3.9x wstETH Carry + 1x USDT Lending Yields - Aave & Compound
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Description
This strategy earns blended USDT and ETH yields by taking advantage of differences in Aave and Compound.
By depositing USDT into Aave, this strategy earns 1x the Aave USDT lending interest. This also allows the strategy to borrow WETH against the USDT collateral with a 20% buffer.
Borrowed WETH from Aave is swapped for wstETH earning the interest differentials between wstETH liquid staking yields and Aave WETH borrow interest.
The wstETH is then used to create a 6.2x leveraged wstETH:ETH position (5% liquidation buffer) which earns an additional 5.2x interest differential between wstETH liquid staking yields and Compound WETH borrow interest. The total WETH borrowed on Compound also earns additional COMP borrow rewards.
Strategy Performance Conditions
wstETH continuously increases in value vs WETH.
WETH borrow cost is less than wstETH liquid staking yields across Aave and Compound (including COMP rewards).
USDT supply interest is greater than the interest differentials between wstETH yield and WETH borrow.
wstETH depegs from ETH.
wstETH liquid staking yields falls below WETH borrow costs.
Where Does The Yields Come From?
Comparisons
Factor Studio Strategy
Lend $USDT - Aave
Borrow $ETH
62.5% deposit for 20% buffer against LTV
Swap borrowed $ETH → $wstETH
Flash loan 5.2x the borrowed $wstETH amount
5% buffer from LTV
Lend all $wstETH - Compound
Borrow $ETH
Swap $ETH to $wstETH to cover flash loan
Flash loan $ETH
Repay $ETH debt - Compound
Withdraw $wstETH collateral - Compound
Swap $wstETH → $ETH
Repay $ETH debt - Aave
Withdraw $USDT collateral - Aave
Withdraw $USDT
Protocol Parameters
~2.70% wstETH Liquid Staking Yields
0.1% Max Slippage Config
Calculation Template
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Estimated Returns
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