So, DeFi trading. It sounds almost absurd, the noisiest thing about DeFi are the various kinds of yield farming products.
The whole business of liquidity provision relies on the existence of a market that demands the liquidity though. Even now already traditional network staking relies on the existence of transaction activity.
In this ScriptSpotlight we will look at pine scripts for monitoring of this quieter part of DeFi. Some are already out there thanks to the TradingView community.
We give you three ideas in this Script Spotlight:
- DeFi dominance script
- Today’s liquidity for single glance volume overview
- DeFi basket indexes for market timing
DeFi Dominance and Altseason Tracking
Trader Hemlocked created this script for people to be able to track AltSeason.
This simple but clever comparison script pulls price and marketcap data of various cryptocurrencies and divides them into three categories.
The coins are grouped based on the type of their fundamental value proposition:
- Cryptocurrencies that store value:
BTC, BCH, XMR... - Cryptocurrencies that generate value through DeFi:
ETH, TRX, UNI, ADA, BNB... - Meme cryptocurrencies like
DOGE
Transforming these three categories into a single ticker each gives a quick overview of where is most of the market’s money located at any moment.
The script is over two weeks old now, which obviously makes it desperately out of date.
It disregards SHIB and many other memecoin projects of the week.
But the pine code is so simple that I’m sure everyone will be able to make adjustments as needed. Take a look:
Liquidity Single-Glance Tool
In 2021 we have DeFi vapourware and dog money, it was ICO shitcoins a few years back, yada yada, get out of those in time.
Here is a super simple TradingView tool that will give you today’s volume as compared to the average daily volume.
Volume trading is a discipline in itself, but this handy single-glance tool is free (unlike VPVR) and gives you the gist in just a second.
DeFi Indexes: Study
Basket indexes are used as a technical tool for market timing strategies. There is already a whole bunch of basket products that group top DeFi markets into a single ticker.
DPI Index
A good basket index is the DeFi Pulse Index (DPI) that monitors Uniswap, AAVE, Compound, Sushi and other Ethereum token valuations. This index is a market-cap weighted one. It is reasonably managed by an independent entity, rebalanced in the last week of each month.
DPI can be traded on DEXes like Uniswap, Sushiswap and Honeyswap, but custodial trading platform offer their own baskets.
Notably, bitfinex has a perpetual swap of a DeFi basket that is not DPI, and Binance has their own one too. These differ quite a bit from the independent DPI, which can bring opportunities.
TradingView member BilzerianCandle created a set of studies to compare these. The actual scripts are outdated, do not copypaste them: They use an old composition of DPI that has been changed since. The idea is still useful as a study and easy to replicate in any multi-chart layout as DPI is now available as its own ticker on TradingView.
- Currently available DeFi baskets: DPI, DEFIPERP (FTX), DEFIUSDTPERP (Binance), PIPT, sDEFI.
- Link to the outdated idea for inspiration
