Yes, if you're an enthusiast, it seems like good, technical fun.
But I have no idea how an "investor" could read this and think they can price the risk correctly. This isn't even the wild west of finance--this is intergalactic space.
It's way safer and less complex than you would expect. Most staking contracts are a copy-paste of two basic staking contracts (from synthetix and sushiswap), so it's enough to do a text diff and see what was changed, which is trivial. For more complex contracts that do something more, funds at risk are the best bug bounty there is - in the current environment if something had >$10M for a month and wasn't hacked, it most likely can't be trivially hacked. Bzrx, the single most incompetent defi platform, was hacked just two weeks after a relaunch for $8M - most likely someone was waiting from the start for it to get enough funds to make the hack worthwhile.
Almost no hacks happened during the entire yield farming craze.
Key word trivially - some contracts are custodial, so if someone hacked the owners (or they turned out to be scammers) funds could be stolen, which arguably has a reverse Lindy effect in the beginning. Fortunately people are starting to demand at least timelocks and/or multisigs. Another risk is how well liquidations function during a price crash, for protocols that need them.
The current risk premium was and still is absurdly overestimated, but that was a good thing (for me) as without it three or even four digit APYs wouldn't last a day, but thanks to the unwarranted risk premium they lasted about 2 months. During the short peak three weeks ago it was possible to make even ~8% per day (on millions of dollars - good liquidity), completely risk free (trivial staking contracts). The great crypto bullrun of 2020 already happened and few outside of ethereum even noticed.
You will see billions flow into defi on ethereum as others realize the real level of risk too (which guarantees those astronomical returns are never going to return - but even 10% apy on dollars is good in the current environment).
In total, I did this with about 40 different farms. There was a time when there were several new ones every day. For a while it was pretty much a 24/7 job as maximizing apy required constantly jumping to some new hype. I was constantly afraid of depositing into a contract that would allow the owner to steal everything, but the worst I noticed were locking bugs + two contracts that allowed the owner to mint infinite tokens (of these two, only one used it to clean the liquidity pool).
The list of farms in that reddit post is obsolete (I think only sushiswap is still running, but with low roi), in general this particular way of making money has run its course.
"In total, I did this with about 40 different farms. There was a time when there were several new ones every day. For a while it was pretty much a 24/7 job as maximizing apy required constantly jumping to some new hype."
My friend made over $500k from the Uniswap airdrop, he woke up on Thursday and realized he had another half million dollars. He sold it all immediately for stablecoins, and actually missed out on another $750k if he had waited a few hours and sold at the UNI peak.
So yes, it is crazy and complex and difficult, but the rewards are vast for those that dare enter the world.
Defi yield farming is too dangerous for people who are not deep into the space. It's like listening to hedge fund traders talk shop and hear the type of trades they do to make alpha.
If you want to dabble in crypto, make a Coinbase account and go 50/50 BTC and ETH, and don't sell until you retire.
If you want to play with the fast money Defi, then you need to do a lot of self-study and learning.
Wrong, there was never any luck involved. The single worst case scenario was that the token price dumps to 0 immediately after I deposit, which would mean I don't even make the gas fee back. Didn't happen.
Stay away from putting money into unique smart contracts that haven't been running for a long time with a lot of activity. Stay away from smart contracts that are custodial (where the creator is given privilege to all depositors' funds).
> But I have no idea how an "investor" could read this and think they can price the risk correctly. This isn't even the wild west of finance--this is intergalactic space.
To be a successful investor, you don’t necessarily have the price the risk correctly, you just have to price it better than others.
I imagine someone successfully investing in crypto can read stuff like this fluently.
Anyone "successfully" investing in crypto got in at least 4 years ago or when we the last big run up was and just held in a reputable exchange or in their own wallet that they secured well.
They don't need to understand anything really except how to deposit 5000+ in a reputable exchange. I think this makes up most successful crypto investors.
Many "investors" are working very far outside the law, are used to very high levels of risk and desperately need different ways to keep their assets out of view from authorities.
But I have no idea how an "investor" could read this and think they can price the risk correctly. This isn't even the wild west of finance--this is intergalactic space.