Amplified wstETH Yields On USDC Lend - Aave

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➡️ Strategy Deposit Link

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➡️ Strategy Builder Link

Description

https://studio.factor.fi/?hash=0x3daac7c10909d7184cc0cb3e1cdd8f1cf8c601eb9437d69aa7d1b1e84a35f979

The vault deposits USDC into Aave to earn lending interest.

By collateralizing the USDC deposit, the vault is able to borrow ETH with a 20% liquidation buffer.

Borrowed ETH is swapped for wstETH to create a leveraged wstETH/ETH position on Aave that earns amplified interest differentials between wstETH liquid staking yields and ETH borrow costs.

+ USDC supply interest

+ wstETH liquid staking yields

- ETH borrow interest

Strategy

Main strategy

1. Lend $USDC - Aave

2. Borrow $ETH

   1. 62.5% deposit for 20% buffer against LTV

3. Flash loan 2.5x the borrowed $ETH amount

   1. 5% buffer from LTV

4. Swap all $ETH → $wstETH

5. Lend all $wstETH - Aave

6. Borrow $ETH to cover flash loan

Exit Strategy

1. Flash loan $ETH

2. Repay $ETH debt - Aave

3. Withdraw $wstETH collateral - Aave

4. Swap $wstETH → $ETH

5. Repay $ETH debt - Aave

6. Withdraw $USDC collateral - Aave

7. Withdraw $USDC

Exit Strategy

Factor Discover also enables Depositors to permissionlessly withdraw from any strategy at anytime via an Exit Strategy.

Visit our Exit Strategy explainer to see how Factor Studio strategies can maximize returns while ensuring truly permissionless withdrawals.

Protocol Parameters

Aave

• ~2.94% USDC Supply Interest

• ~2.34% WETH Borrow Interest

• 75% USDC Max LTV

• 75% wstETH Max LTV

Lido

• ~2.9% 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

• USDC 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/1AqQt0Uk2gzOYYnJi4ijrFbvjwjsGMm0ywrlMGOdHilY/edit?usp=sharing

Estimated Returns

https://docs.google.com/spreadsheets/d/1FzCCMzjcbHUpzxBq635VNuOmdd1tJBY8GLbfa4R4lMk/edit?usp=sharing