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.

+ USDT supply interest (Aave)

+ wstETH liquid staking yields (Lido)

- ETH borrow interest

+ COMP rewards on ETH borrow (Compound)

Strategy

https://studio.factor.fi/?hash=0x336958e8f1f3ebae9c41a036ef07261927cd620ecce66566d180d886344e3ea0

Main strategy

1. Lend $USDT - Aave

2. Borrow $ETH

   1. 62.5% deposit for 20% buffer against LTV

3. Swap borrowed $ETH → $wstETH

4. Flash loan 5.2x the borrowed $wstETH amount

   1. 5% buffer from LTV

5. Lend all $wstETH - Compound

6. Borrow $ETH

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

Exit Strategy

1. Flash loan $ETH

2. Repay $ETH debt - Compound

3. Withdraw $wstETH collateral - Compound

4. Swap $wstETH → $ETH

5. Repay $ETH debt - Aave

6. Withdraw $USDT collateral - Aave

7. Withdraw $USDT

Protocol Parameters

Aave

• ~4.23% USDT Supply Interest

• ~2.32% WETH Borrow Interest

• 75% USDT Max LTV

Compound

• ~2.07% WETH Borrow

• ~0.79% COMP Borrow Rewards

Lido

• ~2.70% wstETH Liquid Staking Yields

OpenOcean

• 0.1% Max Slippage Config

Strategy Performance Conditions

Profit

• 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.

Loss

• wstETH depegs from ETH.

• wstETH 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/1cRmBPUxQVw-ckS9Oigppq53euX6LBJG_Kg93BNBYA68/edit?usp=sharing

Estimated Returns

https://docs.google.com/spreadsheets/d/1cRmBPUxQVw-ckS9Oigppq53euX6LBJG_Kg93BNBYA68/edit?usp=sharing