Hello frens,
On Monday afternoon, Binance Founder CZ sent out a scary tweet:
Yikes!
FUD comes and goes, but CZ is not known for casually throwing around wild accusations like this. If a major exploit was found for Uniswap v3, it could mean all LP positions were in jeopardy. And I just started a substack on this too!
I did the totally normal thing anybody would do - I pulled all of the ETH from my pools (which were all out of range by over $100 anyway) and waited to see if the rumor was true.
Within the hour, Uniswap founder Hayden Adams tweeted out the real issue, which was a phishing attack on a particular user - NOT a protocol level bug.
Funds are safu!
As the price of ETH hadn’t move into the ranges of any of my positions, I was able to return the ETH back into my v3 pools and carry on as if nothing had happened.
No Impermanent Loss!
Always Have an Exit Plan
Lesson Ten - Always have an exit plan
Monday’s drill was a good reminder that smart contracts are still new. While Uniswap is one of the more battle tested, it remains new tech. Knowing how to exit one’s position quickly and safely is incredibly important in this space.
In crypto, be cautious about getting into investments, but be ready to execute immediately when getting out of investments. Consider for a moment those who held UST when the peg began breaking, vs those who sold at a small loss.
This is a hidden benefit that retail players don’t understand well enough - being small is a huge advantage in these situations. If we had been in range with a large sum of money, removing liquidity might have had unwanted side effects. The crypto space is still very illiquid and difficult to navigate for very large players.
This is a major reason why two very capable operators like Zhu Su and Kyle Davies failed to succeed in this space. They were used to being dolphins in a huge ocean, and became the biggest fish in a small lake.
With v3 pools, remember: you can always exit out for a brief time (easiest if ranges are tiny and you’re 100% one sided) and get back in without IL. L2s make this extremely cheap, so take the time to figure out what sort of situations you might want to do this.
Review
Always know how to get out of an investment quickly. Consider practicing when things are calm - just like practicing fire drills in school as a kid.
Remember today’s lesson:
Lesson Ten - Always have an exit plan
And make sure you know how to execute it.
-Jeff
Disclaimer; none of the above is intended as investment advice. Smart contracts are risky, and you could lose everything you put in them.
I guess you were not kidding about not giving access to your content anymore. Do you have any plans for people that want to access your archived old content? I would really like to read it