Strategy A β Operations Playbook
Strategy essence
Strategy A β Strategy B
Strategy A is a learning strategy β it shows how each component works on its own. In practice it generates very small or negative profit, so in the next lesson we'll learn Strategy B, which optimizes these parameters into a profitable system. Think of Strategy A as a "blueprint," not a final product.
Strategy A combines four income sources into one system: lending interest + LP fees + options premiums + price appreciation. All of it with downside protection.
Why an 'Operations Playbook'?
This strategy has a clear weekly and 90-day cycle with concrete actions. This isn't "buy and hold." It's like a pilot's checklist β every step is written down, every situation anticipated. Just follow the instructions.
Architecture β 4 layers
Like a recipe in the kitchen
Each layer is like an ingredient in a recipe. One gives flavor (interest), another gives texture (LPLPLiquidity Provider β deposits tokens into a pool and earns a share of trading fees.Read the lesson β fees), a third gives protection (options). Together they create a complete dish β a balanced portfolio.
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SOL/ETH collateral β Kamino or Aave. Earns ~6% per year from day one. LTVLTVLoan-to-Value β the ratio of debt to collateral value. LTV 30% is considered safe. LTV 71%+ triggers liquidation.Read the lesson β is kept around ~30%
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Borrow USDC (30% LTVLTVLoan-to-Value β the ratio of debt to collateral value. LTV 30% is considered safe. LTV 71%+ triggers liquidation.Read the lesson β) β this is the cheapest way to get "working capital" without giving up your SOLSOLSolana's native token. Used to pay gas and as collateral.Read the lesson β/ETH
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~1/3 of the USDC goes to Deribit β the protection budget. This money buys Put SpreadPut SpreadLong put + short put. Cheaper protection than a plain put, but with limited coverage.Read the lesson β protection and sells a Covered CallCovered CallAn options strategy: sell a call option while holding the underlying asset. Generates premium income but caps upside.Read the lesson β
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~2/3 of the USDC goes to Orca/Meteora LP β a single-sided position, from -20% to the current price. Earns fees from trading
Money flow β how it all connects
SOL/ETH (100%)
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+---> Kamino/Aave Collateral (+6% per year)
| |
| v
| Borrow USDC (30% LTV)
| |
| +---> 1/3 --> Deribit (Put Spread + Covered Call)
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| +---> 2/3 --> Orca/Meteora LP (fees ~30-50% per year)
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+---> Direct price appreciation (45% exposure)
Each layer in detail
1. Collateral β SOL Kamino or ETH Aave
Why 30% LTV? Because we want a large buffer to liquidation. SOLSOLSolana's native token. Used to pay gas and as collateral.Read the lesson β has to fall ~41% to reach the liquidation price. That gives you time to react.
2. LP position β Orca or Meteora
| Parameter | Value |
|---|---|
| Type | Single-sided USDCUSDCA USD stablecoin issued by Circle. Regulated, audited monthly. Our primary stablecoin and loan asset in the Kamino/Aave strategies.Read the lesson β position |
| RangeRangeThe price range of a concentrated LP position. Fees only accrue while the price is inside the range.Read the lesson β | From -20% to the current price |
| Example (SOLSOLSolana's native token. Used to pay gas and as collateral.Read the lesson β@$88) | $70.40 β $88.00 |
| Earnings | ~30-50% per year |
Why single-sided? It acts like a paid limit order: if the price drops, you automatically buy SOLSOLSolana's native token. Used to pay gas and as collateral.Read the lesson β cheaper. And while you wait, you collect fees.
3. Options protection β Deribit (120-day cycles)
| Position | Type | Strike | Purpose |
|---|---|---|---|
| Put Spread | Long PutPutAn option type that grants the right to SELL at a set price. Used as insurance.Read the lesson β + Short PutPutAn option type that grants the right to SELL at a set price. Used as insurance.Read the lesson β | -5% to -30% | Protection against a drop |
| Covered Call | Short CallCallAn option type that grants the right to BUY at the strike price. The opposite of a put.Read the lesson β | 2x price | Income that lowers the protection cost |
Weekly cycle β the "Friday ritual"
Each week you perform the following actions:
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Collect LP fees β take the accumulated trading fees from OrcaOrcaA Solana DEX with concentrated liquidity (Whirlpool). The basis of our LP strategy on the Solana network.Read the lesson β/MeteoraMeteoraA Solana DLMM (bin-based) liquidity protocol. An alternative to Orca, with dynamic fees.Read the lesson β
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Move SOL fees to Collateral β if the LPLPLiquidity Provider β deposits tokens into a pool and earns a share of trading fees.Read the lesson β converted some USDCUSDCA USD stablecoin issued by Circle. Regulated, audited monthly. Our primary stablecoin and loan asset in the Kamino/Aave strategies.Read the lesson β into SOLSOLSolana's native token. Used to pay gas and as collateral.Read the lesson β (price dropped), move that SOLSOLSolana's native token. Used to pay gas and as collateral.Read the lesson β over. This lowers LTVLTVLoan-to-Value β the ratio of debt to collateral value. LTV 30% is considered safe. LTV 71%+ triggers liquidation.Read the lesson β
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Move USDC fees to the "Protection Vault" β a separate amount, accumulated for the next PutPutAn option type that grants the right to SELL at a set price. Used as insurance.Read the lesson β purchase. Over 120 days enough must build up to buy the next PutPutAn option type that grants the right to SELL at a set price. Used as insurance.Read the lesson β
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Reinvest the surplus β if fees exceed the protection budget, use the extra to further reduce LTVLTVLoan-to-Value β the ratio of debt to collateral value. LTV 30% is considered safe. LTV 71%+ triggers liquidation.Read the lesson β. This creates a compounding effect (money earning on money)
90-day cycle β managing the options
Rolling the Put Spread
Day 0: Buy a 120-day Put Spread
Day 90: 30 days left --> ROLL WINDOW!
1. Sell the old Put Spread (still has value)
2. Buy a new 120-day Put Spread
Day 120: New Put Spread is active for another 90 days
Covered Call β don't roll it!
Day 0: Sell a 120-day Covered Call (strike 2x)
Day 120: Let it expire (usually worthless)
--> Sell a new 120-day Call
What happens at different prices (over 120 days)
| Move | New price | Collateral | LP | Options | Total result |
|---|---|---|---|---|---|
| -60% | $35.20 | -$6,653 | -$2,150 | +$4,200 | -$4,603 |
| -30% | $61.60 | -$3,326 | -$800 | +$2,100 | -$2,026 |
| -20% | $70.40 | -$2,218 | -$200 | +$1,200 | -$1,218 |
| 0% | $88.00 | $0 | +$710 | -$400 | +$310 |
| +20% | $105.60 | +$2,218 | +$710 | -$600 | +$2,328 |
| +50% | $132.00 | +$5,544 | +$710 | -$700 | +$5,554 |
| +100% | $176.00 | +$11,088 | +$710 | -$1,200 | +$10,598 |
Who is this strategy for?
| Fits | Doesn't fit |
|---|---|
| Portfolios of $5k-$50k | Very small portfolios (<$2k) |
| Believe in long-term SOLSOLSolana's native token. Used to pay gas and as collateral.Read the lesson β/ETH growth | Want to get rich quick |
| Can spend 1-2 hours/week | Don't have the time |
| Understand options basics | Dislike risk |
Profitability
| Profit source | Per year |
|---|---|
| CollateralCollateralThe asset you deposit in order to borrow. In DeFi this is typically crypto (SOL, ETH).Read the lesson β interest (6%) | +$665 |
| LPLPLiquidity Provider β deposits tokens into a pool and earns a share of trading fees.Read the lesson β fees (30β68%) | +$960 β $2,172 |
| Covered CallCovered CallAn options strategy: sell a call option while holding the underlying asset. Generates premium income but caps upside.Read the lesson β premium (~3%) | +$333 |
| Total gross | +$1,958 β $3,170 |
| Put SpreadPut SpreadLong put + short put. Cheaper protection than a plain put, but with limited coverage.Read the lesson β cost (3 cycles) | -$2,400 |
| Debt interest (USDCUSDCA USD stablecoin issued by Circle. Regulated, audited monthly. Our primary stablecoin and loan asset in the Kamino/Aave strategies.Read the lesson β ~6%) | -$282 |
| Net | -$724 β +$488 |
Note: profit depends heavily on LPLPLiquidity Provider β deposits tokens into a pool and earns a share of trading fees.Read the lesson β fees. At 68% LPLPLiquidity Provider β deposits tokens into a pool and earns a share of trading fees.Read the lesson β fee APRAPRAnnual Percentage Rate β the annual interest rate WITHOUT compounding. 10% APR = +10% per year.Read the lesson β (the current position's instantaneous, variable figure) β the year is profitable (+$490/yr). Below ~53% LPLPLiquidity Provider β deposits tokens into a pool and earns a share of trading fees.Read the lesson β APRAPRAnnual Percentage Rate β the annual interest rate WITHOUT compounding. 10% APR = +10% per year.Read the lesson β the year is a loss β that's when you should cut protection costs.
Next step: Strategy B solves this problem β it optimizes each layer separately.
Once you've read through this playbook, you can break down any DeFiDeFiDecentralized Finance β financial services without intermediaries, operating through smart contracts.Read the lesson β strategy into its separate layers yourself and figure out where every dollar of profit or cost comes from.
Strategy A is a blueprint β so the task here is drafting, not building. No real trades: just paper, a calculator, and ~20 minutes.
This is learning, not investing β use only small amounts you treat as tuition.
You just put together a complete four-layer strategy blueprint and know exactly where it's profitable and where it isn't β most people never reach that level of clarity.