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
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.
Where Does The Yields Come From?
Comparisons
Factor Studio Strategy
Lend $USDC - Aave
Borrow $ETH
62.5% deposit for 20% buffer against LTV
Swap borrowed $ETH → $wstETH
Flash loan 6.1x the borrowed $wstETH amount
2.5% buffer from LTV
Lend all $wstETH - Compound
Borrow $ETH
Swap $ETH to $wstETH to cover flash loan
Protocol Parameters
Calculation Template
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Estimated Returns
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