Uniswap's initial liquidity mining is coming to an end, where will the $1 billion ETH go?
Editor's Note: This article comes fromBlock beats BlockBeats (ID: BlockBeats), reprinted by Odaily with authorization.
Editor's Note: This article comes from
Block beats BlockBeats (ID: BlockBeats)
Block beats BlockBeats (ID: BlockBeats)
, reprinted by Odaily with authorization.
On November 17th, Uniswap's initial liquidity mining will come to an end, and a total of about $3.2 billion worth of assets are currently locked in Uniswap. Participating in Uniswap's liquidity mining, user income can be roughly divided into two types: UNI token rewards and transaction fee dividends.
According to official data, Uniswap's handling fee is 3 per thousand, and the dividend for liquidity providers is 5 per thousand. According to the total trading volume of Uniswap of nearly 26.5 billion US dollars in the past two months, the amount of dividends should not be underestimated. Then there may be some users who continue to choose to lock ETH for the fee income, but it is foreseeable that there will be not many users of this part, and the lack of UNI token reward income will be greatly reduced.
After liquidity mining ends, the impact on Uniswap will inevitably be a loss of liquidity. And after the mining is over, where will the $1 billion worth of ETH go? Many encryption users and industry professionals have expressed their views on this.
Max Bronstein, a researcher at Coinbase, believes that the ETH flowing out of Uniswap's liquidity mining is unlikely to be sold into a stable currency, and liquidity mining participants who do not want to receive ETH have already hedged. If anything, those hedges disappear and we see a small rebound. The emergence of new ETH liquidity mining or (users) reallocating assets to DeFi blue chips seems the most likely.
Wangarian, the manager of DeFiance Capital, assumed on November 11 that even if 50% of the ETH locked in the warehouse chooses to unlock due to the end of liquidity mining, then there will be an outflow of ETH worth 500 million US dollars (about 1.2 million pieces) . These ETH holders have roughly three directions of operation: 1. Continue to participate in the liquidity mining provided by other platforms, such as switching to Sushi or participating in ETH2.0 pledge; 2. Be a Holder, and the Buddha will not hold the currency. 3. Sell immediately and exchange for other tokens.
Wangarian himself is more inclined to the third result, that is, most users will choose to sell ETH.
On November 16, a Twitter user named Nick C. (@n2ckchong) based on Wangarian's guess, listed 9 operations and risks that he thinks currency holders can carry out.
1. Ethereum 2.0
Validators will receive 22% APR if they stake the minimum amount on the ETH Beacon Chain
If you can't run the validator correctly, it will lead to serious consequences
Extreme opportunity cost; once staked your ETH is irrevocable.
2. Alpha Homora Fund Pool
Alpha Homora allows ETH holders to easily use leverage to use liquidity mining pools (SushiSwap, Uniswap, Index, Mstable, etc.) and as liquidity providers on AMMs. Due to impermanence loss (IL), yield mining returns are quite high (15-100%+).
Risk: impermanent loss. If you use leverage, the risk is magnified.
4. Rari
3. Alpha Homora ETH treasury
In order to allow users to obtain leverage from the pool, AH needs to withdraw ETH from it;
Liquidity providers can get a stable return of 3-20%.
Risks: Debtors are wrongly liquidated; funds cannot be withdrawn due to high utilization.
Rari provides an ETH yield pool, using the money market to obtain ETH yield. Rari is also offering RGT tokens as a reward to all depositors before mid-December.
Risk: Smart contract vulnerabilities.
5. Yearn Vaults (coming soon)
In the coming weeks, Yearn developers will be rolling out the second version of the ETH yVault. The first iteration offered 50% APY by the end.
Risk: Smart Contract Vulnerabilities
6. ETH as collateral
Mint or borrow stablecoins with ETH, then deploy stablecoins to yVault, Pickle Jars, etc. Simple, but involves liquidation risk.
8.Hegic underwriter
Risks: liquidation risk if ETH falls; market risk (Black Thursday); smart contract bug (Flash loan exploit)
7. Automated Market Maker (AMM)
On AMMs such as Uniswap and SushiSwap, there are many trading pairs that can provide high yields (over 30%) just by providing liquidity. Traders pay a small fee to liquidity providers when conducting AMM transactions.
Risk: impermanent loss; the more unstable a pair is, the more risk you will take.
Hegic is an options protocol. Insurance underwriting pools pool funds to collectively short volatility. If the option expires worthless, the limited partners profit. Hegic's liquidity providers will also receive 250% of Hegic in the future.
