Protecting Your Yield Farm

Market Meditations | May 25, 2022

?‍? Protect Your Farm 

Step 1 – Finding Top Wallets

Nansen tags certain wallets, showing the top performers in certain segments of the market. For yield farming these wallets are labeled:

  • Smarter LP: The top 1% of addresses by profit made from providing liquidity across a number of decentralized exchanges.
  • Smart LP: Any address that has made more than $100k providing liquidity on Uniswap or Sushiswap.
  • First Mover LP: The top 200 addresses by the number of times the address has been one of the first to enter a liquidity pool.

To find wallets of interest we have two options:

(1) Nansen’s Smart Money dashboard. By filtering by the relevant label, we can find a list of recent transactions, diving into individual wallets to find out if we want to track that address.

(2) Consider existing opportunities. If already involved in an opportunity, you can use the top deposits feature as shown in part 4 of our yield farming series to identify specific wallets: 25/05/2022 – Top Depositors of stETH to Curve wETH / stEth Pool filtered by Smart Money

  • Last week we identified that Three Arrows Capital had recently started farming the wETH / stETH curve pool.
  • We can see that over the last week, they have withdrawn the majority of their position (as shown in the “outgoing” column).
  • If we had been using smart alerts, we would have been notified the exact moment this was complete.

Step 2 – Setting Up Smart Alerts

Once we have identified specific wallets or smart money segments we want to track, we are able to use Nansen to set smart alerts: 25/05/2022 – Smart Alert Configuration

  • In this example, the smart alert is configured to give a notification upon any stablecoin transactions above $10,000 for smart money addresses involved in yield farming.

✅ Tip: You can also use Etherscan to track specific wallets by creating an account, going to “watch list” and adding the relevant address.

Yield farming is a risky activity (a full breakdown of these can be found in part 1 of this series).

Additionally, you can never rely on another market participant’s actions. Everyone has their own strategy and their decisions may not be profitable, especially when in isolation.

Having said that, through identification and real-time tracking of top wallets we can gain an edge over the rest of the market, helping us to protect our returns.