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The case mentioned by Da Dao is essentially a mindset of "using options leverage for yield farming." In the context of DeFi, this is very similar to the popular LP farming strategies seen recently. For example, with Uniswap V3/V4 LP: you provide liquidity within a specific price range and continuously earn trading fees. Further, if you collateralize your LP NFT to borrow funds and then use those borrowed funds to create more LP positions, you are effectively applying leverage to your LP farming. In traditional finance, selling options strategies within a Portfolio Margin account operate in a nearly identical way: leveraging margin efficiency to amplify positions while continuously collecting option premiums. LP NFT → Collateralize → Borrow → Re-invest in LP Portfolio Margin → Utilize margin → Sell options → Collect ongoing income The underlying logic is nearly identical: both aim to maximize capital efficiency to generate higher, continuous cash flow, while accepting convex, nonlinear tail risks. In normal market conditions, this strategy feels very comfortable—you’re collecting “rent” daily, and yields can be highly attractive. But the real danger lies in tail risk. When events like the 2020 COVID crash or a hypothetical 2025 trade war shock occur, positions carrying high leverage that aren’t promptly reduced or hedged can be wiped out in a single extreme market move. Yield farming feels great—until a market crash turns it into a funeral pyre. Therefore, whether in DeFi LP farming or traditional finance options farming: What truly determines whether you survive long-term isn’t how much you earn during normal times—it’s whether you survive when extreme markets hit.

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