Smart Alpha Pools for DeFi Blue Chips Paired with ETH

I’ve been in the WBTC/ETH pool for over 12 weeks. Part of the reason was because I was holding WBTC, not wanting to sell it into ETH but I’ve been bearish on WBTC’s performance against ETH and so I was able to express that view and protect my position in terms of ETH by taking a Senior position in the WBTC/ETH pool.

This is a common dilemma–most tokens underperform ETH, at least in this bull run. And in a bull run the goal for most of us is take profit into ETH and grow your ETH holdings.

However, many of us hold other DeFi tokens to get different exposure with the hope long term they might perform better. Some hold them longer term to avoid trigger taxable events. Whatever the reason, it makes sense that we should consider hedging against these long positions underperforming ETH, which is why I think we should implement more pools paired with ETH.

6 months ago, I would have died to take a senior position with downside protection in the following pairs:

  • SNX/ETH
  • AAVE/ETH
  • BOND/ETH
  • SUSHI/ETH
  • UNI/ETH
  • WNXM/ETH
  • DPI/ETH
  • LINK/ETH
  • BADGER/ETH
  • INST/ETH

Currently, we have lots of USD pairings other than DPI/ETH and that pool has yet to see any participants on Ethereum. I think SA pools could be promoted to those who are long term vesting team members who for all the right reasons are holding huge bags in projects they contribute to, are unwilling to dump, but need to hedge against the token underperforming ETH, without risk of a liquidatable position.

Here’s my top picks due to their large mcaps and number of holders:

  • LINK/ETH
  • UNI/ETH
  • SNX/ETH
  • AAVE/ETH
  • BOND/ETH cuz duh we should serve our own needs

Separately, I made a proposal/post a while ago in Nexus Mutual about the ability to use SA to hedge against the WNXM/ETH price since it’s been about a year where the peg has been struggling to get back to the NXM bonding curve price in ETH and so some could speculate on that WNXM returning to peg with leverage vs those who simply seek protection against WNXM/ETH going down.

USD pairings in SA should be popular in a bear market. ETH pairings should be our focus in a bull market.

What SA pools paired with ETH would you like to see and more importantly, which pools do you think would help grow interest in SA?

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USD pairings in SA should be popular in a bear market. ETH pairings should be our focus in a bull market.

Absolutely love this – it’s a no-brainer in my opinion! I feel with the right outreach to these communities, ETH paired pools could get more traction than USD pairings.

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LINK would definitely benefit from this pairing.

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I like the idea of adding ETH pairs for larger coins.

I’d really like to see BOND/ETH and BOND/USD pairings too, but I’m wondering if that might be a conflict of interest?

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My vote on this proposal is YES. This is great idea!

I support this as well! I think ETH as a baseline can really help senior-side investments a lot.

Would love to a see a BOND/anything SA pool. That would be amazing. Prefer SA vs shorting assets since it doesn’t put downwards pressure on the price.

I definitely agree with this suggestion

Also BOND/ETH might very well be an option to solve the upcoming end of DAO staking rewards

Is there any reason to not submit this to a BarnBridge DAO vote?

I would be most interested in a LINK / ETH pool, but could certainly find value in several of the others on that list if the conditions were right. I am a little concerned this would result in even more fractured liquidity when you consider all of the tokens listed and the possibility of mainnet / L2 pools. I would love to use the LINK or AAVE/USD pool, but there is so little liquidity there that it would not be valuable for me to use it. Maybe each token on this list could be located on the L2 of choice. For instance SNX/ETH would be on Optimism, LINK/ETH would be on Arbitrum, and AAVE/ETH could be on Avalanche or Polygon.

Love this. ETH pairs will attract a lot of crypto holders.