DeFi strategy for bear markets

Every strategy has a risk, which you must know how to value. Do not take this article as investment advice, especially if you do not have the necessary skills to manage emotions, understand charts and manage capital well.

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The idea is to make you understand that DeFi is not a fad, it is not a static system, it does not depend on the protocols or the assets that are managed. It does not chase prices and does not seek to offer high returns. You must begin to understand DeFi from the product, the strategy and the market trend, there you have enough ingredients (obviously add a good training, hours of practice with a mentor in a controlled environment and healthy habits of operational safety), to be profitable on a constant basis.

If you do not know where to learn, if you are looking for an ambitious educational program, created and taught by industry professionals who are actively managing capital in a Hedge Fund, I leave this link for you to take a look. Take it as a favour, not as a recommendation.

In this case we engage with Uniswap Labs in its version 3, Binance and the #GMX token. Let me tell you that every strategy starts from a context and a reality, in the case that I expose you, it starts by knowing when a large exchange will list a coin, since all when listed behave the same. When it is listed it goes up, up and up until a point that it stabilizes and begins to fall, the known exit pump and normalization dump. 

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The work as a strategist or manager should be to detect how returns are generated and where the money is, for this you have to do several simple exercises such as knowing if the #GMX token before being listed on Binance is already being traded in a DEX AMM such as Unisawp, Balancer or SushiSwap. The #GMX token has been paired in Unisawp V3 with #USDC and #ETH, therefore, several factors are already fulfilled that are going to play in your favor to apply the strategy with minimal risk. Look at the graph of the daily fees, curiously the day the token is listed on Binance, the swaps skyrocket, making the fees or profits earned by all those who provide liquidity, the market makers. Therefore, it is important that you keep in mind that before being listed in Binance, the highest volume of transactions was generated in Uniswap V3.

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The figures that were handled during those early days of listing on Binance were tremendously succulent, taking advantage of this opportunity was done by very few, as professionally I find it hard to see people who know how to track where the money is being generated by the simple effect of the market. The normal thing is to chase prices or look at APR’s, believe me if you don’t change that you will never advance to the next phase. To give you some numbers, the day it went live on Binance there were so many swaps, it paid $70,000 in commissions alone in the first 24 hours. That volatility generated an APR of 2,500% (take this with a grain of salt, never believe anything without testing it first), right now it is paying 110%.

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Well, the first strategy with #GMX is clear. Take advantage of explosive moments to generate the maximum return possible (usually this operation works for a maximum of 48h). Experience is a degree, and very necessary to develop the sense of smell that detects the money, GMX gave me the same opportunity that once gave me #OP#APE#FXS or #DOPEX, as they repeat the same pattern:

1) Being web 3 native tokens

2) Being before in liquidity pools of any DEX AMM

3) Know that their valuation is being only for their business model and usage incentive, not for speculation

The second part of the strategy is to accumulate more GMX tokens in the middle of the price correction, since those tokens that you accumulate, added to those that have been earned by fees within the pool, will give us a good average purchase price and will put us in advantage over the market and retail investors. It is time to take out the crystal ball. The experience and the courage to be able to manage this second strategy in the right way. When you try the benefits of knowing how to make money by going short against a token, you will understand that it does not matter if the market goes up or down, as you will be able to find an opportunity to generate returns where others see disaster, therefore, we will go short against GMX in a professional way.

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The correction of the token always comes sooner or later, and as we can see in the image it came quite fast (probably due to the profit taking of the early adopters of the platform, who were incentivized with the #GMX token for its use in test net. That’s when it’s time to build again a pool in Uniswap V3, but this time not with 2 pairs (GMX/USDC) but only with the #USDC that we have liquid in our portfolio ready to invest. The ranges we will work with and mark will be below the current price of the #GMX token (if, for example, it is trading at 40 dollars, the range will be between 38 and 30 dollars) so that, once it enters this range, it will automatically spend the USDC in buying cheaper and cheaper #GMX, executing a perfect #DCA, until all the liquidity provided in the pool is exhausted.

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Once the liquidity is finished, you will have all your capital in the #GMX currency, the current value in dollars will be lower than the contributed capital and this is where comes the part of management and control of emotions, because I know you think that you finish the strategy losing capital and without profitability, but let me tell you that you are only halfway through the strategy, there is still the second part, which will also be executed automatically when the price of the #GMX token recovers. 

Knowing the average purchase price, the last thing is to put limit sell orders in Binance with different TP (my style is to use 3 different sell orders, to optimize the operation to the maximum, you can help yourself with a tool like (, where:

TP 1: 35% of the average purchase price

TP 2: 75% of the average purchase price

TP 3: X2 of the average purchase price.

As always DYOR and educate yourself.