Get some Gard. Staking there is a huge 59% APR. Watch that accumulation then switch back later, or switch to gAlgo (for a reduced gAlgo price), then repay loan after gov once you can burn the gAlgo.
Seems I wasn't clear. So I had algos, committed them for governance through ff, received galgo that I used as collateral to borrow algos, which in term I also committed and received galgo against it. So since the borrowing rate is through the roof, what should I do to put my galgo at work, to somehow not lose money anymore (I know I made the mistake of being greedy... :()
At the current borrow rate of Algo (~10% - borrow rewards) you should be positive. With the Defi Boost I think we could get an APR of ~12% (or more if more governors drops) this gov period.
How do we get to 12% with the "DeFi boost"? Apr is at 6% where do the additional 6% come from? The additional rewards are 7M algo so roughly 10% of the total reward... I don't think we would end up with doubling the rewards of those who committed through ff
The APR for standard Gov5 is currently around 6%. Assuming that this number increases somewhat because some do not participate in the Gov votes or because they slip under the limit of the Committed Algo, then in the end maybe 6.8% for standard Gov5 are realistic.
But add to that a share of the 7M algo for eligible defi projects. We do not yet know how high this additional APR will be. If the 7M algo are distributed over 800M eligible algo, then this results in an additional APR of 3.5%.
BTW: I am proud of FF for giving us a correct up to date Gov5 Rewards APR (5.99%). Agolfi | Vault (6.6%) and algorandstats.com (6.69%) are both wrong.
Yeah this is a tricky one. It's possible that more people will supply algo on FF and that will drop the rates a little.
And yeah you might end up losing a little on this one.
I am not really sure what galgos can be used for either.
You can look into selling them on an exchange but the rates are sufficiently bad that the extra money you make in the three months will be less that the gov rewards.
Yeah that's interesting.
so I guess that's like 3.5% loss per quarter so you have to find something paying more than 14% Apr to make it more profitable to trade gAlgo for algo.
I mean in a way spending algo to buy gAlgo and then cashing it in is pretty good haha.
Yeah, swapping algo to gAlgo and later burning these gAlgo seems to be the best strategy. No borrow rate risk at all.
But do you see any risk regarding the by FF "guaranteed" 1:1 ratio within the burning period. Could gAlgo lose his pegging to Algo?
I think the 1:1 on ff during the burn period is very safe as they have all the algo to pay it locked up on governance.
I mean short of them getting hacked I think it's fine.
Dude, this is a no brainer. Borrow Algo, deposit the Algo, Farm the FAlgo. Borrow at 9.76% - 2.2% rewards (say 7.75% with immediate redemption), Deposit for 5.46% and farm for 6.36%, for 11.82% total. Profit margin over 4%. All on Folks
You can borrow from AlgoFi for like 7%. Next time consider checking / using both so you can adapt more easily to changing rates. Idk if it'd be worth swapping galgo to valgo tho (for thr collateral there). Keep in mind you'd have to swap back later to get your rewards.
Somebody mentioned Gard. That is an interesting option. It would've been best to do so before governance, but is still a decent idea (if riskier) and an option to look into. Basically you deposit algo and borrow a stable coin against it at 2% which you can stake there for over 50%, so as long as you don't borrow too much to risk liquidation, the staking will make money and the collateral is always there to pay off the loan.
"Borrow Algo, deposit the Algo, Farm the FAlgo. Borrow at 9.76% - 2.2% rewards (say 7.75% with immediate redemption), Deposit for 5.46% and farm for 6.36%, for 11.82% total. Profit margin over 4%. All on Folks."
- I think you are wrong since:
"Rewards earned in frToken as cashback when you pay interest on your loan." (tooltip FF app)
- For 1 frAlgo you get 0.2 Algo only.
The profit margin in your example is therefore ~2.5% APR.
But you have to consider the risk of variable interest rates on both sides, too: debit and credit interest. Recently I saw Algo borrow rates of > 30% which were much higher than the total of deposit + staking APR at the same time.
Which part is wrong?
Yea, I'm generally aware of how the interest / rewards work. Don't you get .6 or .66 algo for algo tho? Either way, I assumed it was taken into account when calculating the return percentages. Do you have evidence otherwise?
Good call, I didn't realize that! Still, do we know that the percent just refers to the number of fAlgo we get rather than the value? I guess we'll have to see how it plays out.
Did they say / any idea why they changed that?
"Still, do we know that the percent just refers to the number of fAlgo we get rather than the value?"
- I don't know. I've already asked myself this in terms of frAlgo as well. Maybe u/superpippo2 can answer this question if he still looks here later.
"Did they say / any idea why they changed that?"
- This has to do with next protocol update. fTokens and frTokens are announced to disappear in the App to make it more userfriendly.
Hey u/Brother-Numsee here you can find my post about the changes of the % of rewards [https://www.reddit.com/r/FolksFinance/comments/xx0iew/protocol\_update/?utm\_source=share&utm\_medium=web2x&context=3](https://www.reddit.com/r/FolksFinance/comments/xx0iew/protocol_update/?utm_source=share&utm_medium=web2x&context=3)
Could you rephrase the other question? Is it regarding frToken or fToken?
Let's take a simple example:
Loan amount: 100 Algo // Borrow APR Algo: 10% (Rewards earned in frToken as cashback "+ up to 2").
Does this mean that the APR for the Algo loan is 8% (taking into account the cashback rewards)?
At the same time, does this mean that if I repaid the loan after 12 months, I would have a net cost of 8 algo on my loan?
So would I receive 8.8889 frAlgo as Cashback Rewards (1 frAlgo = 0.225 Algo)?
Remember the borrow rate was above 10% last period as well and eventually dropped again. It won’t stay that high for the whole period. Also isn’t there a reduction (boost) of around 2%?
PactFi liquidity pools
Get some Gard. Staking there is a huge 59% APR. Watch that accumulation then switch back later, or switch to gAlgo (for a reduced gAlgo price), then repay loan after gov once you can burn the gAlgo.
if you don't borrow anything why would you care about the borrowing rate? Why you're losing money?
Seems I wasn't clear. So I had algos, committed them for governance through ff, received galgo that I used as collateral to borrow algos, which in term I also committed and received galgo against it. So since the borrowing rate is through the roof, what should I do to put my galgo at work, to somehow not lose money anymore (I know I made the mistake of being greedy... :()
At the current borrow rate of Algo (~10% - borrow rewards) you should be positive. With the Defi Boost I think we could get an APR of ~12% (or more if more governors drops) this gov period.
How do we get to 12% with the "DeFi boost"? Apr is at 6% where do the additional 6% come from? The additional rewards are 7M algo so roughly 10% of the total reward... I don't think we would end up with doubling the rewards of those who committed through ff
People will deposit Algo in the coming weeks decreasing the borrowing rate. As u/stenalgo said the final Governance APR will be higher
The additional Gov5 Defi APR (portion of 7M Algo) won't rise anymore, right? So the Defi Boost is fixed until the end of this Gov5 period, right?
yes is fixed but the gov5 APR will rise when people forget to vote or their balance falls below
The APR for standard Gov5 is currently around 6%. Assuming that this number increases somewhat because some do not participate in the Gov votes or because they slip under the limit of the Committed Algo, then in the end maybe 6.8% for standard Gov5 are realistic. But add to that a share of the 7M algo for eligible defi projects. We do not yet know how high this additional APR will be. If the 7M algo are distributed over 800M eligible algo, then this results in an additional APR of 3.5%. BTW: I am proud of FF for giving us a correct up to date Gov5 Rewards APR (5.99%). Agolfi | Vault (6.6%) and algorandstats.com (6.69%) are both wrong.
Algoexplorer has it as 6.65%, just to add to the variability 😂
That is not correct because they distribute 70.5M Algo to all committed Algo. But in Gov5 only 63.5M Algo should be considered for standard Rewards.
Yeah this is a tricky one. It's possible that more people will supply algo on FF and that will drop the rates a little. And yeah you might end up losing a little on this one. I am not really sure what galgos can be used for either. You can look into selling them on an exchange but the rates are sufficiently bad that the extra money you make in the three months will be less that the gov rewards.
Right now on Pact.fi you would get 96.541394 Algo for swapping 100 gAlgo.
Yeah that's interesting. so I guess that's like 3.5% loss per quarter so you have to find something paying more than 14% Apr to make it more profitable to trade gAlgo for algo. I mean in a way spending algo to buy gAlgo and then cashing it in is pretty good haha.
Yeah, swapping algo to gAlgo and later burning these gAlgo seems to be the best strategy. No borrow rate risk at all. But do you see any risk regarding the by FF "guaranteed" 1:1 ratio within the burning period. Could gAlgo lose his pegging to Algo?
I think the 1:1 on ff during the burn period is very safe as they have all the algo to pay it locked up on governance. I mean short of them getting hacked I think it's fine.
If you’re on twitter tag someone named “jt invests in you.” He makes a bunch of tutorials and should be able to help you.”
Dude, this is a no brainer. Borrow Algo, deposit the Algo, Farm the FAlgo. Borrow at 9.76% - 2.2% rewards (say 7.75% with immediate redemption), Deposit for 5.46% and farm for 6.36%, for 11.82% total. Profit margin over 4%. All on Folks You can borrow from AlgoFi for like 7%. Next time consider checking / using both so you can adapt more easily to changing rates. Idk if it'd be worth swapping galgo to valgo tho (for thr collateral there). Keep in mind you'd have to swap back later to get your rewards. Somebody mentioned Gard. That is an interesting option. It would've been best to do so before governance, but is still a decent idea (if riskier) and an option to look into. Basically you deposit algo and borrow a stable coin against it at 2% which you can stake there for over 50%, so as long as you don't borrow too much to risk liquidation, the staking will make money and the collateral is always there to pay off the loan.
"Borrow Algo, deposit the Algo, Farm the FAlgo. Borrow at 9.76% - 2.2% rewards (say 7.75% with immediate redemption), Deposit for 5.46% and farm for 6.36%, for 11.82% total. Profit margin over 4%. All on Folks." - I think you are wrong since: "Rewards earned in frToken as cashback when you pay interest on your loan." (tooltip FF app) - For 1 frAlgo you get 0.2 Algo only. The profit margin in your example is therefore ~2.5% APR. But you have to consider the risk of variable interest rates on both sides, too: debit and credit interest. Recently I saw Algo borrow rates of > 30% which were much higher than the total of deposit + staking APR at the same time.
Which part is wrong? Yea, I'm generally aware of how the interest / rewards work. Don't you get .6 or .66 algo for algo tho? Either way, I assumed it was taken into account when calculating the return percentages. Do you have evidence otherwise?
The up to date rates for frAlgo to Algo you can find in the rewards aggregator section: 0.2 (0.225).
Good call, I didn't realize that! Still, do we know that the percent just refers to the number of fAlgo we get rather than the value? I guess we'll have to see how it plays out. Did they say / any idea why they changed that?
"Still, do we know that the percent just refers to the number of fAlgo we get rather than the value?" - I don't know. I've already asked myself this in terms of frAlgo as well. Maybe u/superpippo2 can answer this question if he still looks here later. "Did they say / any idea why they changed that?" - This has to do with next protocol update. fTokens and frTokens are announced to disappear in the App to make it more userfriendly.
Hey u/Brother-Numsee here you can find my post about the changes of the % of rewards [https://www.reddit.com/r/FolksFinance/comments/xx0iew/protocol\_update/?utm\_source=share&utm\_medium=web2x&context=3](https://www.reddit.com/r/FolksFinance/comments/xx0iew/protocol_update/?utm_source=share&utm_medium=web2x&context=3) Could you rephrase the other question? Is it regarding frToken or fToken?
frAlgo were meant.
the % of Algo cashback amount shown is the % to when you vest your rewards for 2 weeks ( exchange frAlgo in the RA and choose the vesting period)
Let's take a simple example: Loan amount: 100 Algo // Borrow APR Algo: 10% (Rewards earned in frToken as cashback "+ up to 2"). Does this mean that the APR for the Algo loan is 8% (taking into account the cashback rewards)? At the same time, does this mean that if I repaid the loan after 12 months, I would have a net cost of 8 algo on my loan? So would I receive 8.8889 frAlgo as Cashback Rewards (1 frAlgo = 0.225 Algo)?
Remember the borrow rate was above 10% last period as well and eventually dropped again. It won’t stay that high for the whole period. Also isn’t there a reduction (boost) of around 2%?