Disclaimer: Your funds are your responsibility. All information in this article is reflecting my own investing strategy and should not be taken as financial advice.

After giving it a test run and after waiting 7 months to see it launch I can say with certainty that PolyCub is... Different...

First Look

At first glance, PolyCub can only be described as a compounding beast. If you are involved in Cub Finance on BSC it is very easy to see how every piece falls into place with the launch of PolyCub.

Single-sided CUB staking pays about 60% APY right now. Depending on your staked amount, it will also produce daily PolyCub airdrops that can then also be deployed in a single-sided staking contract for another 3000%+ APY, at the time of writing.

Looking at the PC/xPC Ratio which is at about 5 right now it seems that there are a lot of rewards coming from early claims on farm rewards because it just makes sense to bite the bullet at this time and concede 50% of your rewards to xPolyCub stakers. The APY and claim penalty from others will make up for it in no time.

All in all, if we were to judge the project based on the first few days it has been a banger and the best is yet to come. But...

Bonding and Protocol Owned Liquidity

I was expecting to see OHM-like bonding at launch because the price of PolyCub will highly depend on the size of the treasury. For those that are out of the loop, POL is generated through LP bonding.

For example, we will probably see a USDC/POLYCUB bonding offer where you can sell your USDC/POLYCUB liquidity on Sushiswap for PolyCub at a discount. These tokens are then issued to you over time but it is worth the wait because you are buying them below the market price and while this is a great way to increase POL it is also the main pitfall of many DeFi 2.0 projects including OHM.

If you want to learn from history just look at the price chart for any DeFi 2.0 project. While bonding increased interest in the project (because discounts are hard to resist in crypto) it also increased token issuance and selling pressure. Let me break it down a bit.

Klima DAO was a really big deal when the project launched. People expected so much but got so little in return. In fact, most investors are down horrendously because the price never recovered, even when the market bounced a few times. Why is that?

DeFi is PVP, not PVE and there will always be uncertainty in the markets. Even though I may be earning 1000% APY on Klima I will constantly be losing money because you are also earning 1000% APY.

We will both be happy with our returns but we will be eager to sell some of those returns because we have a common enemy - the person that bonded liquidity in exchange for even cheaper Klima tokens. If we don't sell today, that person will sell tomorrow because it is an easy profit.

In this specific scenario, I have to trade against fellow stakers but also against the bonders and that is one player too many. Out of 3 people in this equation all 3 are constantly incentivized to sell because if they don't someone else will. It is simply the nature of the game but there is a lot more to this story...

Surely the ever-growing POL will constantly raise the price floor of a DeFi 2.0 token, right? Well, that depends on what the market thinks the floor actually is and how the bonding mechanism is designed. Based on what I saw in the PolyCub docs this will be somewhat mitigated by purchasing other tokens besides PolyCub and using them to back the price of PolyCub. A great idea but we still need to wait and see how that plays out.

PolyCub Can Still Take a Different Path

I don't want to scare anyone with everything stated above but I do want to warn you about the blindspots that everyone misses when dabbling with DeFi 2.0. That being said, I also have a bull case for PolyCub.

Marketing hasn't even started yet and Khal mentioned press releases on Condesk and many other media outlets. The Polygon crowd loves farming and I know this because I kinda live there when I'm not spending time on Hive. Opportunities come and go but the most persistent projects always find their place on the newtwork.

Even though OHM and OHM forks had a bad start they will all consolidate at some point. OHM seems to have found a sweet spot around $30 per token because that is the backed value as well.

If the marketing campaign gets executed successfully we will see an inflow of new investors which will naturally push the price higher. This will probably be the make or break point for PolyCub.

If we see an equilibrium and gradual reduction of the crazy APY numbers we are seeing now the price will stabilize eventually but if we take the same path previous DeFi 2.0 projects have taken you can't really expect a different outcome.

My Farming Strategy

After giving it a lot of thought I have reverse-engineered the possible outcomes and decided to take the safe route. Instead of compounding my PolyCub earnings, I am gifting stakers with 50% of my farmed earnings while converting the rest to CUB and packing it up on BSC that I hoped to leave as soon as PolyCub launched. I would rather earn PolyCub through an airdrop than through high-risk single-sided staking at the moment.

My main stake is sitting in the Leo/Matic pool. Leo liquidity is drying up and any increase in demand will push it towards the Moon so I don't wanna miss out on that possibility.

After considering how fast the PolyCub supply in the PolyCub staking pool is growing I have concluded that some whales will simply be forced to sell every now and then. Those that staked 1000 PolyCub at $5 per token now have 5000 tokens at $2.5 which is still a 150% return. No one can say no to this kind of profit in 48 hours and the price will have to react accordingly.

So, as I said, I am keeping it simple. I'll keep Converting my earnings into CUB until I see a reasonable price range for PolyCub. As for any future changes in the strategy, that all depends on the bonding mechanics that are yet to be introduced.

There is so much room to make PolyCub a DeFi 2.0 unicorn and I sure hope we will see that outcome play out after bonding is introduced.