Poor PLP Performance

Hello All,

First off I just want to say I am not trying to attack this project. Everyone is always so defensive when I bring up my data telling me I am wrong. Adjustments to Fragola were made in December when before that I was told the project was “working” so I think it’s reasonable to consider the project may still have some flaws (in the current market conditions). I honestly would like it to succeed and beat out the market with you all, but this will be my last attempt at drawing attention to it.

I am sure you all have put countless hours into this and I mean no offense when I say this product is not living up to expectations and is currently wrecking most of the liquidity providers. I may be the most vocal but am not the only one whom believes this, many have already left.

I know most people (based on discord) just care about ICE price and generating a lot of fees. It absolutely is generating a ton of fees, but I do believe if the product is working better vs. hold I think you will get more LPers and therefore more fees generated even if the pools generate fees at a lower rate.

You can make data say just about anything you would like, but I do believe this is the simplest and most accurate way to look at it.
Here are my (rounded for simplicity) results:
I deposited 64373 USDC and 12.478 ETH on 11/7/2021
As of 1/19/2022 I now have:
30015 USDC @ $1 +
20.64 ETH @ $3,079.15 = $93,572
If I had held (instead of depositing in Fragola), I would have:
64373 USDC @ $1 +
12.47 ETH @ $3,079.15 = $102,794
My net return on 1/19 is $93,572 - $102,794 = -$9,221 (~-9%)
These numbers are from before the major crash the past few days but I would wager my stack that it only got worse.

A common answer to my complaints is you need to compare Fragola to V2.
Again - I’m not smart enough to look at a V2 wallet personally but found some charts that I would assume are correct but 100% would need to be verified.

I was told there were changes to the contract/code and that it was improved as of 12/21/2021 so I looked at a wallet from around that time as well:

Someone else’s wallet:

12-20-2021
He deposited 10546 USDC and 3.4347 ETH
he now has: 7055 USDC @ $1 + 4.051 ETH @ $3,147.83 = $19,808.25
if he had hodled (instead of depositing in Fragola), he’d now have: 10546 USDC @ $1 + 3.434 ETH @ $3,147.83 = $21,358.85
So his return ending 1/19 is $19,808.25 - $21,358.85 = - $1,550.60 (~-7.2%)

It does look like it is performing slightly better, but it is still negative compared to Hold.

To compare it to V2 on Uni: ETH/USDC performed +0.11% 12/22 to 1/20 including IL.

I don’t have an answer on what to do, but I do think you immediately should:
1.) Stop charging a fee on under performing pools as these people are already bleeding funds…(this was already voted on and passed, not sure why it never happened… I think I would only be down about 5% vs 9%) Snapshot
2.) Remove APR display - this is misleading
3.) Focus on fixing the product… Most pools are performing worse compared to Holding and also worse compared to V2 pools.

Thanks for your time.
Lucas

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Thank you for the detailed and well-argued post!
I hope we will get a detailed analysis and response from the team one day. And I’m trying to escalate the problem for a few months, idk why the team does not treat this as the number one priority problem.
About PLP performance issue:
There was another argument that “eth lost its value”, but I’ve argued that if you LPing one asset always losing value to another. If ETH will go up, LPers will sell eth, and only fees flow can compensate losses (it’s like you always betting on loosing horse, but getting a percent of all bets on a horse race ). Fees flow should not be considered as gains, because it barely compensates losses for being in PLP pool.

I think the problem here is that you are viewing this as a product that should make money in USD terms no matter what the broader market is doing. When you LP ETH and USDC you are still exposed to the price action of ETH. I think the better way to view this is: are you up in terms of ETH? On the day you put into the pool ETH was trading at around $4650 so 12.478 ETH is about $58022. Add the 64373 USDC and you get $122,396. So on the day you entered the PLP you entered with 26.32 ETH worth of LP.
On the day of your post you held 20.64 ETH @ $3,079 and $30,015 worth of USDC (which in ETH terms is (30,015 / 3079 = 9.75 ETH). So that means you held 30.38 ETH worth of LP. Which is a 15% increase over 2 months. The PLP fees are not so good as to make up for a down only market. However, if ETH were to return to the price you entered it would become much more obvious that those fees have actually done a lot for you.

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Thanks for the response and contribution, truly!

You are correct I do think this product should always make money in USD terms compared to holding. I dont expect it to cancel out a bear market for me, but I would expect to be down a couple % less than ETH is. I think it should beat out hold in bears AND bulls otherwise what is the point of using this, you would just be better off holding no matter what right?

If it only works during bulls that is completely fine but that needs to be very transparent and explained.
I know there are no absolutes/guarantees but something like: “You will likely earn more than holding in a bull market but the catch is you will likely lose more than holding in a bear market.”

I do see why looking at it in terms of amount of ETH makes sense but my rebuttal would be it is only temporary right? - as the market goes back up I will be selling ETH for USDC.
As I am currently down % in USDC I will be selling ETH as it goes up with less money meaning by the time ETH gets back to $4650 I likely wouldn’t have made my USDC back by the time I am down to 12.5 ETH and actually am down. (I dont know if im explaining that right…)

Hopefully I articulated my concerns decently. Look forward to responses. Thanks!

Lucas

Let me know

You should compare the dynamics of both tokens. The product should bring value to customers, or it’s useless. Just hold assets in your wallet, and you’ll perform better. And as enzo considered, protocol can’t guarantee, that if the price will go back, you will get your funds back.
I have negative performance in WBTC/ETH pool, and my requirement is not to have more USD value, but to have more WBTC and more ETH in proportions, which I entered the pool. And every time, when pool comes back to these proportions, i can witness that i hold LESS WBTC AND LESS ETH.

So here is what I was talking about (and maybe conveyed the message poorly) ETH has been going up the past week. My PLP position has therefore been selling ETH.
Here is my updated position as of 1/31

I deposited 64,373 USDC and 12.478 ETH on 11/7/2021
As of 1/31/2022 I now have:
50989 USDC @ $1 +
12.87 ETH @ $2,682 = $85506

If I had held (instead of depositing in Fragola), I would have:
64373 USDC @ $1 +
12.47 ETH @ $2,682 = $97,817

My net return on 1/31 is $85506 - 97817 = -$12,311

I know the ETH position is off by 0.4 eth (but thats only ~3%) and it may have just re-arranged so give it some time to make fees, but I think it is now safe to compare the initial position and my position today.

I think its very clear money is being lost compared to holding as I currently have the same amount of ETH I started with.

I look forward to some feedback from the team - I do not think you will get a better comparison and Romy said this is the #1 priority.

Lucas