I used to think the scariest thing in a Looping Basis Trade was a ETH chart dump.
after manually closing a position on @TermMax I changed my mind... the carry can still look good while the exit keeps getting narrower, and that is what feels truly uncomfortable.
I setup: sUSDe Floating Rate 4.2%, FT Implied Fixed Rate 6.8%, Interest-Rate Spread 260bp.
I used GT, with 19,500 USDC in capital, then pushed Leverage to 5x, Notional Exposure 97,500 USDC.
260bp x 5 = 1,300bp, ~13% annualized.
if held for the full 3 months, carry ~3.25%, around 3,169 USDC before fee.
then ETH fell from 3,400 to 3,094.
Collateral Value contracted, LTV went from 68% to 81%, Liquidation Buffer became much thinner.
FT Secondary Market came under selling pressure, FT Discount dropped 3.8%.
honestly, at that point I was no longer looking at Fixed Yield.
I was looking at Market Depth, LLTV and asking myself: if it drops another -4%, will Manual Deleveraging still be possible?
I sold 40% of FT for Debt Repayment.
it was not that the Fixed Rate was wrong.
it was that Exit Liquidity moved out of sync with Collateral Volatility.
Leverage Loop is brutally fair: Leveraged Yield increases multiplicatively, and so do Price Risk, Delta Risk and Liquidation Risk!
Physical Delivery is no suit of armor for a Leveraged Position sitting close to the Liquidation Window.
I changed my rule: if FT Discount exceeds 2%, reduce size, if LTV exceeds 76%, stop the Looping Position, Single-Market Notional Exposure no more than 15K.
collateral 12,000 USDC, Debt 8,400 USDC means LTV is 70%.
collateral drops 6%, LTV ~74.5% before slippage.
one calculation... but it determines a lot of things.
TGE of TermMax is 25.08.2026.
I still follow FT, GT, TMX, Fixed-Rate Lending, but Risk Buffer now matters more than APR.
the highest yield is not necessarily the best trade.
the best trade is the trade that still leaves you a way out when everything starts going wrong.
if it were you, should the first trigger be FT Discount, LTV distance, Market Depth or Collateral Drawdown?
#TermMax @TermMax
after manually closing a position on @TermMax I changed my mind... the carry can still look good while the exit keeps getting narrower, and that is what feels truly uncomfortable.
I setup: sUSDe Floating Rate 4.2%, FT Implied Fixed Rate 6.8%, Interest-Rate Spread 260bp.
I used GT, with 19,500 USDC in capital, then pushed Leverage to 5x, Notional Exposure 97,500 USDC.
260bp x 5 = 1,300bp, ~13% annualized.
if held for the full 3 months, carry ~3.25%, around 3,169 USDC before fee.
then ETH fell from 3,400 to 3,094.
Collateral Value contracted, LTV went from 68% to 81%, Liquidation Buffer became much thinner.
FT Secondary Market came under selling pressure, FT Discount dropped 3.8%.
honestly, at that point I was no longer looking at Fixed Yield.
I was looking at Market Depth, LLTV and asking myself: if it drops another -4%, will Manual Deleveraging still be possible?
I sold 40% of FT for Debt Repayment.
it was not that the Fixed Rate was wrong.
it was that Exit Liquidity moved out of sync with Collateral Volatility.
Leverage Loop is brutally fair: Leveraged Yield increases multiplicatively, and so do Price Risk, Delta Risk and Liquidation Risk!
Physical Delivery is no suit of armor for a Leveraged Position sitting close to the Liquidation Window.
I changed my rule: if FT Discount exceeds 2%, reduce size, if LTV exceeds 76%, stop the Looping Position, Single-Market Notional Exposure no more than 15K.
collateral 12,000 USDC, Debt 8,400 USDC means LTV is 70%.
collateral drops 6%, LTV ~74.5% before slippage.
one calculation... but it determines a lot of things.
TGE of TermMax is 25.08.2026.
I still follow FT, GT, TMX, Fixed-Rate Lending, but Risk Buffer now matters more than APR.
the highest yield is not necessarily the best trade.
the best trade is the trade that still leaves you a way out when everything starts going wrong.
if it were you, should the first trigger be FT Discount, LTV distance, Market Depth or Collateral Drawdown?
#TermMax @TermMax