Amplified cbETH Yields On USDC Lend - Aave

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➡️ Strategy Builder Link

Description

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 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.

+ USDC supply interest

+ cbETH liquid staking yields

- ETH borrow interest

Strategy

https://studio.factor.fi/?hash=0xa383182aa4e1feece921d7e65ff0ce55476964a4bc27398772abb084291e696a

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 → $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 $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

• ~5.77% USDC Supply Interest

• ~2.43% WETH Borrow Interest

• 75% USDC 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

• USDC 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/1GZy-aRVCG_MRxJjphwMAaxYQy4AkJdzvMRp9-CEKNMc/edit?usp=sharing

Estimated Returns

https://docs.google.com/spreadsheets/d/1BTVCYVrNmHfY61-6pyZoF-FXr57eXcIekdEuUcG98mc/edit?usp=sharing