Dr. DODO is Researching

Posted on Jan 03, 2023Read on Mirror.xyz

Build UniV3 LP Strategy, CVI Historically Low|DODO Megascope 12.26 - 1.3

DODO Megascope this week’s Highlights:

  • 2022 Empowering NFT

  • How to build a UniV3 LP strategy

  • Optimism & Arbitrum ‘s performance in 2022

  • The Crypto Volatility Index (CVI) is at an all-time low

👀 Weekly Digest

Headline

  • 2022 NFT Utility

    "NFT" was selected as the 2021 vocabulary of the "Collins Dictionary", and in March 2022, the total market value of NFT reached a historical peak of 34.96 billion US dollars. NFT has entered the public's field of vision and set off a frenzy of NFT distribution in subdivided tracks ranging from fashion to music, entertainment, games, and metaverse. In constant exploration and experimentation, the definition of NFT has evolved from a simple PFP small picture to a key asset for future Web3 value transmission. This year, the community has had many discussions on issues such as NFT transactions, royalties, financialization, and IP management. Although many solutions are still in their infancy, the value system framework of NFT has basically been established, providing a blueprint for subsequent development. Traditional brands are aggressively entering the NFT market. Among them, the NFT Odyssey plan launched by Starbucks is the most anticipated. The brand’s huge user base can become a touchstone for whether this system can find a perfect operating mode, and native NFT creators can also learn from it experience. Looking forward to the Mass Adoption of NFT to appear in 2023.

Souce:Blockbeats

DeFi

  • How to Build a UniV3 LP Strategy

    How professional LPs achieve positive returns, there are many ways for LPs to build strategies, @coindataschool uses machine learning to predict price ranges to build LP strategies. The idea and steps of its construction strategy are described in detail below:

    1. Select a high-yield pool: Take the WBTC-WETH pool as an example, obtain historical data through the DefiLlama API, and compare the fee APY of the two main rate pools (0.3% and 0.05%) of WBTC-WETH. Research results: In the past The 0.05% fee pool had an average APY of 20.9% with a standard deviation of 0.7%, and the 0.3% fee pool had an average APY of 13.8% with a standard deviation of 0.5%. In summary, choose the 0.05% WBTC-WETH UniV3 pool.

    2. Select the price range of LP: choose an accurate price range to improve capital efficiency. The price range should be narrow enough to obtain the highest capital efficiency, and ensure that the future price fluctuation range stays within the price range for as long as possible . By observing historical data, select candidate intervals where BTC/ETH prices fluctuate frequently, and prepare for the next step of backtest analysis.

    3. Grab the data on the chain, analyze the LPs with funds greater than 20K, period greater than 14 days, and APR greater than 20%, and compare their pool selection and price range settings with the screening results of the aforementioned method. Conclusion: The pool selection and price range setting of top income LPs are basically consistent with the results selected by the above method.

    4. Predict prices through Autoregression Model: use DefiLlama API to download hourly price data from the Ethereum blockchain, create a training data set, and find the model parameter values that best fit the training data —— Lag of Autoregression Analysis number. Train the dataset to predict hourly prices.

    5. Iterative forecasting algorithm: Autoregressive Average Moving Model (ARMA). Autoregressive (AR) models use only historical prices to predict future prices, while autoregressive moving average models use both historical prices and historical forecast errors to predict prices. The increase in LP income comes from choosing a more accurate price range, and the short-term price trend prediction error is low, because the price momentum tends to continue in a short time window.

    In theory, if the time series is not stationary, the ARMA model is not applicable, and the real data is often not stationary, it is necessary to integrate the data, that is, perform it once, twice, three times, ... and d times Difference (difference degree is d), which can sometimes make it smooth.

    There are many ways to construct LP strategies, and the above steps just provide an idea. Gamma Strategies, an active liquidity management protocol, uses a similar method to construct its strategies.

Other Opinions

  • The Crypto Volatility Index (CVI) is already at an all-time low: CVI is between 0 and 200. 0-85 ≈ low volatility 85-105 ≈ medium volatility 105-200 ≈ high volatility We are now at 56 - a level not seen in two years. This may be a good time to bet on volatility. Here are two ideas: 1. Bet on CVOL tokens linked to the CVI index; 2. Use a protocol similar to Theta Vault to obtain LP income in the volatility market.

https://twitter.com/korpi87/status/1609560167942868993

Active Addresses

  • Increase from a few thousand to over 50k during the last year;

  • The active addresses flip also happened in late Dec 2022;

Transaction Fees:

  • Fees on Optimism remains stable over the past half year;

  • Obviously optimized on Arbitrum after the upgrade since Sept 2022;

  • Arbitrum has a little advantage on fee, and they both keep the average fee around $0.1;

Estimated Tx Savings from Ethereum L1:

  • Optimism: 95% savings from L1;

  • Arbitrum: 96-97% savings from L1;

Percentage of Total Gas Used by L2:

  • Grew impressively in Q4,2022. Already 3%+ gas used by L2 contracts;

TVL (As of Jan 4th):

  • Arbitrum: Rank No.4;

  • Optimism: Rank No.7;

  • TVL on Arbitrum is roughly twice than that on Optimism.

🚄 Bullet News

Infrastructure

  • Recently, in order to better support the development of the Sui ecological project, MoveBit and other joint members assisted the Asia-Pacific community SuiWorld to launch the Move Accelerator.

  • MicroStrategy to launch Bitcoin Lightning Network applications and solutions in 2023: including online content monetization, enterprise marketing, network paywalls and internal enterprise controls.

VC

  • Twity, the Web3 Twitter marketing platform, has completed its A-round financing of US$1.5 million and signed an equity agreement of US$5 million with relevant institutions, completing a total financing plan of US$6.5 million, led by Wave Capital.

  • UAE cryptocurrency investment firm Cypher Capital has injected $10 million into The Open Network (TON), a Telegram Layer 1 proof-of-stake blockchain continuation project, to support its blockchain infrastructure.

GameFi & NFT

  • The NFT marketplace Blur announced on Twitter that it will enforce minimum royalties on immutable collections from January 3 at 4:00 Beijing time, which will allow it to increase Blur's royalties while preventing new markets from avoiding royalties . Blur will initially enforce a minimum 0.5% royalty on immutable NFT series and will increase the minimum over time (0.5% to start, then 1%, 1.5%, 2%, etc.).

  • Brian, CEO of Lifeform, announced that HALOWORLD, a growth companion chain game incubated by Lifeform and produced by HALO, will be launched in the first quarter of 2023, and users who hold Avatar NFT will be able to experience the game. HALO Avatar NFT will be released on the Lifeform platform in the form of Launchpad on January 4th, with a public sale price of 2,500 BUSD and a whitelist price of 2,250 BUSD.


About us:

「Dr. DODO」is the research arm of DODO. We track the evolvement of DeFi and related sectors. Dr.DODO leads a group of researchers to decode the crypto world, conduct in-depth research, publish distinctive views and predict the future value of the crypto world

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