Don-key Finance: Bear Market Meditations

Different markets require different financial products. When yield is high and opportunities bountiful, infrastructure like Don-key that empowers investors to find the most lucrative farms, like a needle in a haystack, is incredibly useful. In bear markets, when yield dries up, the story is quite different.

Being that the market downturn could last for as short as a few months and as long as multiple years, the team needs to prepare for both scenarios.

With more highs and lows than we can count, both achieving over 20 million dollars TVL and a 40 million dollar market cap, and surviving the Bean hack and UST depegging, the past year has been incredibly educational. Many among the community made hundreds of thousands of dollars with Don-key, while many others lost funds through DeFi compromises that affected the entirety of the ecosystem.

As a platform, these extremities in outcome pose a puzzle: When the yield markets return, how can Don-key offer access to DeFi’s incredible potential upside while also minimizing risk of exposure?

Beyond insurance, which will become increasingly available as the space matures, and deploying a relief fund, the team’s answer requires reconceptualizing its core key performance indicator: TVL. At a glance, TVL is an easy and useful tool to compare the sizes and general utility of different DeFi protocols. The more funds a platform has, assuming an efficient market, the better it is at generating returns.

However, dogmatically trying to grow TVL actually created competing incentives between the platform and users. This is true due to the simple fact that long term investing in yield farming strategies isn’t risk optimized.

Short term yield strategies ought to be aligned with shorter term investment timelines. To achieve this at a systemic level, the team needs to tweak farmer incentives and add a strategy end feature.

Beyond this core change, to prepare for the next yield cycle, Don-key will also better streamline the strategy build feature, add more options to it, and more generally improve the UI/UX to be more retail friendly.

More relevant to the immediate future, Don-key will drastically reconsider retail-ready, yield bearing products that are fit for the bear market. In general, they will be more streamlined then the current platform and produce more reliable, less risky yield.

More details will be shared soon once they are finalized.

About Don-key Finance

Don-key.finance is the only social yield farming platform to democratize expertise in yield farming. Investors need profitable strategies and farmers need extra liquidity — Don-key brings them together in an open-source competition driven marketplace.

With just one-click everyday investors can route their liquidity — in whichever token they chose — through community designed strategies that are updated to chase the highest available APY while minimizing risk.

Competitive Yield Farming is a full-time job; Don-key does it, so you don’t have to.

Website | Twitter | Medium | Telegram Community | Telegram Announcements

--

--

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store