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How to automatically invest in 50% in BTC, 50% in ETH?

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Summary:

  • Celo is a proof of stake blockchain with low gas fees (often $0.001 per transaction)

  • Celo now has wrapped BTC (cBTC) and wrapped ETH (cETH) available

  • You can now contribute to a 50-50 BTC-ETH pool on app.ubeswap.com, which will automatically hold your investment close to 50-50.

Why invest 50-50 in BTC-ETH?

Investing in 50% in BTC and 50% in ETH is recommended by Balajis Srinivasan (on Tim Ferriss’ Podcast). One way to automate this is to contribute to a Uniswap type liquidity pool that has 50% BTC and 50% ETH.

The problem with Uniswap is that fees are high on Ethereum – about $10 per transaction at the time of writing, and much higher to contribute to a liquidity pool. This makes it prohibitive to invest/contribute small amounts.

What’s the benefit of using Ubeswap on Celo?

It only costs less than $0.10 to contribute to a pool on Ubeswap, which is a version of Uniswap for the Celo blockchain.

I was able to get into a cBTC-cETH pool and contribute only $100 – paying less than $0.1 in gas (link to Ubeswap here). Right now, the easiest way for me to get funds into Ubeswap is to:

  1. Buy CELO tokens on Coinbase.com or Binance or another exchange

  2. Install the Celo extension wallet (here on chrome or brave)

  3. Send the CELO tokens from the exchange to my Celo extension wallet.

  4. Swap my CELO tokens for cBTC and cETH on https://app.ubeswap.org/#/swap

  5. Pool my cBTC and cETH tokens on https://app.ubeswap.org/#/pool

Caveats:

Wrapping: These cBTC and cETH tokens are wrapped tokens. While there is one token of BTC (or ETH) backing each wrapped token, there is an additional layer of contract risk involved in the issuance of these wrapped tokens. Therefore, I hold only a very small amount of my BTC and ETH in wrapped form.

Pool risk: As with any Uniswap v2 type pool, there is the risk of impermanent loss. You can read more on this here.

BTC/ETH price risk: There is the risk that the price of BTC and/or ETH will crash.

Further resources (monthly sub required):

  1. To understand stablecoins and Celo – try Part 5 of my DeFi Mini-course covers this in detail.

  2. To understand liquidity pools and DeFi exchanges (e.g. Uniswap and Ubeswap)  – try Part 2 of my DeFi Mini-course.

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