Amplified cbETH Yields On cbBTC Lend - Aave

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Description

The vault collateralizes cbBTC on Aave to earn amplified interest differentials on borrowed ETH.

By collateralizing the cbBTC deposit, the vault is able to borrow ETH with a 20% liquidation buffer while earning a minor cbBTC supply interest.

Borrowed ETH is swapped for cbETH to create a 3.5x leveraged cbETH:ETH position on Aave that earns amplified interest differentials between cbETH liquid staking yields and ETH borrow costs.

+ cbBTC supply interest

+ cbETH liquid staking yields

- ETH borrow interest

Strategy

https://studio.factor.fi/?hash=0x0bb0ff9b3dcddc11b93071c6f75cac9cff05b924ac6fb724789ae2290af6246a

Main strategy

1. Lend $cbBTC - Aave

2. Borrow $ETH

   1. 60.83% deposit for 20% buffer against LTV

3. Flash loan 2.5x the borrowed $ETH amount

   1. 5% buffer from LTV

4. Swap all $ETH → $cbETH

5. Lend all $cbETH - Aave

6. Borrow $ETH to cover flash loan

Exit Strategy

1. Flash loan $ETH

2. Repay $ETH debt - Aave

3. Withdraw $cbETH collateral - Aave

4. Swap $cbETH → $ETH

5. Repay $ETH debt - Aave

6. Withdraw $cbBTC collateral - Aave

7. Withdraw $cbBTC

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

• ~0.21% USDC Supply Interest

• ~2.43% WETH Borrow Interest

• 73% cbBTC Max LTV

• 75% cbETH Max LTV

Coinbase

• ~3.09% cbETH Liquid Staking Yields

OpenOcean

• 0.1% Max Slippage Config

Strategy Performance Conditions

Profit

• cbETH continuously increases in value vs WETH.

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

• cbBTC supply interest is greater than the interest differentials between cbETH yield and WETH borrow.

Loss

• cbETH depegs from ETH.

• cbETH 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/11fCowOqo8Q5hebFpyqdZg7F3_f6dz4z3mc-YUGRLXU8/edit?usp=sharing

Estimated Returns

https://docs.google.com/spreadsheets/d/1F24QvyHyp58FnN6ZCtfW51fzOza0apK5pRvkJaBLFB4/edit?usp=sharing