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Two Ethereum DeFi traders just made $120M using a strategy called 'looping'
31–40 of 68 posts
Re: Two Ethereum DeFi traders just made $120M using a strategy called 'looping'
#32So to clarify for those who don't care to know about defi, 2 people made on-chain leveraged bets with up to 2X leverage (which isn't a ton compared to what some people do). If they are up 120M when ETH has gone up ~26% since it's low point of the last 30 days, they must have deposited ~150M to start with. Looping 3 times, and borrowing ~80% of their deposit value each time (pretty close to the max for most defi proto…
I don't like the title. "Looping" isn't really a strategy. It's just a levered punt on the direction of the market.
Re: Two Ethereum DeFi traders just made $120M using a strategy called 'looping'
#33How we lionise these useless specimens of the human race.
Re: Two Ethereum DeFi traders just made $120M using a strategy called 'looping'
#34While $120M is a huge amount of money, it doesn't necessarily mean they got a huge percentage return. I don't see how much they staked to get this return. The article does mention that the two wallets are collectively worth $3B, and that they used 1-2x leverage in this bet. I'm curious how much they actually bet on this. Was it a 10% overnight return? That's a fantastic return, but plenty of traditional market gamble…
Yeah, it's interesting that the way Ethereum works make it possible to see exactly how the trade worked and how much it made, but "traders with huge resources made a leveraged bet and won" is something that happens constantly.
Re: Two Ethereum DeFi traders just made $120M using a strategy called 'looping'
#35So to clarify for those who don't care to know about defi, 2 people made on-chain leveraged bets with up to 2X leverage (which isn't a ton compared to what some people do). If they are up 120M when ETH has gone up ~26% since it's low point of the last 30 days, they must have deposited ~150M to start with. Looping 3 times, and borrowing ~80% of their deposit value each time (pretty close to the max for most defi proto…
I don't like the title. "Looping" isn't really a strategy. It's just a levered punt on the direction of the market.
I mean it's not really a trading strategy, more of a mechanical strategy for composing other financial primitives into leverage
Re: Two Ethereum DeFi traders just made $120M using a strategy called 'looping'
#36This "strategy" smells very much like the one that /u/ControlTheNarrative infamously used on Robinhood back in 2019 (and blew up his account).
Ah yes, the legendary Guh moment. To be fair, this was only 2x leverage, not 25x like ControlTheNarrative.
Re: Two Ethereum DeFi traders just made $120M using a strategy called 'looping'
#37Earlier quoted context omitted.
It's not, because the risk is calculated. Finance has been doing the same for ages, so these people may come from a very traditional finance background...
Genuinely curious- In what sense is the risk calculated? I understand that the leverage factor is known but fundamentally isn’t this still just a bet that eth will rise? And if it falls then won’t the loss be multiplied by the same leverage factor? Obviously you can research the eth market and form a view but you can also research horse racing form and the odds themselves should be a fair calculation indicator if the…
As the article says, Ethereum needs to move down 60% for them to be liquidated.
This is unlikely to happen overnight (if they are finance pros, they do compute probabilistic models), leaving them time to unwind their position when situation changes.
Re: Two Ethereum DeFi traders just made $120M using a strategy called 'looping'
#38So to clarify for those who don't care to know about defi, 2 people made on-chain leveraged bets with up to 2X leverage (which isn't a ton compared to what some people do). If they are up 120M when ETH has gone up ~26% since it's low point of the last 30 days, they must have deposited ~150M to start with. Looping 3 times, and borrowing ~80% of their deposit value each time (pretty close to the max for most defi proto…
> The fact that such a large position likely moves the market does at least make it a little bit safer for them
I would not be surprised if they had some inside information about some big moves that were likely to move the market in some way. I doubt their entry and exit timing was randomly chosen.
Re: Two Ethereum DeFi traders just made $120M using a strategy called 'looping'
#39Deep elf fighters weren't supposed to be this strong
Re: Two Ethereum DeFi traders just made $120M using a strategy called 'looping'
#40So who lost $120M? This is a zero-sum system.
Asset prices are based on what people believe the future will bring. If the price drops because of some event, and you haven’t traded, you have the same asset as before and only its price has changed. You’re poorer than you thought, but nobody gained anything from you. (You haven’t traded!) People just changed their minds about the price. It’s the same going up.
When you trade, that’s different. If you sell at a higher price then the gain comes from the new buyer. If the price goes down then you lost some of what you paid to the previous seller.
Also, in this case, there are loans. Someone had Ethereum and lended it out. They got paid interest, but lost out on gains that they could have had if they didn’t make the loan. (They could have gotten more money from a buyer later.)