As we mentioned in our last article, the biggest fundamental change in the blockchain industry in 2020 is the explosive development of crypto interest-generating methods and concepts.
So how based on this judgment, the unity of knowledge and action. How about maximizing your income through KLend?
First of all, you need to have a basic judgment on the market stage.
1. When you judge that the market is in a bull market stage
1.1 Then I highly recommend you to hold several tokens with the highest market value for a long time, BTC\ETH\BNB…
Because through historical data, we have surprisingly discovered that the vast majority of bull market yields do not outperform the HODL of BTC and ETH.
1.2 At the same time, I suggest you mortgage these mainstream crypto into KLend, earn interest, and farm KLT first.
1.2.1 The conservative strategy under the bull market judgment:
open the collateral for the value crypto you deposited in KLend, borrow USDT or another stable coin out, continue to buy mainstream crypto, and cyclically mortgage back to KLend. Complete a synthetic spot long contract. The biggest difference between a spot contract and a futures contract is that it is difficult to liquidate a position and will form a real buying force on the spot market. At the same time, because of the mechanism design of KLT mining, you do not really need to pay interest for your borrowing behavior. Under normal circumstances, the farming income of KLT is sufficient to cover this interest expense.
Operation tutorial:
https://app.gitbook.com/@klend-2/s/klend/help/pc
1.2.2 Neutral strategy under bull market judgment:
It is also the most popular strategy for big funds in the bull market. The biggest feature of the bull market is the high rate of short perpetual contracts. If the price is pumping for a period of time and there are many people who go long, it will cause the perpetual price to be higher than the spot price. At this time, the funding rate is generally positive, that is, the long side has to pay the short side to the short side to pay the fee according to the position. The greater the deviation of the market The higher the price difference tends to fall. Doing long trading perpetual contracts is equivalent to borrowing money and adding leverage, and funds have a cost of use, so most of the time it is a 0.1%. The fund rate is charged every 8 hours(0.3% per day), so the perpetual price is often very close to the spot.
Take the data of Binance Exchange as an example: https://www.binance.com/cn/futures/funding-history/1
It can be seen that the average fee rate of multiple currencies is above 0.15% (due to the recent bull market, the fee rate is relatively high, but it is difficult to sustain). According to the recent income calculation, the daily return rate will be 0.15%*3 = 0.45%, and the annualized return rate will be 164% without compound interest.
Considering spot hedging, double the leverage of futures, plus unfavorable factors such as loss of opening, premium, and closing, the annualization should be 100%. The retracement is almost negligible. In a non-bull market, the annualization rate is also around 20%.
So you can deposit your mainstream crypto in KLend, borrow USDT out from KLend after the collateral is opened, to carry out the rate arbitrage.
For example, 1:1configuration. 1x BNB U standard short order and holding BNB; or 1x BNB open short in full position mode (the token standard mayhas certain risks). Then you can participate in Binance’s ultra-high-yield launchpad while hedging the arbitrage rate on Binance Exchange, or return to KLend for revolving lending. At the same time, because your funds are borrowed from KLend collateralized value tokens, you will not take the rise of mainstream tokens at the same time.
1.2.3 Radical strategy: use USDT borrowed to participate in DEFI. At present, stablecoins are still the most universal gold shovel in the DEFI industry. But Defi is like playing cards, and the rate of return is linked to your “card skills”, which poses a certain risk to novices.
When you judge the market as in a bear market cycle?
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Then your operation can actually be very simple, mortgage stablecoins such as USDT entry KLend, lend BTC, ETH, BNB, and other mainstream cryptos, and sell them in the market. Wait or use the funds thrown out to continue to mortgage into the KLend revolving loan and throw it out. After the price of the coin drops, buyback those tokens. Redeem your USDT.
Risk statement:
KLend uses an excess lending model, a decentralized lending platform. In the event of insolvency, your collateral will be liquidated according to an algorithm. When using KLend for farming and arbitrage, please always pay attention to your capital health coefficient. THX
