The first graph below shows the number of swaps grouped by premium on bLUNA-LUNA pool that took place in the past year. Close to 70% of swaps occur with premium 2% or less. 15% of swaps have premium 2-3% while the rest has premium more than 3%.

Premium above 2% to generate most yield with highest number of occurence

To find out what premiums would generate the most yields, we would have to look at how high is the premium relative to the number of swaps. For example, swaps with premium less than 1% would earn a low yield but have high occurrences, whereas swaps with premium >4% may have high yield but it would be hard to find opportunities for such hard premium unless the execution is done using a bot.

Next, let's look at the daily swap volume for premium between 2-3% and premium above 3%, and overlay it with LUNA price to see how LUNA price affects bLUNA-LUNA premiums.

Opportunities for swaps with high premium (>3%) are decreasing over time

As we can see the 2 graphs above, price changes in LUNA does affect bLUNA-LUNA premiums. During the May crash where LUNA price dropped from $17 to $5, swap volume increased substantially for premium higher than 3%.

However in Dec, when we look at recent LUNA price correction from $71 to $56, swap volume above 3% is much lesser than before. On the other hand, swap volume on premium 2-3% has much higher swap volume. This shows that opportunities are swaps with high premiums are decreasing. One possible reason might also be due to the introduction of Kujira as more people participate in this arbitrage opportunity and thus bring down the premium.

To conclude, I would say that the best strategy currently to generate yield in bLUNA-LUNA pool is to swap when the premiums are between 2% to 3%.