WBTC Base Switch On rETH For ETH & USDC Yields

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Description

An ETH rotation play which earns USD yields on rETH by switching the base asset from USD → WBTC. This strategy profits when ETH outperforms WBTC and is profitable as long as the generated USDC lending interest is greater than rETH to WBTC underperformance.

+ USDC Lending Interest

+ rETH Liquid Staking Yields

+ rETH Lending Interest

- WBTC Borrow Interest

Strategy

  1. Flash loan $rETH equivalent to 100% USDC value

  2. Lend $rETH - Aave

  3. Lend $USDC - Aave

  4. Borrow $WBTC

    1. 100% of initial $USD value

  5. Swap all $WBTC → $rETH

Exit Strategy

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Protocol Parameters

  • ~6% USDC Supply Interest

  • ~0.02% rETH Supply Interest

  • ~0.3% WBTC Borrow Interest

  • 75% USDC Max LTV

  • 69% rETH Max LTV

Strategy Performance Conditions

  • WETH, and by extension rETH, outperforms WBTC for the period of the deposit.

  • USDC supply interest and rETH liquid staking yields are greater than WBTC borrow costs.

Calculation Template

https://docs.google.com/spreadsheets/d/1FvNDdfvoec_mQCiDzIPjEGrJWM652I1S2fWFMlK83qE/edit?usp=sharing

Estimate Returns

The profitability of this strategy depends on the performance of ETH relative to WBTC. Aside from potential trading returns, the strategy also earns a net yield of ~6.7% (as of 06/03/25) that comprises of:

  • USDC lending interest

  • rETH liquid staking yields

  • WBTC borrow costs

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