Most of the following strategies can only be used with strategy #2 which we have explained in the previous blog post. But there are still quite some other tactics you can pursue with all other strategies.
#1 Which dTokens should you create?
The crucial thing here is to observe the situation right at the beginning when liquidity mining rewards will be introduced. Since you create the tokens using your Vault you have the flexibility and can quickly jump into the highest Liquidity Mining pools.
Nevertheless you should always try to diversify and shouldn’t put all your eggs into just one single Liquidity Pool. It would make sense to go into at least one or two high volatility pools to maximize your returns.
#2 Diversify over several Liquidity Pools
You should not go all in on all Liquidity Pools. Entering too many Liquidity Pools at once distracts you from the main focus of jumping into the most lucrative pools. But it all boils down to your risk appetite. If you are risk averse, then the less volatile ones like the DFI-DUSD pool may be the most attractive option; riskier options are the smaller, more volatile pools where returns should be even higher.
#3 Profit by doing arbitrage
Instead of minting your dTokens and jumping from Liquidity Pool to Liquidity Pool you could use them instead and arbitrage the pools out and eventually balance them out. Why does that happen and why is there such an opportunity? Well, the price on the DEX is all about supply and demand and as such if there is more demand for e.g. DUSD than supply, then the price tilts and you are able to profit from that.
#4 Should you create dTokens just with one or more Vaults?
Similar to creating dTokens, you shouldn’t open too many Vaults at once and should also not take out multiple dTokens as a loan from these Vaults. Reason being is simple: you will not be able to handle so many Vaults and so many different pools at once and might lose overview, especially when the market crashes and your collateral decreases in terms of USD value.
#5 Buy up Vaults in liquidation
This tactic does not have to do anything with creating Vaults or Liquidity Mining. This tactic is all about buying up Vaults that are being liquidated due to an insufficient collateralization ratio. All you need for this strategy to work out is some basic coding experience, since it can only be done via the command line using the DeFiChain desktop wallet.
Now it’s time to execute everything you learned and make some money! Download the DeFiChain app now and profit from Decentralized Assets.