Amplified rETH Yields On USDC Lend

Compound is coming soon! Mix-and-match borrows across multiple lending protocols on Factor Studio!

Description

The vault deposits USDC into Aave to earn lending interest.

By collateralizing the USDC deposit, the vault is able to borrow ETH with a 20% liquidation buffer.

Borrowed ETH is swapped for rETH to create a leveraged rETH/ETH position on Compound that earns amplified interest differentials between rETH liquid staking yields and ETH borrow costs.

+ USDC supply interest

+ rETH liquid staking yields

- ETH borrow interest

+ COMP rewards on ETH borrow

Strategy

Main strategy

1. Lend $USDC - Aave

2. Borrow $ETH

   1. 62.5% deposit for 20% buffer against LTV

3. Flash loan 4.5x the borrowed $ETH amount

   1. 10% buffer from LTV

4. Swap all $ETH → $rETH

5. Lend all $rETH - Compound

6. Borrow $ETH to cover flash loan

Exit Strategy

1. Flash loan $ETH

2. Repay $ETH debt - Compound

3. Withdraw $rETH collateral - Compound

4. Swap $rETH → $ETH

5. Repay $ETH debt - Aave

6. Withdraw $USDC collateral - Aave

7. Withdraw $USDC

Exit Strategy

Factor Discover also enables Depositors to permissionlessly withdraw from any strategy at anytime via an Exit Strategy.

Visit our Exit Strategy explainer to see how Factor Studio strategies can maximize returns while ensuring truly permissionless withdrawals.

Protocol Parameters

Aave

• ~6% USDC Supply Interest

• ~2.4% WETH Borrow Interest

• 75% USDC Max LTV

Compound

• ~2.1% WETH Borrow

• ~0.6% COMP Borrow Rewards

Rocket Pool

• ~2.7% rETH Liquid Staking Yields

OpenOcean

• 0.1% Max Slippage Config

Strategy Performance Conditions

Profit

• rETH continuously increases in value vs WETH.

• WETH borrow cost is less than rETH liquid staking yields across Aave and Compound (including COMP rewards).

• USDC supply interest is greater than the interest differentials between rETH yield and WETH borrow.

Loss

• rETH depegs from ETH.

• rETH liquid staking yields falls below WETH borrow costs.

Calculation Template

Create Your Own Strategies!

Create a copy of the sheet below and tweak it to create your own personalized strategy.

https://docs.google.com/spreadsheets/d/1cqfXsKPZp4DLVuKOmDuCdeJWQykKzT3cRUpBsWIFs9g/edit?usp=sharing