3.4x rETH Carry + 1x ARB Lending Yields - Aave & Compound

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Description

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

By depositing ARB into Aave, this strategy earns 1x the Aave ARB lending interest. This also allows the strategy to borrow WETH against the ARB 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.

+ ARB supply interest (Aave)

+ rETH liquid staking yields (Lido)

- ETH borrow interest

+ COMP rewards on ETH borrow (Compound)

Strategy

https://studio.factor.fi/?hash=0x5c23780be1bb046813e4c979906f7b5175133536cff354dbd66d4ae3274fb9ce

Main strategy

1. Lend $ARB - 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

Exit Strategy

Protocol Parameters

Aave

• ~0.28% ARB Supply Interest

• ~2.32% WETH Borrow Interest

• 58% ARB Max LTV

Compound

Rocket Pool

OpenOcean

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).

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

Loss

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/1UzVXljEIJg7u_sX_Af5N0de7ernPkh0mclFczImh-SQ/edit?usp=sharing

Estimated Returns

https://docs.google.com/spreadsheets/d/1DobinFTMEsIQPjQlIt_yN5cslqfSgifnOpr7hbsz0q8/edit?usp=drive_link