TL;DR - I have taken to honking like a goose every time I check my Goose Finance portfolio. There I am, honking away many tiny sums of BNB every time I compound, harvest, swap, or stake. I'm having tons of fun using Goose Finance, but my "strategy" has been... ineffective. Please enjoy these geese honking, which I have nominated as the official mascot of honking away my life savings on Goose Finance (I'm not trying to FUD Goose here, I'm actually having a great time with it... though it remains a highly risky and totally experimental project in which I sunk $1,000 that I'm not planning to see back).
One can feel like a silly goose running around in circles spending a ton of BNB gas, while riding each subsequent GGX layer into the ground week after week. But I wonder if that isn't the whole purpose of Goose Finance... is this a brilliant initiative by BINANCE to multiply consumptive BNB transactions on the BSC network? By providing a pressure release valve for all of the mounting desire to interact with DeFi incubators, Binance is creating a lot of value in the BNB coin and receiving all of the BNB network fees as well. So far it seems like Binance & BNB coin may be the real winners in the Goose finance story.
Judging by the comments in the Goose Finance telegram group, it seems that a lot of people lost money with the GG1, GG2, & GG3 layers. I know I definitely did. But I also bought in on day 2 or 3 of layer 1. So it was pretty much the top of EGG and the top of GG1. I haven't given up hope that I may still at least recover my losses and break even, especially if the Goose devs implement a plan to revitalize the GGX tokens (perhaps with capped highest APR GGX->EGG pools or by cranking up and down the GGX->BUSD House pools). It actually looks like some of these ideas are already being implemented in real time yesterday and today. I just noticed that the GG2->BUSD House & even the GG3->BUSD House are currently listed at 0% APR, and the layer one GG1->BUSD House shows current APR at 4,874%. So Goose is really herding the flock back into GG1 right now. But I'm a defiant goose, so I won't go.
Layer 1 (House)
Layer 2 (House)
Layer 3 (House)
So it looks like the Goose devs are making moves to see how much they can do to pump GG1 right now. Sort of looks like they're running an experiment because for the first time since layer 2 was released, the price of GG1 has surpassed the price of GG2. EGG could still have a big rally, and if this "Layered Farming" experiment evolves into a successful proof of concept, then I may still even make a profit. I took this most recent price inversion opportunity to swap my GG1 for GG2 because I assume Goose devs will continue this type of method to pump GG2 next. So instead of following the rest of the geese to the highest APR GGX->BUSD pool, I decided to use these price swings to convert ~10 GG1 into 40 ~GG2. I plan to continue applying this method of trading higher value GGX tokens for a larger quantity of cheaper GGX tokens. I'm done adding new capital to Goose for now, so I'm not buying this GGX token dip. I've resigned to do what I can with what I have left. I'm going to continue the experiment. Will I turn my remaining $100 into $10? Or could it go back to $1,000? At this point, it's anyone's guess. I'm currently holding approximately ~4.35 EGG, ~3.5 GG1, ~39.2 GG2, & ~1 GG3. So I may yet have a chance at recovery. It looks like my Goose holdings are worth about ~$175 or so right now (so I'm already recovering a bit).
Goose Finance does not appear to be a traditional rug-pull scam or Ponzi scheme to me. I see it as more of an experiment in progress. So it's fate is in the hands of its community and its devs, and there are a lot of questions to answer. Will there be endless layers or will there be a maximum number of layers that are cycled through? Will the mint & burn process just cycle back and forth between EGG and GGX tokens? So will us geese pay EGG burn fee to stake EGG to mint GGX, then later pay GGX burn fee to stake GGX to earn EGG? And just continue that cycle? Can any amount of layering and goose shuffling create lasting opportunity in a token minting model?
It seems possible to amplify the opportunity within Goose Finance in a way similar to what Sun.io appears to be doing on Tron Network. Goose could partner with smaller market cap projects looking to get their tokens exposure and into circulation, so instead of having to mint quite as much EGG, some of the APY earnings could be paid in a basket of other small cap tokens from projects wanting to promote by dedicating a stack of their tokens towards paying rewards to Goose Finance users. Paying APR rewards in a handful of small cap currencies in addition to minting EGG & GGX tokens, could help iterate Goose in a more sustainable direction. I'm excited to see how things unfold. Nonetheless, a lot of people who bought high are seeding FUD in the Goose telegram group and the Goose community interactions on there have been hilarious, now including audio messages, like this voice message which had me ROFLing... or this amazing interaction. So no FUD in the Goose telegram people, ok? If you're going to FUD the project, just leave. Lol! I don't totally agree with this, but it is incredibly entertaining.
I'm pretty new to decentralized finance. I just stumbled in at the very end of 2020. The first thing I did in DeFi was to fund the ETH-ESS liquidity pair on UniSwap. That's how I learned about impermanent loss. I laughed out loud while watching this interview with Mark Cuban on Bankless from a few weeks ago. He says that most people, including himself, who are staking liquidity pairs in DeFi are probably losing money (sorry I didn't time stamp the comment because I couldn't find it again). It's a great interview and worth watching. It actually gave me new respect for Mark Cuban's opinions on crypto and DeFi as well... he actually appears to know his stuff. But I think he's right that most people staking liquidity pairs are at least having mixed feelings about it.
I'll write a post about Essentia (ESS) soon. I'm currently using Unicrypt Farms to farm the ETH-ESS LP tokens I got for providing ETH-ESS liquidity on UniSwap. But I'm waiting to see how things go with their blockchain and wallet development over the next few months before I post about the project. I bought $1,000 worth of Ethereum (probably paid ~$40 COINBASE fee), then I swapped half of that ETH for ESS on UniSwap (probably paid $30 ETH gas fees). Then I staked the ETH-ESS pool with my ETH & ESS (probably paid ~$60 ETH gas fees). I knew the fees were high, but even I was pretty dumbfounded by all of these. Nonetheless, once my ETH-ESS pair was staked, I was so excited! Nothing could go wrong. I did the hard work, I paid the fees, and now I can sit back for weeks, months, and years and let my staked liquidity earn me fees while my ESS & ETH appreciate in value. Then ESS tripled in value and I was looking forward to a huge pump in my UniSwap position... but the gains I expected were not there. The value had increased, but not by much.
That's when I began to learn about the real cost of decentralized exchanges, "impermanent loss" (which is a pretty stupid name because it feels pretty damn permanent when it happens to you). It's extremely difficult to explain how and why this happens. The liquidity pools which facilitate decentralized exchanges are run by smart contracts which automate market making. These Automated Market Makers (AMMs) presently require 50-50 staking between the two currencies in a liquidity pair... so as one coin in the pair increases in value relative to the other, the LP's position is reduced to balance the value equally between the pair. I'm probably not explaining it perfectly so if you're not familiar with this concept at all, it should be lesson #1 in DeFi. Here's how Coinmarketcap explains it:
I paid a couple hundred in fees and I learned all about impermanent loss and what that feels like with a more volatile token. I didn't "lose" money, but I made less than I would have if I had HODL'd and depending on the fluctuations in relative values, liquidity providers can lose nearly all of their principle in worst case scenarios. It was a very valuable lesson for me. I needed to understand what it was like to be a liquidity provider in order to know if this whole DeFi boom could be sustainable in its current form. I can more competently assess how the DeFi market may adapt and optimize. This helps me identify value in the crypto economy. So now I know that if I'm going to stake a volatile trading pair, it will have to offer a very high return to even consider taking on the risk due to impermanent loss. Even so, with the high fees on the Ethereum network, it is not practical to speculate in these markets without investing considerably more than $1,000.
All of this informs my actions in the market in a few ways. It lets me know the technical and financial barrier to entry for the DeFi market. It tells me that rewards for liquidity providers (LPs) need to be sufficient to warrant the risk assumed, otherwise there will be a liquidity collapse in the decentralized exchanges. It also raises the question, is there a simple solution for the problem of impermanent loss? The experience sends me looking for anyone working on this problem because I see value in this part of the market. Why not have individual staking pools which are then aggregated to form various liquidity pair AMMs? This way the liquidity provider can simply stake a single token and bare no risk of impermanent loss. It would require very high reserve rates of staked assets (and ~100x more for base pairs as for tokens). And staking reward rates would have to dynamically adjust to incentivize staking coins for which liquidity is most needed. I was asking around about some of these ideas on the Sovryn Forum, and I have it on good authority from the "Hot Gandalf" himself, Edan Yago, that Sovryn is developing this type of solution.
I've taken some pretty big losses and I'm certain I haven't seen my last. However, now I'm more willing to assume greater risk with a limited portion of my portfolio. For me, it's about 5%. I feel comfortable putting 5% of my portfolio into very high risk crypto investments. I'm not just talking about your average run-of-the-mill high risk crypto investment, but truly roulette-casino style risk. It's a subtle but important distinction for me. So, for example, I recently participated in the Sovryn Origin presale on RSK network. It's all about bringing a pioneering DeFi market directly to Bitcoin native blockchain using rBTC (Smart Bitcoin) which is co-mined with the Bitcoin blockchain on RSK network (please correct me if I mixed that up, but that's how I understand it).
I'll write a post on SOV and link it here. But if you're not familiar with the project, you really should look into it and I would start by watching some videos of Edan Yago. I consider presales highly risky because the rigors of the market haven't applied themselves to establish real world value. The biggest losses I have taken have all been ICO investments or presales. Nonetheless, I'm very excited about what Sovryn is doing and I want to be a part of it. So I'm hoping this is the presale that actually does yield considerable returns. But even if it does not, I still find value in having a reason to use RSK network and to interact with some of the old school decentralists in the SOV community. I've benefited from the experiential knowledge on the frontier of the crypto economy. I'm willing to take this risk (and I do consider this a fairly high degree of risk), but I still don't consider this investment among my 5% casino-style risk allocation. It's pretty close, but not quite ludicrous speed level risk.
I'm not into true crypto gambling. You won't ever see me do a review of FunFair or any of these gambling sites on Tron Network. I just don't really care about that stuff. It's cool that crypto can provide provably fair gambling applications, but I'm familiar with that type of risk and gambling in the conventional sense has never appealed to me. The type of high risk I'm talking about when I say "casino-style" or "roulette-style" is better described as "Golden Goose" risk. It's that greedy yield-chasing, too-good-to-be-true, "this must be a scam!", type of project. The PancakeSwap fork, Goose Finance, has recently been making waves in the BSC farming world by introducing the undeniably unsustainable goose chase known as "layered farming". When you stake a liquidity pair, you receive LP tokens which are used to redeem your liquidity when you decide to withdraw. In the DeFi world, I often see words like "farming", "liquidity mining", "yield farming", and "liquidity farming" all more or less used interchangeably. The idea is that by lending out your LP tokens, you can make an additional income on top of the fees you earn for staking a liquidity pair. So if you want to know what Goose's "Layered Farming" experiment is all about, you first need to understand PancakeSwap. Since larger sums of capital first began flooding onto Binance Smart Chain, PancakeSwap has been the dominant swap and DeFi provider on the network. Their branding is focused on stacking your earnings like pancakes and drenching them in the syrup pool. This sort of thing has become a theme of the DeFi world on Binance Smart Chain. If it is adorable or delicious then it is probably being used to entice some DeFi noob into what appears to be an easy way to rapidly double and triple your investment.
Goose Finance recently took things to the next level by introducing farming layers that would seek to preempt and disrupt the pump-and-dump cycle with DeFi projects and their respective tokens. The goose that lays golden eggs is a pervasive mythological symbol of wealth generation so it was a good choice for a project innovating DeFi farming. By minting earnings to be paid out in a token specific to each layer, the APR parameters can be adjusted across the layers to balance the layer token values. It's all a big experiment, in part because the explosive innovation of DeFi has been unleashed on Binance Smart Chain where the transaction fees are pennies (instead of dozens or hundreds of dollars on ETH network). This lowered the financial barrier to entry for engaging with these DeFi projects, but it also provides an opportunity to iterate LP token farming to a place beyond ridiculous. It's fully ludicrous. But how can you resist those high APRs and those cute happy little geese and their golden eggs? I could not. I don't really regret it, but it hasn't been going very well for me. But I should be good as long as I don't kill the golden goose. I just need to keep a few EGG and keep swapping GGX for more cheaper GGX tokens.
Goose's main currency for staking on every layer is EGG. Every layer is capped so that rates for minted layer rewards can remain very high... in the thousands of percent APR for the first layers. I think I've seen the EGG->GG1 incubator paying 18,000% APR (or something absurd possibly higher). You need EGG to stake in the insanely high interest earning capped pools which pay rewards in GGX (GG1 for layer 1, GG2 for layer 2, etc.). Recently, the implosion of VikingSwap (as explained here) brought a lot of FUD to Goose & all PancakeSwap forks on Binance Smart Chain. But Goose seems more experimental than scammy to me. I could be totally wrong, but my hope is that it's not a rug pull type of operation. I did look through Goose's Certik & Hacken audits which seem pretty solid (otherwise I'm sure they wouldn't post them). But Viking also posted a similar Hacken audit and that didn't seem to protect Viking investors from whatever happened there. For context, just take a moment to see how closely the UIs of these forks resemble one another:
PancakeSwap
VikingSwap
Goose Finance
You can see how these UIs are obviously of common origin. So when VikingSwap was collapsing last week in an apparent rug pull, there were a lot of warranted concerns about Goose and some people were even concerned about PancakeSwap. I have used PancakeSwap extensively and I really like it a lot. I have enjoyed the flexibility to deposit and harvest funds around the platform with minimal transaction costs. I'm able to deposit tiny sums into the highest APR liquidity pairs to see how they perform in real life on a small scale. I've actually been using yieldwatch.net to get more detailed breakdown of impermanent loss and relative hodl value. I had to hold $5 worth of WATCH tokens to get access to the PRO info in yieldwatch. So far I really like it. It's a clever implementation too, so you don't require any login credentials to validate your yieldwatch PRO view. As long as you're holding $5 of WATCH tokens per $1,000 worth of portfolio value tracked, you will be able to see awesome details on your LP performance relative to hodl value.
While using yieldwatch to check-out my PancakeSwap LPs, I became curious about the other yield farms that yieldwatch provides analytics for. This led me to explore all 9 other farms supported by yieldwatch: Beefy, Hyperjump, Bearn, JetFuel, Autofarm, PancakeBunny, ACryptoS, Venus, & Cream. It has been interesting to search these various farms for the highest yield at any given moment. Yield chasing like this isn't a terrible idea when transaction fees are so low. It's the sort of thing that is possible now with $10 that wasn't even practical with $1,000 on the Ethereum network.
I really enjoy exploring these ecosystems and evaluating their different offerings. But then Goose finance came along and after the first few days of layer one, I jumped in with $1,000. I think that got me 5 EGG and 2.5 GG1 at the time. Wow, that's painful to recall that now. But perhaps there is still hope. Layered farming is entirely experimental, so anything can happen. The devs could decide to create a super crazy high yield GG1 pool any time which could push the price of GG1 back up again. Right now we are at what appears to be all time lows with GG1 & GG2. It's week 3 / layer 3 (each layer has lasted 1 week), and GG3 is following a similar trajectory as GG1 and GG2. However, GG3 didn't climb as high as GG1 or GG2 and it began losing its value sooner than GG1 or GG2. Each GGX token spikes at new layer start. By the end of a new layer's first week, the corresponding GGX price has lost most, nearly all, of its value.
GG1 Chart (March 4)
GG2 Chart (March 11)
GG3 Chart (March 18)
EGG has obviously kept it's value better than the GGX tokens (which the devs have said were not initially intended to keep their value and utility long term). EGG has received a price spike before each layer as degenerate geese join the migratory flock and rush to buy more EGG to stake the next insanely high APR capped EGG->GGX pool. It looks like GG1 took a few days to peak out, whereas GG2 & GG3 followed a steady downtrend from layer launch with small recovery before subsequent layer launch.
EGG Price Chart
As you explore the various sections of Goose Finance, you begin to see that you can pick any number of strategies because there are EGG->EGG pools, there are EGG->GGX pools, there are GGX->BUSD pools, and there are many liquidity pairs and even "nests" for staking a single currency to earn EGG. So depending on the value of EGG and the other GGX layer tokens, as well as the APRs on various pools... there are an unlimited number of strategies one may apply in order to attempt to harvest the largest reward (or in my case, to throw away $900). This video from Boxmining Clips reflects a similar mindset and perspective towards Goose Finance as I have. It's fun, it's silly, and it's something new that could be hugely rewarding... but has high probability of ending in a dumpster fire. I have to be totally prepared for that in this highest risk allocation in my portfolio.
I learned about Goose Finance a few days into layer 1, so I couldn't get into the capped EGG->GG1 pools in week 1. I showed up early with EGG ready to go for layer 2, but I couldn't stake my EGG in time before the pool filled up... everyone in the Telegram was reporting the same thing, it seemed like some bots had staked the pool before the UI updated with the staking links. That was disappointing and seemed like an honest mistake on the part of the Goose devs. So when layer 3 rolled out, I was sure this was going to be my time to shine, and it sort of has been... I guess? I got in the capped EGG->GG3 pool. But the rates are already way lower than they were for layers 1 & 2. Moreover, the value of GG3 dropped even faster than GG1 & GG2. There will need to be some macro changes to revitalize previous layers in order to sustain layered farming. Perhaps a weekly layer schedule is too fast. I'm not sure if the plan is to have infinite layers or if they will repeat after a set number of weeks. This is where there could be a lot of opportunity... because I don't think the devs even really have a clue what they're going to do. So even though I'm a little bummed that my $1,000 turned into $100 in 2 weeks, I'm still holding out hope that something big can happen with Goose. I'm shuffling around my GGX and my EGG spending BNB gas like it grows on trees. But if I can get my $1,000 back out of this $100 that's left, I may have to exit the Goose Farm in favor of something equally experimental on the Tron Network so I can lose my life savings all over again.
I decided not to stake any liquidity pairs on Goose Finance because I'm a "sophisticated" goose and I understand impermanent loss.... still got wrecked. I only staked single currency nests, EGG->EGG, GGX->GGX, and EGG->GGX. I steered clear of the liquidity pair options. I figured, I was taking enough risk with layered farming... I didn't want to also introduce impermanent loss into the equation. I think I did eventually stake a BUSD-DAI pair or some type of stablecoin to stablecoin liquidity pair in which impermanent loss should have virtually zero impact. But I would never stake an EGG-GGX liquidity pair because that just seems crazy to do... crazy exposure to IL. Even for 10,000% APR or whatever is posted as the stated APR (pretty sure there have been several at 20,000% and even a bit higher than that in layer 1). So I avoided that particular aspect of this crazy Goose Finance farm. But if I had not I don't think my $1,000 would be worth $100 right now. It would be a lot closer to $0.00. But it's only Layer 3, so there could potentially be infinite layers for me to continue losing my investment as I achieve an asymptote infinitely approaching $0.00.
Thank you all for your kind comments on my last post. I was so excited to see the positive feedback. Please help me out if you see I've got something wrong. I'm really trying to understand this stuff better by discussing it with you all and putting my abstract thoughts down in a way that helps to tie some of the disparate pieces together. I didn't know I was going to pull the GGX price charts for this post, but it became relevant and I wanted to take a closer look at it. Let me know if there are any exciting crypto projects that you would like me to research and discuss here. If you've made it to the end of my ramblings about Goose Finance, then you definitely deserve to see this inspirational goose education video which I discovered while looking for goose footage. The potential for goose crypto business parables is endless. Flock together friends.
-NOVAX