4.4x rETH Carry + 1x USDC Lending Yields - Aave & Compound

Visit Studio to copy/fork and tweak this strategy!

đŸ› ī¸ Strategy Builder Link

Description

This strategy earns blended USDC and ETH yields by taking advantage of differences in Aave and Compound.

By depositing USDC into Aave, this strategy earns 1x the Aave USDC lending interest. This also allows the strategy to borrow WETH against the USDC collateral with a 20% buffer.

Borrowed WETH from Aave is swapped for rETH earning the interest differentials between rETH liquid staking yields and Aave WETH borrow interest.

The rETH is then used to create a 7x leveraged rETH:ETH position (5% liquidation buffer) which earns an additional 6x interest differential between rETH liquid staking yields and Compound WETH borrow interest. The total WETH borrowed on Compound also earns additional COMP borrow rewards.

+ USDC supply interest (Aave)

+ rETH liquid staking yields

- ETH borrow interest

+ COMP rewards on ETH borrow (Compound)

Strategy

  1. Lend $USDC - Aave

  2. Borrow $ETH

    1. 62.5% deposit for 20% buffer against LTV

  3. Swap borrowed $ETH → $rETH

  4. Flash loan 6x the borrowed $rETH amount

    1. 5% buffer from LTV

  5. Lend all $rETH - Compound

  6. Borrow $ETH

  7. Swap $ETH to $rETH to cover flash loan

Protocol Parameters

Strategy Performance Conditions

  • 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.

Calculation Template

https://docs.google.com/spreadsheets/d/1BfH0bezfJQkeAvkuedWoZZbPKsj6rvkPNLOgIipJDlU/edit?usp=sharing

Estimated Returns

https://docs.google.com/spreadsheets/d/1pdPqohiBsrAQZJx_EKAlvZbzZ8PYlClEIxsk3D71ovE/edit?usp=sharing

Last updated

Was this helpful?