Dan Guido

3) In addition, LPs can remove their liquidity at any time, taking the revenues (not just premiums) from options paid for while relieving themselves from downside risk. New LPs take their burden, not having gotten paid premiums, and get shafted

4) An opportunistic LP that understands this would provide liquidity early, accrue revenue, and remove liquidity before potential exercising of options. A clever one may even purchase options themselves to expedite the process. Someone did just that.

6) The LP mainly profited from the DAI (put) pool. They went through the following process twice: (1) Deposit Liquidity (2) Purchase Put (3) Withdraw Liquidity (4) Exercise Put 1st Round = $500 Profit 2nd Round = $2,843 Profit

7) To maximize profit, the LP bought DEEP ITM puts at strikes of $990 and $2,800 when $ETH was at ~$190 Doing so minimized the size of the premium of the option relative to the total price. The 2nd round contracts cost $2633/ea with the premium comprising 0.8% ($22/ea)

8) The actual profit is derived by looking at the LP capital withdrawn from pool, and subtracting the costs (premium + LP capital initially provided) In the 2nd round, $10,512 + $389 = $10,901 was withdrawn, $58 paid in premiums, and $8,000 initially deposited = $2,843 profit