The Risk Finance & Gamma Swap Trading Competition - I Had No Clue What I Was Doing!

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Avatar for PVMihalache
4 months ago

I am a Jack of all trades, but master of none! I consider myself skillful in content creation and gained a decent knowledge about blockchain, but can't keep up to date with the advance trading tools.

Never been a fan of trading, as my compulsive nature will make me lose my crypto in silly leveraged stuff. I understand the idea behind perpetuals, leveraged tokens but I don't like it. HODLers always win, and their live can be less stressful than those doing day trading.

However, I joined the GammaSwap x Rysk Finance Trading Competition for fun... and because  Across Protocol was one of the sponsors. There was some money to be won, a lot of cool swag, and even a prize for the worst trader! 

Rysk is a feature-rich options protocol with an advanced user experience for traders that generates uncorrelated and competitive yield in all marketc conditions for liquidity providers. Earn uncorrelated yield whilst targeting market neutrality

I was already lost after reading the sentence, and I dived into Rysk without having a clue about what I had to do. Not only I was lost, but the dashboard made no sense for me! I immediately understood what "advance user experience for traders" means, and why I don't do this stuff!   Risk Finance helps the users to earn uncorrelated yield whilst targeting market neutrality! Lost again... this is the point where crypto becomes too advance for my brain cells!    

Risk introduced the Dynamic Hedging Vault (DHV), the brand-new hybrid AMM and RFQ (Request for Quotation) options protocol that will generate uncorrelated yield for its liquidity providers and enables a bespoke options trading experience for traders and hedgers.

Let's read more and understand everything, everywhere... at once! The Dynamic (Delta) Hedging Vault (DHV) trades options aiming to reduce the directional risk associated with price movements in the underlying asset. The system can be use to sell options, trading spot and perps, or trading any derivatives the DHV manages the hedge and is able to generate yield whilst targeting market neutrality.

Well... I clicked everywhere and I managed to open the tab that let me buy a position. I called $ETH at $1825 on the 12th of May, and paid most of my testnet virtual money. The trading competition took place on the Goerli Arbitrum testnet, so everyone received big bags of internet magical money!

 My first use of the Dynamic Hedging Vault was confirmed and I started my way towards the top of the leaderboard. PVM was 47th between all traders, and probably done something right with his random clicking!   The Rysk Finance on-chain options enable an accessible, transparent, and non-custodial market for anyone to trade and manage their risk. There are tools that differentiates Risk from both centralized and decentralized options markets, such as the Unified Liquidity across Multiple Expiries and Strikes.  

The trading competition took place on both Rysk Finance and Gamma Swap, with leaderboards for both protocols and a combined chart with the users performance.

I moved to Gamma Swap, a novel primitive for scaling DeFi liquidity through permissionless risk markets. The protocol offers Oracle Free Perpetual Volatility Trading, and I jumped straight into a WETH/USDC Long Position. 

GammaSwap is a decentralized exchange enabling perpetual leverage trading on any token. The Liquidity Providers and Borrowers are two participants in the GammaSwap ecosystem   Liquidity Providers can provide liquidity in any pool to earn a higher yield than the vanilla LP position. This additional yield is from the fees paid by those borrowing liquidity which should better compensate LPs for the volatility risk they are assuming.  

The Borrowers can take leverage in the form of a perpetual straddle, call or put on any token without liquidation risk from price movement. GammaSwap is not reliant on oracles and instead calculates the PNL of borrowed positions based on the liquidity invariant and the interest rate. Borrowers can utilize GammaSwap to hedge LP exposure or speculate on token price movements. They are essentially turning the LP's Impermanent Loss into their Impermanent Gain.  

I must say that GammaSwap looks more user friendly than Rysk, as I could move through the UI without feeling dumb. I went Long on wETH on to positions and hoped for the best! 

I know Impermanent Loss is bad, and I assume Impermanent Gain is good! I understood that the borrowers are gaining from what the LPs are losing, and it looked that my Long wETH positions were doing really well!    Closed both for profit, and checked the Rysk Finance Short option on $ETH. No idea what I've clicked but my position had a huge profit. PVM was doing well in the trading competition... for a while!   

I got a good grip and believed in a bull market, going long on ETH after my first successful Short option. And this is why I don't trade... as all my calls turned blood red and the profit was gone! 

I didn't win any prizes, not even the won for the worst trader, but I learned few new things. Finished 943 in the leaderboard and the experiment was a confirmation that I should stay away from leverage mambo-jumbo perpetual stuff.

As my friend Baron Pierre de Coubertin once said... the most important thing in life is not winning but taking part! The essential thing is not conquering but fighting well!

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