Out of the blue, the altcoin season seems to have arrived like a spring breeze overnight.
The chain also feels warm, because the chain's small positions have once again turned losses into profits. ETH is up 53%. UNI is up 47%.
BTC provides ballast. These small positions are just for fun. Even if they go to zero, it won't be a big deal.
During this wave when UNI dropped to $5, the chain was tempted to add positions during the dip, but ultimately missed the opportunity by waiting for an even lower price.
However, the chain will not reduce positions, so the regret is only about missing the chance to buy the dips, not about selling everything.
Beyond the regret, two relatively correct things were done.
The first was participating in Unichain's LP activity to win UNI rewards in May and June (mentioned in the internal reference), obtaining some "zero-cost" UNI and lowering the average cost from $11 to $7.24.
Hey, without participating in the activity and lowering the cost, it would still be at a loss!
Doing DeFi involves risks. Often, while you're attracted by the interest others offer, they have their eyes on your principal.
Especially with new products and technologies, vulnerabilities might suddenly emerge, and hackers could clean you out. Therefore, the chain never recommends newbies to play recklessly. Even for someone like the chain who understands technology, it's impossible to carefully read through all the code from start to finish. Honestly, it's just charging forward on intuition. Man proposes, God disposes.
Walk by the river often, and your shoes will eventually get wet.
The chain has now withdrawn. The reasons were shared in the internal reference and won't be repeated here.
A byproduct was earning some COMP rewards by temporarily placing withdrawn funds in Compound. Now these rewards are more valuable due to the rising coin price.
The second thing was that the timing of completely withdrawing from the LP activity was just before this market movement started.
Those who have done LP should know that if you're doing LP with a volatile coin and a stablecoin, like ETH/USDC, if ETH suddenly surges on one side, you might suffer significant Impermanent Loss.
Due to the constant product market-making algorithm, it's always buying when prices drop and selling when prices rise. So if ETH surges on one side, the ETH position might be sold out completely.
For example, the chain initially bought WBTC at $80,000 for WBTC/USDC LP, with a market-making range between $80,000 and $90,000. When BTC rises above $90,000, the WBTC position would be sold out. Later, buying again between $90,000 and $100,000 for LP, and as BTC returns to $100,000, it would be sold out again. Although from a USDC perspective there's no loss, compared to holding from $80,000, it definitely earned much less.
So the UNI mined seemingly "zero-cost" actually has a hidden cost of "earning less" due to Impermanent Loss.
Is it too greedy to say that not earning is a loss?
Consider the opposite scenario: buying WBTC for LP, and BTC crashes significantly. The algorithm would buy as the price drops. The total position value would keep decreasing. From a USDC perspective, Impermanent Loss would be "more loss" rather than "less earning". Compared to holding half WBTC and half USDC, the downside Impermanent Loss would indeed face more serious losses.
At this point, LP transaction fees and UNI rewards from activities can be seen as compensation for such losses.
There's only one scenario where mined UNI is pure profit: entering and exiting LP at the same price. Like the chain's withdrawal from ETH/USDC LP, the price was around $2,500 both when entering and exiting.
So, surfing the market has both fortunate and regrettable moments, but overall, regret outweighs fortune.
Regret outweighing fortune is the norm. People always regret not selling in time during losses and not buying more during profits.
No matter how you calculate, human plans can't beat divine plans. It's just human nature's greed, forgetting the pain of crashes during bull markets and forgetting to repair the roof during sunny days.
It's better to accept the regrets. Contentment brings happiness.
