UPDATE 7-19-2021: KILLING THE DELTA NEUTRAL STRATEGY ASAP
(I’ve modified the subject of this thread to reflect an even more pressing need here regarding the delta neutral…can moving / adjusting the protocol fee help with this? -maybe. I’d still like to see this tweeked- however we need solutions to make people pick a side in the market - not scoop mir with 0 risk via easy strategies they can learn on youtube. )
Is everyone enjoying the price movement of MIR? I hope not. The question we must ask here is WHO is dumping MIR at these levels? It doesn’t take a genius to figure out these are the large players providing LP on mirror in DELTA NEUTRAL strategies. And why wouldn’t they if they can make 40-70% apy with 0 risk? LOL. Come on this has to end. We can’t let such strategies turn into risk free money printers for whales. Please use this thread as a way to make suggestions to end this madness. Markets need WINNERS and LOSERS - not guaranteed winners at the expense of Mir price!
ORIGINAL POST (re increasing mirror protocol fees & having them paid upfront)
taken from my tweet: https://twitter.com/nachodonUST/status/1415316673679167490?s=20
re: Mirror Protocol & the “delta neutral” catch 22 with mainly downside
tl;dr - mirror protocol v2 should be modified to require minted asset value 1.5% fee to be paid up front rather than at cdp closure, the fee should also be increased to 3% (or thereabouts for the short term)
declining mir governance revenues can be blamed on a number factors - with lower volumes atm likely being the main culprit. but i believe the ability to earn mir rewards on the short side to create a delta neutral strategy is also hurting mir gov rewards generated by cdp fees.
does the fact that so many users might be executing “delta neutral” strategy on mir mean that shorts essentially rarely close since they can be easily balanced by adjustments on long side & cdp collateral?
i think so
wouldn’t it make more sense to req to pay the fee upfront? because otherwise, when does the short side close? & when are the fees going to be paid to the protocol?
-when the mir rewards end or become less interesting?
-when a massive upturn liquidates the position?
now i’m not saying that these fees will not eventually be paid to the protocol …but why allow them to be paid at potentially such a later date when the protocol is offering them the equivalent of “free money” (& fast / immediate) to take this trade?
minimally imo these fees should be paid upfront, and consideration should be made for increasing them…
…the fact is that the ability to delta mainly rewards whale positions extremely handsomely. These large neutral positions do little for the protocol other than send fat rewards to Whales who are likely to dump big mir profits onto the market. Not good!
furthermore-the change to pay fees based on asset price at the close rather than on collateral along the way further benefits the sharpest traders who will pay less fees later on successful net short trades hedged perfectly and profitably by the delta neutral mir reward scheme.
Are you seeing the issue that i am here?
-every change to the fee structure benefits the sharp whale who has more capital than you or me put together and will suck mir rewards out of the system and dump - while kicking the protocol fee can down the road as long as they choose.
I don’t have all the answers here, and maybe I’m missing something fundamental. But clearly the ability to execute this strategy likely comes at Mir’s expense. I just can’t think of how any of this can possibly benefit Mirror/$MIR.
So, let’s think this through as a community - or feel free to kick me in my nuts and tell me “all is fine” and how much YOU are personally “enjoying” your delta neutral positions - but I’d argue that is extremely shortsighted & certainly not in @mirror_protocol’s best interests