Transcription
In today's video, we're going to talk a little bit about the best DeFi strategy, in our opinion. I'm going to do a step-by-step. The strategy is this one that involves two of the biggest DeFi platforms, which are Ave and Uniswap.
Well, just for you to understand the logic behind this strategy, we're going to use two DeFi platforms, as I mentioned before. We're first going to go to Ave to do something we call, right, collateralized lending. What would collateral be? So, imagine you have, for example, $10,000 in BTC. Instead of just leaving that $10,000 in Bitcoin idle, you're going to take that $10,000 in Bitcoin that you have, and you're going to use it as collateral to come here to Ave.
So, we're going to come here to Ave, and we're going to put that $10,000 here as collateral. Then, after doing that, Ave will make it available for us to take out a dollar loan. So, I'll take, put Bitcoin here, put it on Ave, and Ave will say: "Ah, since he has this amount of Bitcoin, I'll give him the power to borrow dollars." We're going to borrow a certain amount of dollars, and I'll explain the amount to you, everything correctly, so as not to have too much risk. And with these dollars that we borrow, we're going to set up a liquidity pool. So, I'll set up a liquidity pool on Uniswap.
So, the strategy itself is basically this. Obviously, I'm going to do it in practice with you, but we're going to use two of the biggest platforms, which are Ave and Uniswap, to give even more power to our holdings. It doesn't make sense to leave $10,000, or whatever amount, right? If it's a significant amount, sitting idle in an exchange, for example. The ideal is to use that value to make more money. If I don't put this here on Ave, for example, it will just sit there idle.
Now, with what I borrow here, I can put it in a liquidity pool, paying off this loan little by little, and then, at the end of a month, two months, three months, this loan itself will be paid off, and in the end, I'll still have my $10,000, and at the same time, I'll also have the amount I put into the pool initially, because I will have already paid off my entire debt. So, I'll end up with more money and the same amount of Bitcoin if I know exactly what I'm doing, okay?
The first question we sometimes get when we explain this strategy is: Why don't you put the Bitcoin directly into the liquidity pool? Because, first of all, liquidity pools that involve large tokens like Bitcoin, Ethereum, normally pay little. And besides paying little, these liquidity pools that involve Bitcoin, Ethereum, and so on, I'll be susceptible to market fluctuations. So, when I set up a Bitcoin liquidity pool with USDC, for example, imagine, I set up a BTC with USDC pool. When the market is going up, I'll be converting part of the Bitcoin into USDC, because the pool rebalances itself, right? So, part will be in USDC, then if Bitcoin falls, it does the DCA, it stays more in BTC. So, I won't be 100% in the asset, and the goal is to be 100% in the asset, especially, for example, if the market starts to rise.
If the market rises a lot, and I'm in a Bitcoin, USDC pool, if it goes out of my range, I'll end up 100% in USDC, which is something I don't want with this value that is being held in Bitcoin. The Bitcoin I have there, for example, is for the long term. I don't want to sell it. So, I'll use this Bitcoin, which is for the long term, to generate money out of nowhere, which is through Ave here. And with that money, I can take a pool and pay more. I can choose pools on other networks. I don't need to be susceptible to just one network. I can do whatever I want with this money, trade, do whatever you know how to do.
Here, in this case, we're going to use Uniswap. Okay? Let's get to the practice. Now that you've understood the theory, in practice here, I'm going to change the network because my balance is on the Base network. Notice that Ave is on practically all networks, right? On the standard Ethereum network, there are many assets here, look. You could put, for example, WBTC, which was the example I gave, or cBTC. You could put many, many. You can even put dollars here, but that would involve another strategy. SHA, which is gold, Link, Ave. So, we have many options, you can see what you have as collateral. I'm going to switch to the Base Network for tutorial purposes, as that's where my balance is, okay?
So, notice what I'm going to do here. I have $8 here that's idle in my wallet. I'm going to first convert these $58 I have into Ethereum, because the example here of what I'm going to do is that if I were holding Ethereum, right? If I were holding Ethereum, I would have to put ETH there. So, I'm going to take these USDCs I have here, and I'm going to get ETH on the Base network. I'm going to convert, for example, 50 to make it a round number, into Ethereum. I'll analyze the swap, confirm. I'm using Rabby nowadays, which is being the fastest wallet, right? I've really enjoyed using Rabby. I'll confirm the transaction here, and okay, I've done the swap. Base network, Base network is cheap. I already have here, look, 0.02 ETH.
I'll go back to Ave, I'll refresh the page here, and it will already locate the amount of Ethereum I have. Look, look. It will locate that I have 0.02 ETH, and I can put this 0.02 ETH here as collateral. How do I do that? I come here to supply, and then it asks how much you want to put. I'll put 0.018, for example, to leave a little to pay for fees here. Actually, I have a little more Ethereum, but I'll put 0.08. 08 to leave a little to pay for fees. Then I'll click here on supply ETH. And then it even says here, if I put 0.08, I'll be eligible to borrow 80% of that amount. So, I could here, 0.08 is 40. I could put 40 and borrow almost 80% of the value I put in USDC.
But you'll never borrow that 80%. Anyone who does that is crazy. Just smoking weed. What you're going to do here is you're going to put in an amount and borrow less than half of what you put in. So, remember the Bitcoin example? Ah, I put $10,000 in Bitcoin. When borrowing, you'll borrow three, you'll borrow two, you'll borrow 1,000. You'll never borrow, man, I put $10,000, I'll borrow 8, which is 80%. You'll never do that. Why? Because if the asset you put in, in my case here it's Ethereum, its market value starts to fall and gets close to the value you borrowed. In this case, I haven't borrowed yet, right? I haven't borrowed anything. But if this value starts to fall, imagine I've already borrowed here, uh, 30. I was crazy and borrowed almost everything I put in. I put in 40 and borrowed 30. If Ethereum starts to fall, melt, melt, melt, melt, and gets close, for example, to the value of 33, what will happen? When it reaches 33, 32 there, Ave will say: "Whoa, this is getting risky." Know that Ave will never lose. It doesn't make sense for me to put 40 here and borrow 50. I gained R$10 out of nowhere. That doesn't exist. So, it will always let you borrow less than you put in. And if this value starts to get close to what you borrowed, it will say: "Whoa, it's getting close." It will start to take part of what you put in for it, which is what we call liquidation. That's why you'll never borrow too much, close to what you put in, okay? You always borrow less than half. If the market is going up a lot, then you can borrow half. Because if Ethereum starts to rise, what will happen to this 40? 40 will become 50, and then it will become further and further away from the amount you borrowed. When the market is rising, then it makes sense to perhaps borrow half or even a little more if you keep a close eye on the market, because the trend is for the asset to continue rising and the value you put in here to also start rising. We can even see this in your loan health.
I'll do it here. Here it is, assets to borrow, which are the assets I can borrow. I could borrow Ethereum, Bitcoin, Euro, GHO, which is Ave's stablecoin, right? And USDC itself. Notice that it lets me borrow 31, look, available 31. I put in 39.40. So, it only allows a percentage, 80% of that. It won't let me borrow 100%. And never borrow a cryptocurrency. Unless you're doing a specific strategy for it. On Defizeros, I teach some strategies for borrowing cryptocurrencies, which is our community, where we teach DeFi step-by-step. But if you're doing a more down-to-earth, more relaxed strategy, it makes total sense to just borrow USDC, okay? Because USDC doesn't fluctuate. If you borrow a cryptocurrency, its debt will also fluctuate. So, if Ethereum starts to rise, and you borrowed Ethereum, man, you'll have to pay more when you go to pay, right? So, you have to be careful.
I'll borrow USDC here. I'll never borrow more than half, so I'll borrow, I put in 40, I'll borrow here, for example, $15. And look, it will already show me the health. And this is where you have to keep an eye. It will show me the health of my loan. If I borrow 15, my loan will have 2.20 health. If I put in 10, my loan will have 3.31 health. What does this mean? It means that the less I borrow, the healthier this loan is, right? Because it's further away from the value I put in, which was 40. When it reaches one, if, look, imagine if I borrowed 31, look where my health will be. 1.06. Any fluctuation Ethereum makes, I can be liquidated. So, when it goes below one, look, it even says here, liquidation at less than one. If Ethereum drops a little and gets close to the value of 31, which is what I put in, right? It's 40, it starts to fall, gets close to 31, I'll start to be liquidated. It liquidates all at once. What is liquidation? Ave will start to take part of the Ethereum I put in, because as I said, Ave will never lose, right? So, it will gradually take what you put in as Ethereum to make the loan healthier again, right? You can also at any time come and simply repay the USDC, or you can, for example, deposit more. If you deposit more, the health will increase again. I'll put in $15, okay? I won't put 15, right? A little less than half. I'll put here on borrow USDC. So, I'm borrowing $15 here. Obviously, with $15, I can't monetize that much. If I set up a liquidity pool with just dollars, it will pay me one cent per month. I don't know how much it will pay me. It will pay very little. So, it would take me quite a while here to repay. I won't be able to generate much income. It will pay a dollar per month, for example. So, after 15 months, I can clear this debt. But with $15, it doesn't make much sense. It makes sense for you to practice and so on. It makes even more sense for those who have more value. If I put in $400,000 here and borrowed $15,000, with $5,000 I can do a lot, right? Right? I can create a great liquidity pool that will give me income, and I'll continue to have, for example, the value I put in here in Ethereum, okay? But since I'm doing a tutorial here for you, I borrowed $15. You'll see that it has already appeared in the wallet, look, it was around 8 and now it's 23. And now comes the second part of the tutorial, which is us using these $15. But before that, I need to remind you, we have spots for the Defizeros mentorship with a discount, lifetime access, and plus two bonuses, one of which is sensational. Look at all the testimonials people share here. Look at all the classes there are. This is all a chapter within Defizeros. And look at this first bonus here, where we send liquidity pools that we're keeping an eye on in the Defizeros student group. So, every week you'll receive some pools that Gu and I have filtered, and we send them in the group, okay? Access is lifetime, as I mentioned to you, the link is in the description. Come be our student, it makes a lot of sense, man, you'll learn everything about DeFi and various strategies, not just one, okay? And I remind you to leave a like, subscribe to the channel, we bring DeFi videos here every Friday.
Returning here now to the liquidity pool part, it's worth noting that I wouldn't necessarily have to set up a liquidity pool. I could do something else. I could take this money, for example, and withdraw it in BRL, send it to an exchange and withdraw it, send it to Bybit. I could take this amount, send it to the Solana network, go to the Solana network and buy an Mcoin. Obviously, if you take it and lose this money, you'll have to find that money again to repay the debt. So, the ideal is not to go crazy and start losing, right? It's not about making mistakes. The right thing to do is to go for something more down-to-earth so you can pay off this debt little by little.
Another observation, the debt itself has no expiration date, okay? It has an interest rate that is very low, right? Look, it says here. Interest 3%, 4% per year. So, it's a much lower interest rate than in the traditional market here, man. That's 4% per month here in the traditional market, right? If you take out a loan here, it's 4% per year that you'll be paying. So, these $15 will become $15.10 at the end of the year, I don't know how much it will be. So, keep an eye on it, you don't have an expiration date, you can keep holding it practically forever. And these $20, $15 that I borrowed here, I could do whatever I want with it, okay? I'm going to set up a liquidity pool because it will be two tutorials in one here for you.
So, what I'm going to do is I'm going to look for a pool here. If I go to explore and look at Pools, I can find one that is interesting on the Base network. But as I mentioned, I could also send these tokens to another network. The Solana network, for example, has the best pools. Yesterday I researched some liquidity pools to send to the Defizeros people, and on the Solana Network, I found the best ones of all. But I'm not going to do a bridge here now and so on, I'm going to look for one on the Base network itself, okay? So, looking here, I found, let's see if I find it, actually, because so far I haven't found anything interesting. I'll just take this one, okay? Ethereum USDC. I'll enter it here. It's only paying 24%, but even so, it's more than the interest on the debt I just took out, right? On Ave, the interest is 3%. Here I'll earn 24% per year. This can increase as there's more volume on Uniswap itself, right?
And now I'm going to set up a liquidity pool with this amount here. I have practically $3. I'll convert half of it, it goes into Ethereum. I'll click here to do the swap. And then we'll set up this pool. Obviously, if I were doing this for myself, and not just a tutorial, I would look for a pool that was paying more, I would perhaps bridge to Meteora, find a more interesting pool on Meteora, but the intention here is for you to understand how to set up a pool as well. You'll come here to add liquidity, you'll put here, the two tokens are already selected, actually, that I'm going to choose. The fee tier is already here, which is the fee tier that people normally set at 0.3%, I could choose others, but in this case, 88% of liquidity pools are at this fee tier. I'll continue. We explain all of this more in the Defizeros mentorship, okay? And we arrive here, for example, at the range, which is the price at which I want to set up this liquidity pool. Here it set a default of 6% up and 6% down. I'll leave it at this default, which is a tighter range, but obviously, I would have to look at the chart, analyze a bit more. As I mentioned, we teach all of this in our mentorship. I'll put in the balance here. So, now, look, of Ethereum and USDC. Let me put myself on the other side. Maybe you can't see it clearly there. Look. Ethereum USDC. Here I'll put 50% of the value, for example. I'll need 10 here and 11 here. It will work out. I'll be able to set up the liquidity pool. Click on analyze, create. So, I'm setting up a liquidity pool with the price of Ethereum rising by a maximum of 6% and a minimum of 6% if it falls, right? The range is basically this, right? It's the price interval that I'm setting in the liquidity pool itself.
Look, be careful with these pools that appear in your wallet and you didn't set them up, okay? Look, ouwen2.org. This is a scam, it's a scam. So, never click on these liquidity pools. I'll go to portfolio, and now, probably, my liquidity pool will be set up here. Let's see if I can find it. Notice that it's already here at the bottom, look. Ethereum with USDC, paying here a balance of 22. I'll click on it. Balance of 22, look, 22.77. For now, I haven't received practically anything because I just set up this pool, and the balance is also very small. The range is also here, look. If Ethereum stays up to 2000, 2.1, right? 2100, I'm still within the pool, up to a price of approximately 2.7, right? So, at this exact moment, it's 2217 dollars, right? Look, here is my range, look. 2217 is the current price. The minimum price 2.079, the maximum price 2359, correcting the information. Okay? So, here is my liquidity pool. I could remove this pool at any time. Look, it has already earned 0.001 WETH here, which is practically nothing. But obviously, if there were more money, I would start earning much more than this. And the objective was just to do a tutorial.
Now, I'm going to remove this liquidity pool and dismantle the situation on Ave as well. Look, I'll go to remove. I'll put here the maximum 100% of my pool. I'll confirm the removal here. Confirm here in my dear wallet as well. Okay. I'm removing my 22 dollars that I used to set up the pool. It's already back in my wallet. And on Ave, the procedure is also very simple. I can even repay this debt here, which is 15, with the collateral I put in. So, for example, if one day the market starts to fall a lot, you can repay, part of this, man, the market started to fall. I'll take, for example, from what I put in here to repay, so as not to be liquidated, right? So, you can do that procedure. I'll do it, look. Go to collateral, just so you can see how it works. I'll take the maximum here, look. I'll repay everything. And it will take 15 from the Ethereum I put in, look. it will take 15, which is 0.006 of the Ethereum I put in. I'll approve, and then my debt will simply disappear with the capital I put in. But also, right, I have to warn you that by doing this, you'll lose out, because imagine that you lost the 15, you repay with what you put in, you'll lose out, look. So, that's why, as I mentioned before, you can't simply lose this capital, because otherwise, you won't have the money to pay back the debt. So, do more down-to-earth strategies and so on, right? I'll close here. And now the debt will be paid. It's doing a swap up here, okay? And the debt is then paid. Look, your borrows are zeroed, but the rest remained as collateral. So, I have to come here to withdraw, and then I'll withdraw all my money that stayed there, which is practically 0.01 Ethereum. I'll confirm here. And now the money will all come back to my wallet.
So, in summary, what we did here is use a value that I had idle, for example, Ethereum. I put it here on Ave, it could be Bitcoin, it could be Ethereum, it could be various cryptocurrencies, as long as Ave accepts it. I borrowed dollars. With these dollars, I did a tutorial to set up a liquidity pool, but I could have borrowed, opened a business, and then with the profitability of that business, paid off this loan little by little. I could have bought a house for those with a lot of money, put that house up for rent, and then with the rent, paid off this loan little by little. I could have put it in real estate funds, I could have done whatever I wanted. Here the tutorial was about liquidity pools, but you could have done whatever you wanted. Basically, you use the power of the money you already have and is idle to generate income in many ways. Okay?
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