I Put $10,000 Into the Riskiest DeFi I Could Find for 24 Hours; Here’s What Happened
A couple of days ago I went down the rabbit hole of recursive lending and extreme liquidity farming on Polygon. My step-by-step article generated some interesting discussion on r/defi, and a few folks asked me for an update.
Before diving in, I have to give a caveat that I didn’t take careful notes the first time I did this, so the numbers below are from a second experiment I made where I isolated everything and took care to keep the numbers clean. I also skipped the lower-yield interest stacking strategies here, so we can focus on the spectacle of a 10,000% APY gamble.
To be clear, this is not investing. These are risky new coins, trading on risky new DEXs. The chance of getting liquidated from volatility, impermanent loss, or exit scams is very high here. This is pure gambling!
The Setup
The unbelievably high APY number is coming from Iron.finance’s partnership with Quickswap. Iron’s tokenomics model is allocating $44,000 per day to reward liquidity providers; there is also $18,000 mentioned as daily fees from the borrowers, although it’s unclear if this number is part of the 44k or gravy on top. Quickswap has added another incentive of 65 QUICK tokens. Some VCs out there are throwing a lot of money around to get these projects to snowball.
To set things up, I moved $10,000 USDC into a clean wallet and swapped half for TITAN and half for ETH. Next, I staked these into LP tokens, and finally I deposited those into the Quickswap pool. Here are the starting numbers:
- $10,027 USDC ➔ 1565 TITAN + 1.91 ETH ➔ 53.88 LP tokens
- APY 16,730%
- Expected payout of 0.1829 QUICK per day
- Expected payout of $53.45 per day from fees
- 0.28% stake of $3,564,534 total pool size
- TITAN trading at $3.21
- PoS-WETH trading at $2,727
- QUICK trading at $676.09
- Down $0.000615 in gas costs so far (this is how they get you /s)
24 Hours Later
Now for the fun part. I kicked back, watched the 1999 cinematic masterpiece Wing…
