Risks & lures of DeFi. Why I didn't move my IOTX & SUSHI to Pancake Farms

in HODLlast month (edited)

New doesn't always shine.

There was a time during 2017 ICO rush, when people used to rush to buy all new ICO coins in the hope to get them early & cheap to sell them several folds higher only a few days later.

Similarly, we see DeFi's yield farming rush now. It seems simple. Just get in early into a new farm as soon as a new liquidity pool is announced and encash your initial yield before it gets dumped due to its increased supply.

However, it doesn't always come true. And that's where many people get rekt.

We shouldn't consider only the initial APY figures because they are just to attract your money into that pool. Those figures will soon disappear and reality will be drastically different than what you initially saw.

On Ethereum chain, I never used to enter a pool if yield farming was only for a short period. Because it takes a lot of gas to move your funds (esp. if the invested funds are small). Although on low gas options like BSC's Pancake Swap, gas fee won't make a huge hole in your pocket; I still consider the value of time I need to invest to move different coins from different wallets, Exchanges and pools. It doesn't always makes sense.

IOTX


Recently, in an effort to go cross-chain, IOTX moved to Binance Smart Chain. Pancake Swap came up with BUSD-IOTX liquidity pool and some staking rewards in its Syrup or reverse-Syrup pools.

Since I hold some IOTX, I got excited by the news. But I was already invested in IOTX-CYC pools which were giving me over 450% APY. And I was happy with it. So I won't like to move to a different chain and wallet just for a week or two even if it gives slightly higher APY to me.

Turns out, it's giving even lower than what I'm getting on its native chain!

Okay, I'll like to convey the figures by their own screenshots.

How they advertise:


11,322.86% APR dt. 1st March
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What we get in reality:


352.21% APR as on today.
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SUSHI


Same applies to SUSHI too.
On Sushiswap platform I'm already getting about 70% APY and that too after 6 months of participation in the yield farming in SUSHI-ETH pair. If I move this SLP to CREAM Finance, I can earn some extra Supply interest too, on top of this.

On Pancake Swap, though it's somewhat higher than Sushiswap, it's down to 83% within a week of its launch and I don't hope it too will sustain for long. What's more, I will earn the yield in a different token i.e. CAKE. So I'll have some small quantity of new token which I'll need to manage. No, thanks, I won't take it!

How they advertise:

Over 300,000% & 75,000% APR How insane!!! It was 6 days ago.
Can you guess, what it's today?

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What we get in reality:

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There is no dearth of such examples in DeFi. It's not easy to wade through all these large figures which keep changing every second, keeping track of tons of updates about these coins and learning to use and install different wallets & interfaces of several blockchains.

So I think, these tasks should only be undertaken if one can really see a handsome profit in taking all these risks.

TL;DR:


DeFi is dangerously risky (for all) as well as very rewarding (for some). 😊

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Yes, you need to step carefully in this arena. That's one of the reasons I'm hoping this new CUB thing on Leo pans out. If you're in early, you usually reap the best rewards. Just a question of whether Leo is going to make it or not and I believe the answer to that is a resounding yes.