I’ve been researching DeFi strategies that I’d like to take advantage of once gas prices come down. I figured I could write them up and share here for the benefit of others and potentially for some critique.
Please keep in mind that all APY percentages are as of time of writing. And this is all assuming low gas fees.
1. Supply USDC and ETH to compound
Purchase USDC and ETH or use existing reserves. Although amounts may vary - I’d like to use larger round numbers for these examples. Thus - supply:
$10000 USDC - Supply APY 9.85% USDC + 5.04% COMP
1 ETH - Supply APY .16% ETH + .56% COMP
The ETH here is not really for interest, but rather to increase the borrowing limit available. Each has a 75% collateral factor or $7500 + .75 ETH ($1350) which lets you borrow around $8000 USDC (in a safe range).
2. Borrow USDC against your supply
$8000 USDC - Borrow APY 12.37% - 5.81% COMP = Net Borrow APY 6.56%
This means net COMP earnings in one year are
10K x .0504 = ~$504
8k x .584 = ~$467
1EHT x .0054 = ~$10
This is equivalent to around 2.05 comp at current prices. If this comp is earned and supplied back to Compound instead of being sold:
2.05 COMP x .057 = ~$50 additional compounding interest on your compound.
3. Trade USDC on SushiSwap for YVECRV
YVECRV is the new vault token on Yearn - the vault allows you to lock CRV tokens indefinitely to earn rewards in the 3CRV token. At writing though, the YVECRV token costs $2.20 and CRV costs $2.75. Thus, more bang for your buck if you buy YVECRV directly instead of CRV.
With the $8000 USDC you can swap for around 3612 YVECRV tokens. There is .11% slippage and a $50 fee as well.
4. Earn 3CRV
Now that you own a substantial amount of YVE CRV you can begin to earn the Yearn vault rewards. These rewards are accumulated and paid in 3crv tokens - which equivocate to roughly $1.01 at time of writing.
The APY is currently around 10% - which means you would earn an estimated $362 in 3CRV tokens or roughly $30 a month.
Obviously the more you hold, the more you earn.
Now, once you’ve earned your 3CRV you have two options:
Supply to Harvest, or supply to Yearn.
5. Supply 3CRV to Farm
Harvest.Finance offers a 9.22% return on 3CRV tokens supplied. This would be around $33 worth or a 13th month on the earnings from Yearn.
This is rewarded in FARM. You have the option to auto-stake those rewards in the FARM vault for an additional compound 67% or $22 dollars.
5. ALT - Supply 3CRV to Yearn Vault
Year also provides a 3CRV vault at a 19.9% rate. This would equivocate to $69 dollars.
The difference between YEARN and FARM earnings would be $15 or so - but the benefit of FARM is that it auto compounds.
So to summarize
1. COMP Earnings ~$1031 in COMP
USDC Supply $985 - USDC Borrow $989 = -$4 USDC
ETH Supply $3
COMP earning total = $1300
2. YVECRV Earnings = $362
3. Farm Earnings = $55
For a total of $1717 total or (not factoring in the “borrowed amount”) or stellar 14.55% on only $11800 dollars.
Obviously there may be better “direct” strategies. But I’ve been theorizing using multiple DeFi projects to test potential cross platform earning potentials.
Please note - I rounded up some numbers and some math may be slightly off.
Is there a way this particular strategic flow could be improved?
Let me know your thoughts below.