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

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Visit Discover to deposit into this strategy and automate your yields!

:inbox\_tray:  [Strategy Deposit Link](https://pro.factor.fi/strategies/0x1c82F7276A4FAdD3F80EF97a19898eD1aF958cea)
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{% hint style="info" %}
Visit Studio to copy/fork and tweak this strategy!

:tools:  [Strategy Builder Link](https://studio.factor.fi/?hash=0x5c23780be1bb046813e4c979906f7b5175133536cff354dbd66d4ae3274fb9ce)
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## Description

<figure><img src="https://1496012388-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FSEwRza4r80hmJsISwKFf%2Fuploads%2FgdpE6TfcGZkphSMa8kiq%2F3.4x%20rETH%20Carry%20%2B%201x%20ARB%20Lending%20Yields%20-%20Aave%20%26%20Compound.jpg?alt=media&#x26;token=5f8402b8-9527-43f2-b2f6-7a80dc460093" alt=""><figcaption></figcaption></figure>

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.&#x20;

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

<figure><img src="https://1496012388-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FSEwRza4r80hmJsISwKFf%2Fuploads%2FZaz37CG4QTiZxKi2MRkT%2Fimage.png?alt=media&#x26;token=87c8256d-25a4-4ece-9d5d-01344e521d1f" alt=""><figcaption><p><a href="https://studio.factor.fi/?hash=0x5c23780be1bb046813e4c979906f7b5175133536cff354dbd66d4ae3274fb9ce">https://studio.factor.fi/?hash=0x5c23780be1bb046813e4c979906f7b5175133536cff354dbd66d4ae3274fb9ce</a></p></figcaption></figure>

{% tabs %}
{% tab title="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&#x20;
7. Swap $ETH to $rETH to cover flash loan
   {% endtab %}

{% tab title="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 $ARB collateral - Aave
7. Withdraw $ARB
   {% endtab %}
   {% endtabs %}

## Protocol Parameters

{% tabs %}
{% tab title="Aave" %}

* [\~0.28%](https://app.aave.com/reserve-overview/?underlyingAsset=0x912ce59144191c1204e64559fe8253a0e49e6548\&marketName=proto_arbitrum_v3) ARB Supply Interest
* [\~2.32%](https://app.aave.com/reserve-overview/?underlyingAsset=0x82af49447d8a07e3bd95bd0d56f35241523fbab1\&marketName=proto_arbitrum_v3) WETH Borrow Interest
* [58%](https://app.aave.com/reserve-overview/?underlyingAsset=0x912ce59144191c1204e64559fe8253a0e49e6548\&marketName=proto_arbitrum_v3) ARB Max LTV
  {% endtab %}

{% tab title="Compound" %}

* [\~2.07%](https://app.compound.finance/markets/weth-arb) WETH Borrow
* [\~0.79%](https://app.compound.finance/markets/weth-arb) COMP Borrow Rewards
  {% endtab %}

{% tab title="Rocket Pool" %}

* [\~2.70%](https://rocketpool.net/) rETH Liquid Staking Yields
  {% endtab %}

{% tab title="OpenOcean" %}

* 0.1% Max Slippage Config
  {% endtab %}
  {% endtabs %}

## Strategy Performance Conditions

{% tabs %}
{% tab title="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.
  {% endtab %}

{% tab title="Loss" %}

* rETH depegs from ETH.
* rETH liquid staking yields falls below WETH borrow costs.
  {% endtab %}
  {% endtabs %}

## Calculation Template

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**Create Your Own Strategies!**

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

{% embed url="<https://docs.google.com/spreadsheets/d/1UzVXljEIJg7u_sX_Af5N0de7ernPkh0mclFczImh-SQ/edit?usp=sharing>" %}
<https://docs.google.com/spreadsheets/d/1UzVXljEIJg7u_sX_Af5N0de7ernPkh0mclFczImh-SQ/edit?usp=sharing>
{% endembed %}

## Estimated Returns

{% embed url="<https://docs.google.com/spreadsheets/d/1DobinFTMEsIQPjQlIt_yN5cslqfSgifnOpr7hbsz0q8/edit?usp=drive_link>" %}
<https://docs.google.com/spreadsheets/d/1DobinFTMEsIQPjQlIt_yN5cslqfSgifnOpr7hbsz0q8/edit?usp=drive_link>
{% endembed %}