Sirwin
Sirwin

I tested the new THORChain Savers Vault for 1 Month— my Results

By n1ce | DeFi Adventures | 16 Jan 2023


One month ago, I added around $500 to the new THORChain Savers vaults. Now, 32 days later I checked the statistics in this handy Telegram bot @THORChain Infobot:

My returns for Bitcoin added to the THORChain Savers vault.

I explain in much more detail in the previous article but a quick recap. THORChain is a decentralised exchange built with the Cosmos SDK. It let’s you swap native coins like Bitcoin, Ethereum, BNB, Avax, ATOM, Dodge.

The recently introduced a feature called Savers Vaults which let’s you provide liquidity for any of the single assets mentioned above.

How is it different? Usually when providing liquidity, you are exposed to price movement for the asset but also RUNE. This is needed to keep the assets save on the chain.

In case of Savers Vaults you sacrifice 50% of your returns but gain access to real yield on your asset. The yield is paid from swap fees by users of the THORChain DEX.

How much did I make?

That’s all nice and stuff but how much did you make in the end?

I made an almost 0.4% gain (0.393%), increasing my Bitcoin by 0.000123. At todays Bitcoin price of $21.300 that’s around $2.62!

It might not seem much but for such a small position I think it’s quite substantial. Especially given that you have the full control over your Bitcoin and can withdraw it at any given moment. With all the centralised exchanges and lending providers like Celsius, Nexo and FTX collapsing, for me that is one of the most important aspects.

There is a network fee when withdrawing so you need to be careful. Together with the slippage when adding you need to consider how long you stay in the vault to be positive.

Right now I could withdraw 0.0308575 BTC which means I need to earn another 0.0005731 BTC before I am in the green. That should be around 4.5 months. As I see this as a long term hold I am fine with that. The more volatile the market, the more swap fees on THORChain and the more returns for this vault strategy.

Even if in the first year I only earn for 7.5 (= 12–4.5) of the 12 months, I think is a very nice long term investment as I intend to hold the Bitcoin anyway. I also don’t see the Volume on THORChain decreasing in the long term, which makes this a low-risk leveraged bet on the adoption of crypto & a multichain-future.

I have not decided for a long term strategy yet but I could see myself adding a part of my Bitcoin buys every few months into the Savers Vault. Currently I am running a Dollar Cost Averaging bot that buys a few Satoshis (Bitcoin’s smallest unit) every few hours. Some of those savings go to Cold Storage, but earning almost 5% per year in a decentralised manner looks quite interesting!

I also still need to figure out how to get the lowest slippage & network fees.

In one year I would earn 0.393 * 12 = 4.7% which is exactly the meaning of APR in the bottom of the image: annual percentage rate without recompounding.

Savers Vault vs Liquidity Providing

Of course Bitcoin rallied substantially in the timeframe with a 25.7% increase. I was not going to spend my Bitcoin at what I perceived to be the bottom but I was able to increase my savings without being exposed to an altcoin like RUNE token.

I am referring to “normal” liquidity providing for THORChain which means paring the asset you want to supply with an equal dollar amount of RUNE.

I even have such a position, but it is deeply in the red as it was opened during the top of the bull market. It does not matter as much as I see it as a long term hold. Seeing how much THORChain is building and attracting liquidity in a bear market (which decreases the supply for RUNE, but that is a topic for another day) I think it will perform quite well in the next bull-run.

The downside of the savers vault compared to liquidity providing (LPing) is that it only pays 50% of the returns for LPing. Which makes sense as you are not risking any downside of providing the second asset and it going down in price.

How can you join?

As I am writing this, the Savers Vault is 94% full for Bitcoin but I think there are plans to raise the caps via a governance vote.

In my last blog on the feature I wrote a detailed deposit guide (click here). Please let me know if you have any question or problem with the deposit. I would like to help as much people to use the feature as I can.

You can also reach out on twitter and let me know about your experience.

Self-promotion

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That’s it for today, see you all in the next one,
n1ce

 

Necessary disclaimer of course: Non of this info is financial advice. THORChain Savers is a risky product and can lead to you losing all your Bitcoin you sent there. Please only add whatever you are willing to lose in the worst case.

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n1ce
n1ce

I love to teach you Decentralized Finance on Fantom and THORChain Follow me on twitter: https://twitter.com/n1ce34007134


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