wstETH Boosted USDC Lending - Aave & Compound

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Description

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

By depositing USDC into Aave, this strategy earns 1x the Aave USDC lending interest. This also allows the strategy to borrow WETH against the USDC 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 7.1x leveraged wstETH:ETH position (2.5% liquidation buffer) which earns an additional 6.1x 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

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).

• USDC supply interest is greater than the interest differentials between wstETH yield and WETH borrow.

Loss

Where Does The Yields Come From?

Comparisons

Factor Studio Strategy

https://studio.factor.fi/builder?hash=0x8c1f45d2a08c30cb258603378ad5ac170935f41d

Main strategy

1. Lend $USDC - Aave

2. Borrow $ETH

   1. 62.5% deposit for 20% buffer against LTV

3. Swap borrowed $ETH → $wstETH

4. Flash loan 6.1x the borrowed $wstETH amount

   1. 2.5% buffer from LTV

5. Lend all $wstETH - Compound

6. Borrow $ETH

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

Exit Strategy

Protocol Parameters

Aave

• ~5.11% USDC Supply Interest

• ~2.33% WETH Borrow Interest

• 75% USDC Max LTV

Compound

Lido

OpenOcean

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/1p_hk69aImsLMgbzjQlY37vjMza9jAwqR4yjd_34WzaY/edit?usp=sharing

Estimated Returns

https://docs.google.com/spreadsheets/d/1gUzTfwhzOW6iTslSMoJvnkI0KxkiB99hCHxrfBo6dZ8/edit?usp=sharing