Friday we released a new signal in Seer!
Meet Dither DLMM and how to engage with @MeteoraAG DLMM pools while limiting token exposure with @HyperliquidX or @DriftProtocol
Our alert outlines everything you need but we will break it down here in 2 topics:
1. Picking Pools
2. Beta Hedge
1. Picking Pools
Our alert gives you two tokens, a beta Hedge ratio, estimated return per day, a step size and a few rate.
The fee rates are the most voluminous pools but the step size is based on the minimum required to cover a 24hr period of volatility.
So our 80-80 pool passes the minimum step and the fee is one in the alert.
Now we need to decide - do we believe in SOL and fartcoin over the short term or do we want to hedge downside?
2. Beta Hedge
If we want to hedge downside, we can use a beta hedge to eliminate our exposure to our DLMM tokens even in the DLMM.
That is, we will short the tokens in the pool after we deploy the DLMM. We will use our beta hedge. You can use Hyperliquid or Drift to open a short.
For Fartcoin - SOL we will short an equal USD value in our pool in the ratio 72.3 : 27.7
Our short will be ~72% fartcoin and 28% SOL. This is because fartcoin is more volatile.
The goal of this hedge is to remain ~neutral to the market despite operating a DLMM pool.
If the value of Fartcoin and SOL increases, then our hedge will compensate. If the value decreases, then our hedge will preserve value.
Using this method we remain with ~stable USD portfolio value while harvesting DLMM fees.
The goal of this new signalling tool is to allow anyone to act like an MM while limiting downside risk.
If you're a holder of Dither and qualify for premium - please use /settools in Seer to enable this new feature.
You will get signals which filter pools on perp availability and return criteria.
Although this mitigates risk for DLMMs, there are no "risk-free" strategies in Crypto.
Please understand what you are doing before you open DLMM and short positions on perp platforms.
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