【CJ Market Making Notes 14/14】
After talking about 13 papers, in the end this method only leaves one habit: make trades that I can clearly calculate myself, without chasing a higher APR on paper.
When I see a new opportunity, I ask in order:
First, where does the profit come from? Is it the price spread, the interest rate spread, or the fees paid by traders?
Second, can the Fee cover IL, Gas, slippage, and capital lock-up?
Third, after the price passes through the range, what asset do I ultimately receive, and am I willing to hold it?
Fourth, when do I reassess, and when do I exit the pool?
Fifth, will execution be eaten up by MEV, liquidity, and rebalancing costs?
Sixth, do I have enough energy to manage these positions at the same time?
You can’t answer these questions before entering. Even if the APR is higher, it’s still just a conspicuous number. The direction can be wrong, but the risks must not be completely unknown. The capability circle isn’t mysterious either: know what money you can earn, know what risks you can handle, and know what opportunities you should let go.
That’s where these 14 posts end. The next batch can continue breaking down specific protocols, arbitrage paths, and market-making tools, but the judgment order will not change.
#DeFi #Trading Cognition
After talking about 13 papers, in the end this method only leaves one habit: make trades that I can clearly calculate myself, without chasing a higher APR on paper.
When I see a new opportunity, I ask in order:
First, where does the profit come from? Is it the price spread, the interest rate spread, or the fees paid by traders?
Second, can the Fee cover IL, Gas, slippage, and capital lock-up?
Third, after the price passes through the range, what asset do I ultimately receive, and am I willing to hold it?
Fourth, when do I reassess, and when do I exit the pool?
Fifth, will execution be eaten up by MEV, liquidity, and rebalancing costs?
Sixth, do I have enough energy to manage these positions at the same time?
You can’t answer these questions before entering. Even if the APR is higher, it’s still just a conspicuous number. The direction can be wrong, but the risks must not be completely unknown. The capability circle isn’t mysterious either: know what money you can earn, know what risks you can handle, and know what opportunities you should let go.
That’s where these 14 posts end. The next batch can continue breaking down specific protocols, arbitrage paths, and market-making tools, but the judgment order will not change.
#DeFi #Trading Cognition
