Mole Hedge Fund Algorithm

Mole is a DeFi protocol providing savings, leveraged yield farms and funds. It is on Aptos chain.

Mole Introduction Video: https://youtu.be/_m90pcIW7Ko


:evergreen_tree: Website: https://mole.fi/

:evergreen_tree: Twitter: https://twitter.com/moledefi

:evergreen_tree: Telegram: https://t.me/moledefi

:evergreen_tree: Discord: https://discord.com/invite/JfgJzJ8kkK

:evergreen_tree: Docs: https://doc-en.mole.fi/introduction/what-is-mole


Mole currently offers 3 types of 5 funds:

a) Type 1 : Robust stable, dual stable tokens

It contains Bond Fund. It has following advantages:

  • Extremely stable investing returns by using dual stable tokens

  • Mole intelligent algorithm will automaticly calculate the best leveraged rate and borrowing interests to maximize investing returns

  • There is no risk of being liquidated

  • Profit and loss is based on fiat currency standard

b) Type 2 : Neutralize market volatility risk:

It contains Balanced Funds and Hedge Funds. They have following advantages:

  • Neutralize market volatility to earn high and stable invest returns

  • Automatic positions adjustment, users only need one click to purchase, Mole automatically helps to complete all the background operations

  • There is no risk of being liquidated

  • Automatic compound interest

  • Profit and loss is based on fiat currency standard

c) Type 3 : 1x exposure, following mainstream token price fluctuations:

It contains Trend Funds and Index Funds. They have following advantages:

  • Track price fluctuation of corresponding cryptocurrency, and enjoy not only the long-term value growth of price goes up, but also rich farming rewards.

  • Automatic positions adjustment, users only need one click to purchase, Mole automatically helps to complete all the background operations

  • There is no risk of being liquidated

  • Profit and loss is based on cryptocurrency (such as ETH, BTC) standard

Mole funds make all of the related operations automatic. The industrious and brave little Mole silently endures all the ascetic life of adjusting positions accompanying to the market volatility. It brings you high yield farming income. More important, these funds will not have the risk of liquidation. Amazing world!

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Today Iā€™d like to introduce Mole Hedge Fund algorithm.

Hedge Fund

Hedge Fund Tech. Details

The essence of Mole hedge fund is to hedge the LONG and SHORT exposures of two positions, so that the net exposure of fluctuations are zero. For example:

1) Position 1:

Use $100 token as principle collateral, open ETH-USDC position, and borrow USDC with 3x leverage. At this time, your debt is $200 USDC (3x -1x principal =2x)

  • Principle : $100

  • Debt: $200 USDC (debt is equivalent to SHORT operation. $200 USDC debt means shorting $200 USDC)

  • Position: $300 (holding $150 ETH + $150 USDC. According to Dex AMM rules, these two tokens ETH:USDC should be 1:1. Holding position is equivalent to LONG operation)

Summary of exposure:

holding positions offset shorting debt, Your exposure of position 1 is as following:

LONG $150 ETH + SHORT $50 USDC

2) Position 2:

Open the other ETH-USDC position to hedge the ETH exposure of the first position. Since USDC is a stable token, it does not need to pay much attention to its fluctuation, because its price is approximately anchored at $1.

The second position uses $300 as the principle collateral to open a 3x leveraged position, that is, borrow $600 ETH as the debt.

  • Principle: $300

  • Debt: $600 ETH (that is $600 ETH SHORT)

  • Position: $900 (that is $450 ETH + $450 USDC holding LONG)

Summary of exposure:

holding positions offset shorting debt. Your exposure of position 2 is as following:

SHORT $150 ETH + LONG $450 USDC

3) Position 1 + Position 2:

A magic happened. The net exposure of the first position and the second position was neutralized. LONG position of $150 ETH offset the SHORT position of $150 ETH, so the net exposure of ETH was 0. Similarly, also it has LONG position of $400 USDC. Since USDC is a stable token with stable value, its fluctuation can be ignored. The key ETH fluctuates has been hedged since the net exposure of ETH is 0 with these two positions.

Through the precise operations of these two positions, you can not only hedge the risk of market volatility, but also obtain high yield farming income at leveraged rate. Awesome!

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Okay thanks for the update