This is for people who want those fat rewards but also have other factors in their life that prevent them from sitting down and focusing on something like this. Here I will paint a simple strategy for anyone who just wants to make sure they don't miss out but doesn't have the time to worry about min-maxing every little aspect.
The main concepts you need to understand are building LP tokens to capture more $MEX and considering the long term value of $MEX. For building your LPs you can do so by either taking your earnings from the exchange, doing the neccessary swaps and then making more or, dollar cost averaging into the Exchange as you earn more fiat or recieve staking rewards from the network. Generally speaking, more LP tokens means more rewards, so it is in your interest to keep building more. You can lock all rewards if you want, and earn double APR on all of your tokens, but you should think about bringing more value in from the outside from your staking rewards or from fiat in this case. You might also consider keeping some LP tokens in a simple stake earning $MEX so that you have some liquitidy that isn't locked in order to make more LP tokens and also to take advantage of momentary fluctuations in the price of $MEX.
Remember that you need to believe you will earn more than 100% on your non-locked rewards in order to beat what you would have earned from simply locking them. If you don't want to bother with the day to day activity on the exchange and you have a steady supply of fiat or staking rewards coming in, it is probably better to lock all of them. Perhaps keep a small amount out of lockage just in case but, this requires a bit more attention. Use some of the $LKMEX rewards to pair with new $EGLD you bring in from either fiat or from staking rewards, lock those, and send the rest to the MEX farm for another locked stake. Continue compounding your $LKMEX in the MEX farm and watch your $MEX bag grow at an exponential rate. Do this for a year and your $LKMEX will begin to unlock and you can consider keeping them in the pool or pulling them out to swap for $EGLD, other tokens, or withdraw to fiat and buy pretty things.
If you believe the value of $MEX is likely going to appreciate rapidly then it makes sense to bag as much of it as you can while it is cheap and rewards are high. If this is the case then later on your $MEX rewards will be much much less in terms of $MEX tokens but they will be of greater value in terms of USD. If you are looking at the market and think $MEX is only up from here then it makes sense to build as big of a bag as you can now, and then watch the value of your bag rise dramatically with the price of $MEX. If you believe however, that the price of $MEX will be pretty stable for a long time or even that it will take a dive, then consider not locking any of it or only a small portion, and then swapping your rewards to $EGLD or stablecoins or make more LP tokens. If you think that $EGLD will perform better than $MEX, this is another low effort strategy that you can deploy and simply use the exchange to boost your $EGLD bag and stake that on the network.
One thing to consider when deciding how to stake in your farms.... Staking for $MEX instead of $LKMEX is essentially taking a 50% hit on APR. If you have EGLD-MEX tokens handy still (as opposed to EGLD-LKMEX) then you still have some free $MEX that you can use paired up in those LP tokens. While you have to start by buying $MEX to provide liquidity to make your first farm, you will be earning MEX after that and can use that instead. If you lock those rewards, you will soon have lots of LKMEX to use to make more LP tokens... and perhaps replace the free $MEX in the first LP tokens. It is possible to double the LP tokens using free $MEX by replacing it with $LKMEX.
This may seem complicated to imagine at first but consider this farm I have going right now:
I have 3.2 LP tokens as EGLD-MEX and 1.6 as EGLD-LKMEX. If I were to farm and earn $7k worth of $LKMEX then I could unstake that first farm, remove liquidity and receive $3.5K of $EGLD and $3.5k of $MEX (at whatever ratio that happens to come out to at that moment). If I were to immediately swap the $MEX for $EGLD then, I will have $7k in $EGLD. With me so far? So I earned $7K in LKMEX and then pulled my liquidity and swapped so I also now have $7k in $EGLD. I knew I could do this because it's written right there that my LP tokens are worth $7k. If I were to now provide liquidity in this same session (so the prices haven't moved), then I would end up with 6.4 LP tokens of EGLD-LKMEX. Do you see how I did that?
If I staked those now, I would be earning $MEX with $14k instead of $7k. I doubled my stake and I never had to cut my APR by 50% to do so. This can be done gradually as well. No need to earn all $7k at once. The beauty of withdrawing your LP tokens from the farm is that you can do so at whatever percentage you want. If I had $300 of LKMEX and I wanted to do this then I could get them in the liquidity pool by withdrawing only 4% ($300 / $7000 = 0.0429). In this way it would be possible to compound my LP tokens and still stake everything while locking for double ARP. Eventually I will run out of EGLD-MEX LP tokens and be left with EGLD-LKMEX tokens and only then would I need to take an APR cut to continue growing.
This is a time it may be worth the 1% hit if this is an early withdrawal because 1% of $7k is $70 and I would be adding $7k so the hit would be negligible, especially when the APR is high and falling fast with increased adoption. If I waited I may end up losing more than if I take a small hit now to receive more rewards. There are many ways to approach this.
There is no right or wrong strategy except for the one that helps you sleep at night. If you are up late worrying about your decisions then it isn't worth the effort. Likewise if you find yourself overworked or stressed during the day over harvesting your yields. You don't need to focus very hard on the exchange in order to benefit greatly and what precise strategy is right for you to employ depends entirely on you as an individual, how much you can put in, how much attention you can give it, and your appetite for risk.
For my own strategy, I may put out an article discussing on my thoughts on using the Maiar Exchange which will have aspects of all of these below but with my own needs and vision for long term growth in mind.
If any aspect of this was confusing or you have further questions, feel free to DM me on Twitter and I will try my best to answer or find the answer for you. I appreciate your feedbak as it helps me refine this article so it may help more people.
For further learning, take a look at the following resources:
- For visual learners, Wesley Kress has created a wonderfully thorough video: A Master Class: A Deep Dive into The Maiar Exchange (DEX) of The Elrond Network
- And for further exploration of advanced strategies, The Palm Tree Network has put out a guide based on discussions in their community.
- There is a Telegram channel for discussing strategy, made by the community here
- And the official Telegram channel is here
- The official docs from Elrond are here, with their how to guides and simple explanations of concepts
- Here is a video: Maiar Exchange Crash Course
- A useful guide and another tutorial from MGStaking
- An introduction to liquidity pools by Ishtari Vision
Thanks for stopping by my Elrond blog! Please share with others and let me know if there are topics you would like me to dive into for future articles
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