LUNACHOW: For the people and by the people

BountyOx name: Hugoranking

Hedging is defined as a strategy used to reduce risks in financial assets. From the Wikipedia article: “A hedge is an investment position intended to offset potential losses or gains that may be incurred by a companion investment”.

The scope of this article will be to help you understand the fundamentals of hedging and provide you the tools to apply this knowledge for yourself. Disclaimer: This article is for educational purposes only, it is not a financial advice. Cryptocurrency investing is a risky endeavour, please do your own research. The opinions stated here are my own personal view and should be considered as such.

 Why use hedging? Because:

1. Investing is always risky. Risk is usually proportional to reward. Since this is not always the case, the difference in successful investing or trading is made by having even the slightest edge over the market.

2. Many people in the crypto space advise on holding a position, usually with 100% of your capital, and keeping it with conviction. Also they advertise borrowing money on it, by using leverage, wittingly remarking “putting a mortgage on your house”. After a boom of those advices, we saw an increase in *liquidations* and saw many people getting wrecked’

A smarter approach is taken by people who say “don’t invest more than you risk to lose” But for many people that means less than 1% of their capital. How can someone increase “what they can lose” capital?

This is where ‘Hedging’ comes into play. By hedging your investment, you can afford to lose more, and therefore gain more.

Hedging is usually a turn-off for the people. And in a novel project like crypto, where people involved include thrill seekers to a great extent, feelings actually matter. And feelings can make people unable to discern investing from gambling.

Gambling always leads to a dopamine rush. It can get ‘hard-coded’ in the mind after getting a few wins in the beginning of their trading endeavours. This plays a major role in many phenomena we look at in the crypto world. This makes hedging a not-so popular strategy. On top of this is the myth of the “get-rich-quick” narrative in crypto space, which pushes even non-gamblers toward gambling strategies. The exponential factor of course is crypto volatility, which amplifies dopamine rushes, as well as losses.

All the above however, hint something even more valuable than an insider token info: That the majority of opponents you have to face in the crypto trading and investment world are naive, have no strategy at all, and pose no threat to the gaming of the investment play. In simple words, it is really easy to beat them. And the punchline being that it is very easy to beat them, with a simple strategy like hedging.

So hedging is a simple tool that will help you “make it” in crypto, simply because your opponent won’t be using it. In mature financial markets, profit margins are minimal because players are informed and follow complex strategies. In crypto, people simply don’t. But you can. Just follow any hedging strategy and you will up your chances of winning ten-fold. So what strategies are there?

The simplest strategy to hedge your crypto investment is in fact, holding coins like LUCHOW (a core token of LunaChow), and here are some of the reasons why;

A coin for the people and by the people- LunaChow operates on the core dogma of "transparency, collaboration and commitment". This feature, imbibes in it, true sense of altruism and instills confidence to the larger crypto community hence promoting an enigmatic way of control.

Aggressive Burn structure- you will agree with me today that, a major peril faced by Fiat and cryptocurrencies is their outright inflationary nature. LunaChow architecture therefore creates a realistic and holistic approach to make up for such deficiency through creation of a single burn event that will eliminate up to 99.9% of the tokens. By doing so, creating more value for token holders.

A token that entirely eliminates the tradition of team Allocation- it's no new that every coin launch possesses team allocation. This is not the case as LunaChow, which is 100% community driven, Integrating different players from different spheres to even up the scope of equity in the face of uncertainty. This is what it stands for, ensuring transparency, and boosting user's confidence.

A decentralized token built on the Ethereum Blockchain providing the needed innovative ideas and throughputs for a broader horizon, stability, and newer ideas in the long run.

Most fascinating of them all is it's charity drive for the less privileged kids across the globe. This is what true innovation is all about, in keeping with the saying that children are the leaders of a brighter tomorrow, a first of it's kind project to draw such a line , with a view to further broaden its scope.

Haven known this, let me take you through from a different perspective. You enter a BTC investment with 100$, and you also keep 100$ worth as a hedge in stablecoins, you can protect yourself in market fluctuations. Setting a buy order in a low price order, which you sell immediately after the market rebalances is an excellent strategy for profit making and hedging. (For example, you set a buy order for BTC with 50$ out of your 100$ hedge for 15% lower price of btc, set up a notification when it executes, and then put a sell order at 10% of the price bought.

I would advise against buying altcoins for hedging. On the other hand, buying BTC to hedge against altcoin exposure is a good strategy if you want full exposure in crypto.

Futures and options are popular hedging strategies. Usually these are complex instruments, demanding formal training and calculation. Some innovations in the field have allowed people to use them with much less risk, such as leveraged tokens like LunaChow token, for which we will devote the next section to.

A popular and underestimated hedging method is providing liquidity. By providing liquidity to specific pairs you can hedge your exposure, and with leveraged yield farming strategies, you can achieve a fully diversified and safe portfolio with very few moves. A personal favorite is the LUCHOW-BNB Liquidity pool on Uniswap and ETH-LUCHOW Liquidity pool with mind blowing APY and locking periods (12months). This is a nice hedge because you base your capital in a brand, while getting rewarded in a token with fluctuating demand which you can take advantage of on periods of high demand.

Providing liquidity is an excellent hedging and investment strategy. To anyone having any doubts about the merits of liquidity providing, I would invite him to watch the growth of professional platforms that offer liquidity. Binance, MEXC, Kucoin, etc are all profitable enterprises on the basis of just providing liquidity as a base business model. DeFi managed to give equal opportunities for everyone to participate in this venture through liquidity pools in automated market makers. Having the liquidity providers as the greater winners in the financial sectors over the long-term, ensures a healthy financial ecosystem. LunaChow, the Magnum Opus of DeFi innovation research aims to ensure the system is secured in a variety of market conditions, with the liquidity providers as the most profitable long-term participants. All in all, providing liquidity is a great hedge strategy, especially if you choose contradicting assets like stablecoins and BTC, and ensures long-term profit.

The scope of this article is to teach you that hedging is a powerful strategy that you can use and propose simple solutions for it. This is why I chose LunaChow and its main product LUCHOW token as the perfect example to educate on.

DeFi is not like traditional finance. Crypto is not (yet) like traditional finance. Copying solutions provided in the traditional finance sector for the crypto world has led so far in capital inefficient protocols or dangerous products. LunaChow offering leverage means, implies that you can use the tool of leverage for your investing without the risk of liquidation.

If you are interested, but still find it a bit confusing, here's a user tutorial for LunaChow. LUCHOW is purchasable, and you can provide liquidity with it, then stake the LP tokens on Uniswap as follows:

Step 1.

Download and install a Trust wallet or Metamask

Step 2.

Add ETH to the wallet

Step 3.

Navigate your browser to Uniswap and then connect your wallet

 Step 4.

Select slippage and then finally swap.

Summing up:

1. Hedging is the best friend of an investor.

2. Hedging is an absolute advantage in a market where the majority just “apes in”. Major advantages translate in higher profits and beating the market in the long term.

3. There are many hedging strategies, from simply holding some stablecoin, to having a calculated diversified portfolio, precise positioning sizing calculations and bulletproof technical analysis of the market. Yet simply having some hedge is still profitable in the crypto market due to the sheer number of players that don’t.

4. Liquidity providers are the most profitable players in the long-term, and CEX growth is something that proves the point. Providing liquidity is an underestimated and understudied investment strategy that can contain automatic hedging.

5. Algorithmic leveraged tokens like LunaChow token can help run an efficient investment plan by providing liquidity with them without the need for deep expertise on finance. The hedging opportunities they provide are unique and simplify the average investor’s life.

N.B- This is a sponsored article written for a bounty reward by a bounty Hunter.

For more info, avail yourself with the following links:

Website: https://www.lunachow.com/

Whitepaper:. https://lunachow.com/whitepaper

Telegram: https://t.me/LuChow

Twitter: https://twitter.com/LunaChoww