokens, Aave Protocol, TraderJoe on the network of Avalance to finally swap USDC.a swap with gOHM — OlympusDAO, the outcome of the strategy could be 9,53% in 55 days.

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