CRV - 28 June 2022
The Dopex Community Analyst series is a series of strategies, ideas, opinion pieces and educational resource written by independent contributors from the Dopex community. Every month many knowledgeable community analysts share a short analyses of a coin of their choice and share these with Dopex. The goal of these articles is to empower the community and help Dopex increase SSOV volume & deposits. With these articles we hope to provide users with additional information that will help them in making an informed choice of strategy using our products.
Without further ado let’s jump into our next article.
Strike ‘em out with a $CRV ball
Summary: Curve is one of the most important protocols in DeFi. It is a high liquidity low slippage AMM, first focused on stablecoin swaps, but has since branched out to other token liquidity pools (ie tricrypto). $CRV incentivizes LP’s and controls governance.
Quick Stats: $CRV market cap is currently $460 million, with almost $6 billion tvl. The token’s all time high is $6.51 and it currently trades at $1.18
Introduction: $CRV has been a focal point in defi for as long since its launch in January 2020 and has only become more popular, partly due to the Curve Wars, which were a hugely popular narrative months ago. For those who have stuck around and have been paying attention, Dopex has an absolute sniper for the curve wars through its IRO’s. However, we’re focusing on the $CRV token with a focus on accumulation until the next bull.
Position & Analysis: Again, I am bullish on the $CRV token long term, especially since I just heard they may come out with a Curve stable coin. While the macro looks shaky at best, my position would be to accumulate until the next bull. Many try to catch the pico bottom, many fail to buy the pico bottom. When a token hits your price target, it takes real discipline to say “perfect, now I’m going to buy.” This strat will aid in the buying process.
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Strategy: We’ll be running a super simple 1 step strategy here - selling put options. This is an appropriate strategy because we believe $CRV is undervalued at these levels. Even if we sell puts at the wrong level, our long term gains are virtually unaffected, but if we sell puts at the correct level, we could collect a premium in USD, and immediately swap for $CRV. The strategy is as follows: Sell puts at all 4 levels to A) maximize potential premium collected B) DCA into $CRV so that if it does fall, we aren't limited to a single price point as our overall buy price, we’re able to average down to something a little less painful in USD terms.
The worst case scenario for this strategy is one of two things; no one buys the puts we’re selling, or, $CRV tanks to a very low price like 55 cents and we eat a substantial loss in potential CRV bought: |
Price tanks to .55 cents/token
Sell $1.15 put and be forced to buy at that price (say with $100)
Tokens acquired=86.95
Buy $100 worth of tokens at .55 cents
Tokens acquired= 181.81
The best case scenario would be all the puts get bought (which wouldn't be surprising in the current market) and $CRV drops to $1.16 allowing you to not only collect premium for all the puts you sold, but also being able to instantly swap that USD for $CRV and obtain more tokens than you would have had you not sold any puts and simply bought at $1.16
Don't sell puts and buy $100 worth of $CRV at $1.16
Tokens acquired= 86.2 tokens acquired
Collect premium on 4 different levels of puts sold, earn an averaged total of 8% more usd to put towards $CRV, $108
Tokens acquired= 93.10
8% is an estimate of additional USD earned from selling puts. Actual number may vary.
Disclaimer: I am farming stables and was too scared to buy on the way down. This strat could help me buy when I want to in the future, and I hope it helps you too.
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