Pair Trade Paradise: Are We Staring at a Potential Trade with a 75-100% Upside Potential?

In this attached thread, I build on my idea from the quoted tweet thread and present a potential short opportunity. And although it seems like a great trade in isolation, can we perhaps pair this up and identify another asset that holds a considerable upside potential? Let’s see!

When MakerDAO incorporated RWAs, the price of $MKR went from roughly $500 to $1200. I am not saying that history repeats itself, but what if I were to say that there is an easy layup that shares the same characteristics as that of the $MKR trade?

Frax is set to release its V3 later this month. The update will bring treasuries and RWAs on-chain. This would boost protocol yields and stablecoin demand.

frxETH V2, which is a lending market for frxETH, will also soon go live and will LSD efficiency and yields.

This is what the weekly chart of $FXS looks like.


I’m not a big fan of fractals, but it does seem to share some similarities with $MKR before its most recent run-up.


Now, what do we have here? A straightforward short opportunity on $DOT coupled with a pretty strong case for being long $FXS going into next month.

If you were to put up a $FXS/$DOT spread, you not only position yourself to capture the upside/downside on both tokens but do so while remaining market neutral.

So, even if the market were to go up or down in a drastic manner, one is likely to outperform the other such that you have a high +EV setup, something that the crypto market blesses us with more often than any other market.


The FXS/DOT*100 is sitting at 128. It will be interesting to see where this pair is trading by the end of Oct. 23.

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What's the best/easiest way to put this trade on?

I would long FXS and short DOT in equal size. If you need to put on some serious size, I'd recommend buying FXS on-chain as CEX liquidity is not as great. In this case, you can buy spot FXS and short DOT.