Strategies
- Trading Cover Tokens
When you buy a Cover Token, you lock in a fixed yield based on the Risk Premium. A high Risk Premium results in a high fixed yield. The Risk Premium fluctuates as market participants buy and sell their Cover Tokens and Depeg Swaps. You can earn by purchasing Cover Tokens when they are underpriced and selling them when they are overpriced, gaining a continuous yield as you hold them. - Depositing into the Liquidity Vault
The Liquidity Vault earns yield from the sale of Depeg Swaps, AMM trading fees, and protocol fees. If you deposit into the Liquidity Vault, you gain access to these yield sources.
- Trading Depeg Swaps
The price of Depeg Swaps fluctuates based on the perceived risk of depegging and any ongoing depeg events. Depeg Swaps give you high-leverage exposure for betting on depegs. If you buy Depeg Swaps when the risk premium is low and sell them when it is high, you can make a profit. However, note that all Depeg Swaps eventually expire, at which point they have no further value.
- Hedging
You can earn a risk-free rate by buying a Pegged Asset and the relevant Depeg Swap. This way, you earn yield while being protected from potential depegs. This strategy is viable as long as the risk premium for the Depeg Swap is lower than the Pegged Asset's yield.
- Arbitrage
If a Pegged Asset depegs and the price of the Depeg Swap has not increased accordingly, you can buy a Depeg Swap and a Pegged Asset to redeem a Redemption Asset profitably and loop the trade. If there is a repeg and the Pegged Asset and Depeg Swap can be repurchased from the Peg Stability Module and sold on the market for a profit, this creates another form of arbitrage. Both mechanisms can be executed manually or through arbitrage bots.
- Total P&L Winner: Highest overall profit during the competition. 0.5 ETH
- 2nd Place: Second-highest overall profit. 0.25 ETH
- 3rd Place: Third-highest overall profit. 0.15 ETH
- Most Profitable Liquidity Provider: Most profitable trader with 70% of assets deployed in LVs 0.25 ETH
- Most Profitable Hedger: Most profitable trader with 70% of assets as LRT + DS. 0.25 ETH
- Largest Single Trade Profit: The most profitable single trade. 0.1 ETH
- Most Profitable Bot: Best-performing automated trading bot. 0.1 ETH
- Most Number of UI Trades: The participant with the most executed trades via the UI. 0.1 ETH
- Most Valid Bug: Best bug report, determined by accuracy, detail, and relevance. 0.1 ETH
- Most Accepted Documentation Suggestion: Most valuable and accepted suggestion for improving documentation. 0.1 ETH
- Worst P&L: The participant with the worst overall profit/loss. 0.05 ETH
- Worst Single Trade: The participant with the least profitable single trade. 0.05 ETH