3.5x Leveraged cbETH:ETH Yields - Aave

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Description

This vault creates 3.5x leveraged cbETH:ETH position that earns 1x cbETH liquid staking yields plus an additional 2.5x interest differential between cbETH yields and WETH borrow costs.

Deposited cbETH is supplied to Aave enabling the strategy to borrow WETH which is then swapped for more cbETH. This process is repeated to get up to 3.5x leverage which provides a 5% liquidation buffer.

+ cbETH liquid staking yields

- ETH borrow interest

Strategy

  1. Flash loan 2.5x the deposited $cbETH amount

  2. Lend all $cbETH - Aave

  3. Borrow $ETH to cover flash loan

  4. Swap borrowed $ETH → $cbETH

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

Strategy Performance Conditions

  • cbETH continuously increases in value vs WETH.

  • WETH borrow cost is less than cbETH liquid staking yields across Aave

Calculation Template

https://docs.google.com/spreadsheets/d/1SRg9rk_WcOrDr7x18f3mNVZf2_D7Uw1pMiHASvSnZ-Y/edit?usp=sharing

Estimated Returns

https://docs.google.com/spreadsheets/d/11pOG2i3EUpRau5XJcDa9lL1FxGJSjYqhD6QUSON8Ja4/edit?usp=sharing

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