This is the first of a series of Psuedo-Delta Neutral (PDN) hedging experiments that I am conducting on the Solana Blockchain. This is so that I can obtain actual performance results that can hopefully help me to make better decisions as to decide on what strategies work for me and which protocol I prefer.
Disclaimer: This is not investment or financial advice, but a sharing of my adventures and learnings in crypto space, where I conduct various experiments with different tokens and protocols across different blockchains.
For this experiment, I would like to compare the experience of setting up and rebalancing a PDN position at 2 popular Leveraged Yield Farming (LYF) protocols on Solana: Francium and Tulip. As the 2 protocols rely mostly on the same 2 sets of farms from Orca and Raydium. I was (and am still) interested to know how the performance between the 2 protocols using the same underlying farms will pan out.
I had chosen the SAMO-USDC pair because at 2.75x leverage, the APY for farming this pair of tokens was over 500%! How could I resist that? As the market had decidedly taken on a deep bearish undertone by mid-December 2021 when this experiment was conducted, I had chosen a 2.75x leverage instead of 3x just so that I have that extra tiny bit of buffer. I also thought that choosing SAMO-USDC would be interesting to see if the PDN can stomach the expected volatility from the price of a meme token like SAMO.
