Suggested Strategies
This section presents a few strategic approaches and methods you can consider to optimize your use of Dual Investment. Whether you're a seasoned investor or just starting on your financial journey, this section will help you navigate Dual Investment with confidence.
These strategies are for educational purposes only and are not financial advice.
1. Yield Maximizing
Yield seekers can invest in vaults that offer consistent yields while balancing your risk exposure. Whether you’re holding WBTC or USDC, you can deposit into a vault and earn interest whether or not your Linked Price is reached.
Here are perhaps the two simplest interest bearing strategies:
Increase your WBTC holdings: Deposit WBTC into a Sell High vault and select a Linked Price that you think will not be reached by the Expiration Date. If the price is not reached as you expected, you get back your WBTC principal plus interest in WBTC.
Increase your USDC holdings: Deposit USDC into a Buy Low vault and select a Linked Price that you think will not be reached by the Expiration Date. If the price is not reached as you expected, you get back your USDC principal plus interest in USDC.
This approach provides a steady income stream while minimizing risk. Yield seekers benefit from consistent income generation, even in volatile markets, by earning yields on your deposits regardless of the market direction.
2. Market Positioning
New or conservative investors aiming to enter the market safely can select vaults that offer lower-risk profiles with stable yields. These vaults provide a predictable return on investment, allowing you to familiarize yourself with the mechanics of Prodigy.Fi without exposing yourself to high volatility.
Gain Experience in a Controlled Environment: Start by depositing USDC into a Buy Low vault with a Linked Price set close to the current market rate but still lower. This provides a stable entry point and a yield on your deposit if the price remains above the Linked Price.
Minimize Risk Exposure: Alternatively, deposit WBTC into a Sell High vault where the Linked Price is set higher than the current market price. If the price remains below the Linked Price, you retain your principal and earn interest in WBTC.
This strategy allows new or conservative investors to earn steady yields while building confidence and experience in a controlled, low-risk environment. Over time, as they become more familiar with the platform, they can explore more advanced strategies.
3. Arbitraging
Prodigy.Fi's "Buy Low" and "Sell High" vaults could present unique opportunities for price and premium discrepancies compared to options trading on other platforms. By carefully analyzing the differences between the vaults' Linked Prices and current market prices, you can create or subscribe to vaults that offer lucrative arbitrage opportunities—all without the complexity, high fees, and limitations typically associated with conventional options markets.
Buy Low Vaults as Put Options: When the market shows signs that it will not drop to the Linked Price, you can treat the "Buy Low" vault like a put option.
Sell High Vaults as Call Options: Conversely, if the market appears unlikely to reach a higher price, "Sell High" vaults function like call options.
This strategy allows arbitrageurs to utilize options-like trades without the traditional complexities, costs, and restrictions. You gain access to the flexibility of setting your own parameters, such as the strike price and expiration, while benefiting from decentralized, transparent, and low-cost trades. This not only enhances market efficiency but also provides opportunities for guaranteed profits through arbitrage.
4. Advanced Trading
Advanced traders can use your understanding of market trends to create or subscribe to vaults that match your forecasted price movements. Choose Linked Prices that optimize your potential for returns based on your analysis.
Maximize Returns with Market Timing: If you predict a bearish trend, create or subscribe to a Buy Low vault with a Linked Price near your expected bottom. This allows you to buy at a lower price and benefit if the market hits your target.
Capitalize on Bullish Movements: Conversely, if you expect a bullish trend, subscribe to a Sell High vault with a Linked Price close to your expected peak. This enables you to sell at a higher price and secure gains if the market aligns with your prediction.
This approach gives advanced traders multiple avenues to monetize your market predictions. You can earn yields if the market doesn’t reach the strike price or profit if it does, maximizing your returns in either scenario.
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