On this channel, we like to take you places.
Together, we’ve made our way through the tropical landscapes of leverage trading,
we’ve lounged in a cozy piano bar for a little morning TA with Matty B,
we’ve sat in the armchair for some sports analysis
and went with crypto on its ever volatile journey from China to El Salvador,
bull market to pullback and beyond.
Today, we’re going to take you to the flat sprawling grasslands of the African savanna
to see the beautiful antelope,
an animal like a giant deer,
agile, muscular, crowned with beautiful horns,
but also it's the next meal for the savanna’s apex predators
like the cheetah who can run as fast as a car speeding down the interstate.
The antelope in this story?
Your trades.
And the cheetah?
Stop-loss hunters that are camouflaged within the savanna grasses
waiting to spring out, sprint and make their kill.
How do these market makers know where sell orders and stop-losses are hiding?
Why are they doing it?
And what DeFi tools can the antelope use to protect itself from the cheetah?
That's what we're going to find out today.
Let's go on a safari.
Let's get it!
Welcome to BitBoy Crypto
Home of the BitSquad
The largest crypto community in all the Interwebs
My name is Ben.
Everyday on this channel, I show you how to make money in crypto.
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In this video, we talk about market makers that stop out trades
and how to use the popular DeFi protocols Curve and Balancer to make more gains with less risk.
Market maker is an old-timey investment term
that basically means traders that add liquidity or funds to the market.
Market makers do this by making buy and sell orders at targeted levels
which provides depth to the market.
In the open savanna of investment trading,
market makers are people or institutions making moves and setting orders that serve their own best interest.
There are some traders, the antelope, who are herbivores traveling in the savanna.
Other market makers are the whales and institutions,
the stealthy, fast and lethal cheetah.
These predators can and do hunt the antelope.
By targeting stop-losses.
They make massive buy and sell orders to manipulate the market down or up
to where they think a lot of stop-losses and limit orders are hiding.
Their target?
Retail investors guarding their trades and tokens like the antelope guards its herd.
The cheetah stalks its prey in the camouflaging expanse of the savanna grasses.
It finds the stop-loss
and uses a windfall of funds to move the market at a sprinting pace
and causes the surrounding herd or other holders of the asset to flee or sell
when they see the volatile price movement.
That's when the cheetah pounces.
Stop-loss hit.
And the market bounces back immediately.
Killshot.
The institutions in the stock market have more data and more connections,
more time to trade and spend time bribing the SEC to put not just their thumb on the scales,
but their whole dang hand.
Is it legal?
It's certainly unethical.
But these market movements are hidden so well within the endless savanna grasses
that it's almost impossible to accurately determine who has moved the price and why.
Stop-loss hunting happens regularly in stock trading.
And it happens in the crypto markets as well.
But unlike many other assets, crypto is far more transparent.
Anyone can see when massive orders have been made to manipulate the whole market.
But even still, we don't accurately see who is doing the manipulating.
Technically, these traders are allowed to make buy and sell orders as they see fit.
And their market movements couldn't really be proven as anything other than a happy coincidence
in a court of law.
And even if they were,
who's going to take them to court?
Like Mother Nature, trading is cold and unbiased.
Neither the cheetah nor the antelope are held accountable.
Speaking of being accountable,
I'm holding you accountable right now for liking this video.
It keeps us ahead of YouTube censorship
so we can continue to make this crucial crypto content.
If only we could do something about stop-loss hunting.
Somehow take the human element out of market makers.
Tame the beast with some sort of math equation.
We needed a market maker to provide trading liquidity without having to hide, hunt and kill.
And we got exactly what we asked for.
DeFi, the home of automatic market makers or automated market makers.
DeFi or decentralized finance is finance without a central authority managing it.
It needs no middleman to execute transactions and provide liquidity.
The automatic market makers used by DeFi platforms set prices based on market indexes
and use liquidity pools to fulfill trade orders.
DeFi is like sending a robot into the savanna
to cover the antelope in body armor and grill the cheetah a steak.
It does this by creating a way for traders to make gains with less risk.
Because with DeFi,
traders can buy and sell assets or provide liquidity by staking funds in liquidity pools.
This is called yield farming,
a complicated sounding term that really just means putting funds into a liquidity pool
like a farmer would plant seeds
and harvesting the fruit or the yields that grow from the funds you put in the pool.
With liquidity pools,
the yields the farmer gains are a percentage of the fees that users have paid to swap on DeFi platforms.
Traditional finance and trading platforms use order books to complete transactions.
These order books act a little like Match.com.
They find a seller who wants to sell at a certain price and a buyer who's willing to buy at that same price.
Automatic market makers like the ones using Curve and Balancer use liquidity pools to fulfill orders,
eliminating the need for both a buyer and a seller.
A buyer can buy from the liquidity pool and a seller can sell to the liquidity pool at any time.
This makes DeFi trading faster and more efficient.
Be fast and efficient with your time
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But Curve is a synthetics DeFi platform specializing in stablecoin liquidity.
It has a very low slippage. Only 0.06%.
This means that the amount of stablecoins you buy is pretty much the exact amount you get.
Launched in January of 2020, Curve Finance was founded by Michael Egorov,
who previously worked on NuCypher.
The goal of the platform was the low slippage fees because most of the transactions are done with stablecoins
such as DAI, USDT and USDC.
It can also trade Bitcoin-pegged tokens like Wrapped Bitcoin and renBTC.
Yield farming on Curve is a great way to make your portfolio grow in a relatively low risk way.
You can think of the risk of yield farming as being somewhere between
trading like an antelope in the unforgiving savanna
and staking coins in a wallet to earn rewards.
With trading, you risk encountering a predator,
while staking coins in a wallet carries very little risk.
With yield farming, your assets are staked,
but there is some risk that the liquidity in the pool will dry up along with the portion of your funds.
This means that although yield farming is low risk,
you have to watch it and periodically remove your funds from the pool.
It's not the same as "set it and forget it" coin wallet staking,
but the return on investment for yield farming can be a lot higher.
Depositing stablecoins onto the Curve platform is simple.
Visit their deposit page and choose which stablecoin you would like to deposit.
Once you deposit your funds,
they will be split amongst all the stablecoin types,
and you will have exposure to all of them.
Curve is on the Ethereum blockchain,
so remember to wait for a good time when ETH gas fees are low.
Once you deposit funds into the pool,
you'll receive liquidity tokens which will then be prompted to be put in the liquidity gauge.
That is when you can start mining for rewards tokens,
Curve and Synthetix.
Balancer is a DeFi protocol that also runs on the Ethereum network.
It started in 2018 as Block Science founders Fernando Martinelli and Mike McDonald
were able to raise $3 million in funds and create what we know today as Balancer.
Balancer is an index fund that, like Curve, use liquidity pools
and allows users to buy and sell tokens using automated market makers or AMMs.
The unique feature that Balancer offers is the ability to bundle up to eight tokens in a pool.
In this way, Balancer can be looked at like an index fund,
a stock portfolio that is made up of several different stocks.
When the value of a token goes up, the yield farmer gets a rebalancing reward.
Unlike stock index funds where users would see a rebalancing fee.
Balancer offers public and private pools
depending on a user's portfolio size and risk tolerance.
Private pools are for a user with a bigger portfolio.
Public pools offer several users with their funds pooled together.
Like Curve and Uniswap,
Balancer is a permissionless platform.
Just link a wallet to Balancer's pool page.
Click "Filter by Asset" and choose a token you want to stake.
When you find it, click "Add Liquidity".
The platform will calculate how much of the other assets in the index need to be deposited.
There's also a single asset tab if you want to add liquidity to just one crypto asset.
And there you have it, another way to make gains with crypto.
AMMs
Talk about peace on the savanna.
That's all I got.
Be blessed.
BitBoy out.