Pando is a set of open decentralized financial protocols that allow anyone to access the cryptocurrency market easily and securely. Right now, Pando provide 3 products:
- Pando Lake / 4swap - a decentralized protocol like uniswap that allows anyone to swap any cryptocurrency. 4swap is the community-built version of Pando Lake.
- Pando Leaf - a decentralized protocol that allows anyone to mint and generate the stablecoin called Pando USD(pUSD).
- Pando Rings - a decentralized protocol that allows anyone to make loans and lend cryptos.
Any finiancial product can be used to make money, so does Pando. In this article, I will show you how to make money with Pando, and I also will show you the where the risk of losing money come from, to avoid losing money.
1. Trading at Pando Lake/4swap
- Product: Pando Lake/4swap
- Difficulty: ⭐
- Risk: ⭐⭐, you may lose a part of your money
Pando Lake/4swap is the first protocol that published by Pando, and it's also the basic way to make money. It's pretty simple, you can use Pando Lake/4swap to trade one cryptocurrency with another cryptocurrency. You will make money when the price of the cryptocurrency you have received become higher than the price of the cryptocurrency you have traded.
For example, if you have traded 100 USDC to buy some Bitcoin, and the price of Bitcoin is now higher than 100 USDC, you will make money.
However, you will lose money when the price of Bitcoin goes down. It's important to know your expectation of the price of Bitcoin.
2. Lending crypto and receive interest
- Product: Pando Rings
- Difficulty: ⭐
- Risk: ⭐, you will not lose any principal
As I mentioned, Pando Rings is a place to borrow and lend money. You can be a lender to lead cryptos to the people and receive interests from them.
It's a pretty simple process to lend crypto. What you need to do is simply choose a "support pool" from Pando Rings, and then you support it by transfer crypto to the pool. Pando Rings will give you the "rToken" as the "receipt" and will automatically calculate the interest for you.
You can transfer the rToken to the pool to get the principal back and get the interest as profits.
3. Borrowing money to trade
- Product: Pando Lake/4swap, Pando Leaf, Pando Rings
- Difficulty: ⭐⭐
- Risk: ⭐⭐⭐, you may lose all your collaterals
With Pando Leaf, you can borrow pUSD out. With Pando Rings, you can borrow any supported crypto out.
When you get the crypto, you can use it to trade with Pando Lake/4swap. If you think a crypto's price will go up, you buy it with the borrowed pUSD or another crypto. If you think a crypto's price will go down, you borrow the some from the Pando Rings, and sell it to stablecoins like pUSD or USDC; When it goes down as you expected, you can buy it back and payback the borrowed crypto to Pando Rings to get the profits.
Note that all debts are not free. You will need to pay a "interest" to Pando Leaf or Pando Rings, which will increase the total debts with time.
So, in theoritical, you can make more money by using this kind of method to trade because you have more principal to invest. However, in practice, you will need to make sure your profit is higher than the interest fee.
There is another risk that you may lose most of your collaterals if you has debts, the liquidation. In Pando Leaf and Pando Rings, the liquidation occurs when the total debts exceed a threshold which is decided by several factors. The factors include the price of collaterals, the price of debts, the liquidation ratio.
4. Provide swap liquidity
- Product: Pando Lake/4swap
- Difficulty: ⭐
- Risk: ⭐⭐, you may suffer a impermanent loss
Pando Lake and 4swap are implementations of the Uniswap protocol protocol. The Uniswap protocol requires people to provide liquidity before people trade on them. As a reward, the liquidity providers will receive the trade fees from the traders.
If the liquidity pool you are supporting has a large number of trades, you will get a lot of fees as the profits. You can check out the information panel at the top of the pool page to see the trade volume and the trade fees in 24 hours.
However, the liquidity providers must be able to consider the risk of impermanent loss: people who provide liquidity can see their staked assets lose value compared to simply holding the tokens on their own. In a words, if the trade fees are not enough to cover the value losing when assets price change rather volatility, you will suffer the "impermanent loss".
Don't be afraid of impermanent loss, it's not a big problem if you choose the pool carefully. 9 months ago, I added some liquidity to the DOGE-BTC pool, and I got the additional profits of 14%. It's worth to try.
You may want to read "Beginner’s Guide to Impermanent Loss" to understand more details about it.
5. Participating in the auction
- Product: Pando Leaf and Pando Rings
- Difficulty: ⭐⭐
- Risk: ⭐, there is no risk unless you pay exceeded high bids
Have you considered that when a person be liquidated, who will pay the debts of them?
The auction is a way to solve this problem. When someone is liquidated, the auction will be started. The liquidator (the people who participates in the action) will pay the debts of the liquidated person. Please refer to the official document for the tutorial of auction.
If you're lucky, you will get a part of the debts in a low price. If you are bullish on the value of this debt, you can choose to hold it; if you are not bullish on the value of this debt, you can choose to sell it in the market and the price you sell it for minus the price you paid to acquire it is your profit.
This morning, one member of my group won an auction and got of profit of 10 MOB (about 130 US Dollar).
- Product: Pando Products
- Difficulty: ⭐⭐⭐
- Risk: ⭐⭐, you may lose the arbitrage opportunity
There are always arbitrage opportunities in the market. The same asset in different markets may has different prices. It's a good idea to take advantage of this.
An arbitrage example: assuming that the price of MobileCoin in 4swap is higher than the price in FTX, then you can buy MobileCoin in FTX and sell it in 4swap. The difference between the price of MobileCoin in 4swap and FTX is the arbitrage profit.
The example is rather ideal. However, the arbitrage opportunities are not easy to seize for some reasons: 1. the opportunity is not always there. It may be taken by someone else; 2. you must pay transaction fee for each trade, which may cost more than the arbitrage; 3. the price of the crypto may change frequently.
The losing will happen if you have already started the trade, but the arbitrage opportunity is not there. That's why in practice, many people are using programs to automate the trade, because the program is always faster than the human being, which is a great advantage to arbitrage. The developer document of Pando Products will tell you how to use the API, SDK and other development resources to automate the trade.
Everyone have a very different talent to make money. Some people has talent in trading, some people has unique perspective in the macro economy, while some people may totally unfamiliar with the market, but they are skilled in programming. However, all of them have the chance to make money with Pando. Because of the openess and fairness of Pando, anyone can participate in the Pando ecosystem equally and benefit from it.
No matter which path you choose, please awe the market, it knows everything, we must respect it.