New to HERMES ?
1.“Generally speaking, what's the easiest flow to follow for compounding rewards?”
The following is NOT FINANCIAL ADVICE. It is for education and entertainment purposes only.
There are countless strategies, and which one you choose depends on your risk tolerance and short, medium, and long-term goals. That being said, the "plug-and-play" method is detailed below. Also, take some profits along the way. Don't get too greedy.
If $HERMES is OVER the peg:
-Buy $HERMES and pair it with $AVAX to provide liquidity, and stake your HERMES-AVAX LP in the farm to earn $HSHARE rewards.
-Take your $HSHARE rewards and stake them in the OLYMPUS to earn inflationary $HERMES rewards.
-Sell half of your earned $HERMES for $AVAX, and compound it back into the HERMES-AVAX LP.
If $HERMES is UNDER the peg:
1.Buy HERMES and exchange it for HBOND. If you are LP'ing, you can break the LP to exchange $HERMES for $HBOND, and use the remaining $AVAX to buy $HERMES to also exchange for $HBOND. Now you have a big fat bag of $HBOND, and you've also helped bring $HERMES back above peg so that the OLYMPUS can resume printing.
2.Sell $HBOND for a redemption bonus once $HERMES is back over peg (above 1.1 TWAP).
2. "What is 50/50?"
50/50 is the method best suited to provide stability for both the platform and for your underlying investment. By boosting liquidity, the 50/50 strategy reduces price volatility, and helps $HERMES stay above the peg for longer to keep the OLYMPUS printing. This, in turn, attracts new investors and keeps the ecosystem growing. 1)When you claim your $HERMES rewards in the OLYMPUS, sell 50% of them for $AVAX. 2)When you go to provide HERMES-AVAX LP, stake the entirety of your remaining HERMES with the $AVAX you've just purchased.
3. "APR is much higher in the OLYMPUS than in the farm for HERMES-AVAX LP. Why would I not just invest everything there?"
The farm APR is linear and prints 24/7, regardless of HERMES's relation to the peg. OLYMPUS, on the other hand, prints only when HERMES's TWAP is above 1.01. Therefore, it may not always be that an investor gets a higher return from the OLYMPUS than from the HERMES-AVAX pool. Because $HERMES follows the price of $AVAX, the HERMES-AVAX LP is akin to holding $AVAX in your wallet, except with the bonus of a high farming APR on top of it. In other words, if you're bullish on $AVAX’s price action, the HERMES-AVAX LP is a way of holding exposure to that single asset while also reaping high APRs.
Terms and Mechanisms
1. "What is an expansionary epoch?"
An expansionary epoch is the amount of $HERMES that is printed by $HSHARE in order to increase the total circulating supply.
To simplify the explanation with a hypothetical example, let’s say an epoch is 3 days long and there are $100 dollars in the circulating supply.
If the money printer grows the supply by 10% of the existing circulating supply each day, at the end of the 3 days you'd have 100*1.1*1.1*1.1 = $133.
Then, let’s say the emissions decrease to 5% per day.
You’d then have have $133 *1.05 *1.05 *1.05 = $153 at the end of this second epoch.
2. “What is compounding in the context of HERMES FINANCE?”
Earning a return on gains you've already made from previous periods is what is commonly referred to as compounding.
For example, consider a 3% daily APR on an initial investment of $100.
After 24 hours it would grow to $103.
After 365 days without compounding: $1195.
After 365 days, compounding once daily: $4,848,272.
3. “I'm invested in the project for the long term, and I feel guilty taking profits. Am I still a team player if I move profits somewhere outside of the project?”
Never put all your funds in one basket, even if it's $HERMES. Always take gains along the way. The HERMES team views it as a success if, over time, everyone gets their initial investment back into their wallets and continues investing with the profits that come after that.