DeFi Strategies
Maximize your returns and minimize risks with Algoo Strategies' automated DeFi trading strategies, designed to navigate the complexities of decentralized markets.
SOFT LONG” on ETH
DeFi strategy that generates yield (target 45% ROI) through the ETH-BAL liquidity pool and price appreciation of ETH (a +10% price increase in ETH results in +7.9% strategy growth) as borrowed BAL is converted to ETH, which is why this strategy is referred to as a “soft long.”
Full Description
Similar to YAPs, an investment in this strategy will be composed of “shares”. Half of the BAL pool is converted to ETH and then provided as supply tokens to Aura finance (a DeFi protocol that leverages liquidity pools). These supply tokens are used as collateral for creating a 2x leveraged position on a basket of ETH-BAL liquidity pools. The price dynamics of ETH are reflected in the strategy: on average, a 10% increase in the price of ETH results in a 7.9% growth of a strategy's price due to the conversion of BAL to ETH, making its price less volatile while capturing 45% ROI from fees and rewards. This strategy is an excellent way to diversify a portfolio during choppy, bearish markets while maintaining exposure for the start of a potential rally in the crypto markets.
Estimated returns and sources of yield
Underlying coins and protocols
Coins and tokens: ETH, BAL
Protocols: Aura Finance as LP leverage, Iron Bank as the lending service under the hood of Alpha Homora.
Strategy pros
Efficiency. High yields combined with a long position on ETH lead to high efficiency during flat and bullish markets.
Liquid. Enter and exit the strategy at any time (with low fees).
Transparency. Track strategy performance via on-chain analytics and understand where yields are deriving (link).
Strategy cons
Limited Availability. Investors always have the ability to exit their position in this strategy, however, the availability of this position/strategy is calculated based on the liquidity within the strategy. In order to increase liquidity (and open up availability to additional investments), Algoo strategies must add more balances to the strategy, which we plan to do regularly. Please reach out to support if you’re looking to gain exposure into this strategy.
DeFi Protocol Risk. Algoo strategies builds strategies on top of fully audited protocols that have proven their sustainability, however, protocol vulnerabilities still exist. While Algoo Strategies monitors all positions 24/7, systematic DeFi risk is shared with investors.
Market Downtrend. A decline in the price of ETH will contribute toward price depreciation in the strategy.
Investment tips on how to blend this strategy into your portfolio
Utilize this strategy during flat markets to capture an attractive 40% ROI while maintaining exposure to ETH.
Combine it with Algoo Strategies’ “Soft Short” strategy in different proportions to balance between longing, shorting or neutral market position.
Combine it with Algoo Strategies’ fixed yield products (holding BTC or ETH) to reduce the risks presented by market volatility, while increasing portfolio yield.
Enter this position with stable coins during market dips to accumulate a medium-risk and high-yield vehicle and rebalance it to stables or BTC/ETH on each market rise.
Risks and ways to hedge against presented risks
Liquidation possibilities (Low Risk). The position may be liquidated if ETH’s price decreases by 57% from position entrance due to leverage for liquidity pools with USDC as collateral. The position entry is updated weekly based on strategy demand, therefore, liquidation risk is low. Position health may be tracked on-chain via this Link.
Liquidity pools' impermanent loss (Medium Risk). The strategy is based on market-making of ETH-USDS liquidity pool, which are subject to impermanent loss. In this strategy, impermanent loss halved given the presence of USDC collateral. However, if the value of the ETH position were to drop two times in price in a short time span without retracement, simply holding ETH would give you 20% more in USD value. This is the “other side” of 40% ROI that the strategy targets. You can hedge this strategy by going long on ETH in addition to investing in this strategy. This, however, may give investors an overexposure to ETH.
Systematic DeFi risks (Medium Risk). Algoo Strategies uses real-time alerts to track all of the main metrics of the position's health, such as protocol liquidity, liquidation prices, and lending utilization rates. If one of our alerts is triggered, it may signal potential hacks, protocol vulnerabilities (liquidity issues), or bad health of the position. Algoo strategies has the ability to exit any of the strategies into stablecoins at any time should any of those events occur. Midas’ infrastructure and expertise give our investment team the ability to proactively protect investors from these risks.
Fees
Performance fee: 15% of weekly profit (only if the strategy has generated profit); fees are deducted directly from the strategy shares each week. The user retains the same number of SLETH tokens, but the price of each token is less by the success reward.
If the user exits the investment strategy before the settlement day, then we calculate the difference between the current price and the price of the last settlement period and take 15% of the profit. If there is no profit, then the user does not pay performance fee.
Strategy address: https://debank.com/profile/0x822b4caf8bf7652b1c4b8a59f405e530d6a5a1e3
Maximum capacity: $18,000,000
SOFT SHORT” on ETH
DeFi strategy which generates yield (target 25% ROI) through ETH-USDC liquidity pool and price depreciation of ETH (a -10% decline in the price of ETH price leads to +4% strategy growth) due to ETH being borrowed while half of the position is converted to USDC.
Full description
Similar to YAPs, an investment into this strategy will be composed of “shares”. The strategy is denominated in USDC. USDC is deposited on AAVE to borrow ETH, and half of this ETH is sold for stables. The ETH and stables are then provided as supply tokens to Alpha Homora. The supply tokens are used as collateral for creating a 1x leveraged position on the basket of ETH-USDC liquidity pool. The position turns into a “short” based on the difference between the borrowing of ETH and having a ETH-USDC liquidity pool. Therefore, investors are short ETH while simultaneously profiting from LP rewards on Alpha Homora. The price dynamics of ETH are reflected in the strategy; on average, a 10% decline in the price of ETH leads to a 4% increase in the strategy's price, making its price less volatile (versus strictly holding ETH) while also capturing up to 25% ROI through fees and rewards. This strategy is a great way to hedge your crypto and altcoin portfolio from a potential drawdown in the market, while profiting from yields on Alpha Homora.
Estimated returns and source of yield
Underlying coins and protocols
Coins and tokens: ETH, USDC
Protocols: Alpha Homora as LP leverage, Iron Bank as the lending service under the hood of Alpha Homora, AAVE as the lending protocol
Strategy pros
Efficiency. Medium yields combined with short on ETH leads to high efficiency during flat and bearish markets. Liquid. Enter and exit the strategy at any time (with low fees).
Liquid. Enter and exit the strategy at any time (with low fees).
Transparency. Track strategy performance via on-chain analytics and understand where yields are deriving (link below).
Strategy cons
Market Uptrend. An increase in ETH’s price will result in a decline in the strategy's price.
DeFi Protocol Risk. Algoo strategies builds strategies on top of fully audited protocols that have proven their sustainability, however, protocol vulnerabilities still exist. While Algoo Strategies monitors all positions 24/7, systematic DeFi risk is shared with investors.
Limited Availability. Investors always have the ability to exit their position in this strategy, however, availability of this position/strategy is calculated based on the liquidity within the strategy. In order to increase liquidity (and open up availability to additional investments), Algoo strategies must add more balances to the strategy, which we plan to do regularly. Please reach out to support if you’re looking to gain exposure into this strategy.
Investment tips on how to blend this strategy into your portfolio
Utilize this strategy during bearish markets to take advantage of ETH price declines.
This strategy may be helpful if you have a sizable position in ETH and altcoins and want to balance portfolio risk.
Combine this strategy with the “Soft Long” strategy to create a market neutral strategy with a slight exposure on ETH, and earn a targeted 35% ROI on the portfolio.
Enter this position on major upward swings in the price of ETH during bearish markets to earn extra yield following ETH retracements.
Risks and ways to hedge against presented risks
Price appreciation of ETH (High Risk). Sharp increases to the price of ETH will lead to a decline in the strategy’s performance (and price). Combining this strategy with a long position on ETH may partially offset strategy losses.
Liquidity pools' impermanent loss (Medium Risk). The strategy is based on market-making of ETH-USD liquidity pools, which are subject to impermanent loss. In this case, impermanent loss is generating money if ETH goes down and decreases if ETH goes up due to borrowing of ETH.
Systematic DeFi risks (Medium Risk). Algoo strategies uses real-time alerts to track all of the main metrics of the position's health, such as protocol liquidity, liquidation prices, and lending utilization rates. If one of our alerts is triggered, it may signal potential hacks, protocol vulnerabilities (liquidity issues), or bad health of the position. Algoo strategies has the ability to exit any of the strategies into stablecoins at any time should any of those events occur. Algoo strategies’ infrastructure and expertise gives our investment team the ability to proactively protect investors from these risks.
Fees
Performance fee: 20% of weekly profit (only if the strategy has generated profit); fees are deducted directly from the strategy shares each week. The user retains the same amount of returns generated but their price is less by the success reward.
If the user exits the investment strategy before the settlement day, then we calculate the difference between the current price and the price of the last settlement period and take 20% of the profit. If there is no profit, then the user does not pay performance fee.
Strategy address: https://debank.com/profile/0x53eaf3d7eb9272554d208e8680aabff275c51376
DeFi TOKEN FARMING
A basket of incentivised liquidity pools representing the most profitable cash-flow models in protocols with DeFi tokens on Convex Finance, which may generate up to 35% ROI while investors also benefit from price appreciation of the underlying tokens.
Full description
This strategy taps into top-tier liquidity pools in all of DeFi with the most valuable tokens, based on Algoo Strategies’ investment research. Each token in this strategy aims to address the pain points of DeFi and includes tokenomics revolving around the protocol's cash flow. The protocols included in the strategy solve the cornerstone problems of DeFi: liquidity and stablecoins. Including this strategy in your portfolio is similar to maintaining a long position on the entire DeFi ecosystem. Each liquidity pool includes incentivised rewards from Convex, which represent the primary source of the strategy’s yield. Liquidity pools are balanced based on available liquidity and market cap.
Liquidity pools and our rationale for selecting each one
CRV + cvxCRV. Curve is one of the largest automated market maker (“AMM”) protocols with a sophisticated mechanic of locking CRV to receive extra fees from their most used pools. CRV is used as a governance token to allocate CRV emissions for other project pools, required for protocol health. cvxCRV is tokenized, locked CRV from Convex Finance which is used by Convex to offer liquidity to dozens of DeFi protocols. The CRV + cvxCRV liquidity pool is incentivised by Curve and Convex to create liquidity between CRV native token and tokenized, locked CRV with an approximate APR of 25%. This pool is absent of impermanent loss risk and is long on CRV token, which boasts an exciting roadmap of a native stablecoin release in addition to cash flow tokenomics.
CRV + ETH. This pool provides liquidity for ETH and CRV tokens and is incentivised by Curve and Convex, reaching an APR up to 30%. This pool grows in price with the appreciation of ETH and CRV prices.
CVX + ETH. The pool provides liquidity for ETH and CVX tokens. CVX is a governance token of Convex Finance which is used to manage liquidity of Curve pools. CVX is a valuable token for protocols and stablecoins which seeks to bootstrap liquidity on Curve. Some of the major driving forces of CVX are bribes from other protocols. This pool is incentivised by Curve and Convex, reaching an APR up to 40%. This pool grows in price with an appreciation of ETH and CVX prices.
FXS + cvxFXS. This pool provides liquidity for FXS tokens and tokenized, locked FXS on Convex Finance. FXS, the world’s first fractional-algorithmic stablecoin, is the governance token of FRAX protocol; FRAX is an overcollateralized DeFi stablecoin with a flawless performance in terms of peg and and is entrenched with dozens of DeFi protocols. Owning FXS means owning part of the DeFi ecosystem they are building. FRAX DAO holds a major stack of locked CVX and CRV, arranges buybacks, and has fee generation mechanisms that capture the power from their ecosystem into the strength of their governance token. The pool is incentivised by CRV and CVX, with an APR up to 30%. This pool is not subject to impermanent loss.
Silo + FRAX. This pool provides liquidity for Silo token and FRAX stablecoin. Silo is a governance token for its upcoming isolated lending protocol, which aims to create a new level of security for lending markets, positioning it as the “Uniswap for lending.” The market cap of Silo is very low ($7M as of this publishing), and Algoo Strategies included this pool to share the potential major upside of their innovative approach to lending. The pool is incentivised by CRV and CVX, yielding an APR up to 60%. Algoo Strategies’ investment team will rebalance these pools based on several dynamic metrics, including available liquidity, price impact, and rewards. Algoo Strategies constantly evaluates opportunities in DeFi and plans to add more pools to this strategy based on community demand.
Estimated returns and source of yield
The target ROI for this strategy is 40%, but it may vary based on liquidity in the pools and incentivisation of the protocols.
Source of yield: fees, CRV and CVX governance tokens. Rewards are reinvested into the strategy and reflected in the price increase.
Underlying coins and protocols
Coins: CRV, CVX, ETH, FXS, Silo
Protocols: Convex Finance, Curve
Strategy pros
One Strategy. A single strategy from which to receive an attractive ROI from the most valuable DeFi projects in the current ecosystem.
Rebalancing. Algoo Strategies rebalances this strategy based on continuous monitoring, adapting it based on various market conditions.
Exposure to the upside following price increases of the DeFi tokens.
Strategy cons
Highly correlated assets. Macro crypto performance will strongly influence the performance of the strategy.
DeFi Protocol Risk. Algoo Strategies builds strategies on top of fully audited protocols that have proven their sustainability, however, protocol vulnerabilities still exist. While Algoo Strategies monitors all positions 24/7, systematic DeFi risk is shared with investors.
Limited Availability. Investors always have the ability to exit their position in this strategy, however, the availability of this position/strategy is calculated based on the liquidity within the strategy. In order to increase liquidity (and open up availability for additional investments), Algoo Strategies must add more balances to the strategy, which we plan to do regularly. Please reach out to support if you’re looking to gain exposure into this strategy.
Investment tips on how to blend this strategy into your portfolio
Utilize this strategy in your portfolio if you’re bullish on DeFi adoption.
Balance this strategy with exposure to ETH, BTC and stablecoins, which will give you a diversified portfolio covering a large portion of the market.
Combine this strategy with the “Soft Long” strategy to build a portfolio with high ROI potential while also having a stablecoin position to balance it out.
Combine the strategy with the “Soft Short” strategy or ETH shorts to protect from crypto volatility.
Risks and ways to hedge against presented risks
Assets are highly correlated to the macro movement of crypto (High Risk). This strategy is a full “long” on crypto and DeFi. Algoo Strategies asserts that this is a great long-term bet, but it can be highly volatile. You can hedge this risk with the “Soft Short” strategy or net shorts on crypto.
Impermanent loss (Medium Risk). The CRV-ETH, CVX-ETH and Silo-FRAX pools are subject to impermanent loss risk, which means that if one of the tokens performs disproportionately compared to the other, an investor would’ve been better off (profitability-wise) by simply holding those tokens. The formula for impermanent loss is a square root between the price change of two assets, which means that for every 100% of price change between two assets, the LP will underperform by 10%. CRV and CVX are highly correlated with ETH, therefore, Algoo Strategies’ investment team does not expect a major impact of impermanent loss.
Systematic DeFi risks (Medium Risk). All pools hosted on Convex Finance have passed an audit ordered by Coinbase and have never been subject to a hack. Algoo Strategies considers Convex Finance’s security as one of the best in the market. Nevertheless, Algoo Strategies uses real-time alerts to track all of the main metrics of the position's health, such as protocol liquidity, liquidation prices, and lending utilization rates. If one of our alerts is triggered, it may signal potential hacks, protocol vulnerabilities (liquidity issues), or the bad health of the position. Algoo Strategies has the ability to exit any of the strategies into stablecoins at any time should any of those events occur. Algoo Strategies’ infrastructure and expertise gives our investment team the ability to proactively protect investors from these risks.
Fees
Performance fee: 20% of weekly profit (only if the strategy has generated profit); fees are deducted directly from the strategy shares each week. The user retains the same number of DFTF tokens, but their price is less by the success reward.
If the user exits the investment strategy before the settlement day, then we calculate the difference between the current price and the price of the last settlement period and take 20% of the profit. If there is no profit, then the user does not pay performance fee.
Strategy address: https://debank.com/profile/0xae5f7b8962d2a186eab07085c74bbe6142467f27
Maximum capacity: $20,000,000
Disclaimer: While Algoo Strategies assumes no responsibility for malicious events impacting protocols or inefficiency of the strategy itself, it is our goal to make investing in these strategies as safe, effective and easy to use as possible. However, investment responsibility ultimately falls to the individual, and it is advised that investors do their own research before engaging in these strategies.
“GLP” - Index Liquidity Provision on GMX
DeFi strategy that generates 20–30% APR (in ETH) by providing blue-chip liquidity for leveraged traders on GMX, a decentralized perpetual exchange. Users supply liquidity into an index called GLP and earn fees generated from traders’ liquidations, or swaps, as well as gain from trader losses.
Full description
GLP is an investment product very similar to our YAPs that will be launching. Ninety-eight percent (98%) of the GLP index is composed of BTC, ETH, and stablecoins (FRAX, USDC, DAI, USDT). Historically, stablecoins have accounted for around 40-45% of the index while BTC and ETH have rounded out the remaining 50-55% of the index (in roughly equal proportions). Therefore, by buying GLP shares for stables, users will effectively enter a soft long position on ETH (~0.25x) and BTC (~0.25x). On top of this, investors will be eligible for ETH-denominated yield derived from activities performed by traders on GMX (more on these in the next section).
This strategy is an excellent, reasonably low-risk way to receive exposure to ETH and BTC along with a significant and sustainable ETH yield (~30%). GLP will be a particularly high performer during choppy markets when traders are most likely to lose money. Moreover, during periods of high volatility, the GLP TVL could grow due to traders’ negative PnL which results in an unbound upside potential.
Estimated returns and sources of yield
GLP’s source of yield is 100% sustainable. Rewards come from two sources:
Fees paid by traders (20% of the yield comes from this source) for: swapping assets using GLP liquidity, opening and closing their leveraged positions on GMX, and liquidations on GMX.
Traders’ losses: When traders lose money by misjudging the market, their net losses are GLP’s net profits. GLP is effectively the counterparty for traders; this yield source accounts for around 85% of the GLP yield.
Target ROI: ~27%
Underlying tokens and protocols:
Tokens: GLP (index token), ETH (reward token)
Protocols: GMX
Strategy pros
High and fully sustainable yield: 100% of the 30+% annual yield received by GLP holders is denominated in ETH.
Exposure to ETH and BTC growth: GLP is a soft long for both these tokens when users enter GLP with USDC and soft-short when users enter the position with BTC or ETH. In other words, due to the index composition (50% USDC), when one enters the index for BTC or ETH, one will automatically obtain exposure (unwanted or not) to USDC (hence the name “soft short”). Similarly, due to the index composition (25% ETH, 25% BTC), when investors enter GLP via USDC (or any other stable), they receive a 25% exposure to ETH and a 25% exposure to BTC.
Reasonably low risk: historical trader performance on GMX indicates that traders incur losses, which results in gains for GLP holders. For example, over the past year, GLP’s net earnings due to traders’ net losses have amounted to $36M. Unlimited capacity: GLP pool on Arbitrum is around $279M in TVL.
Strategy cons
Exposure to other assets: GLP is not the same as a single-sided liquidity provision due to its index nature. When depositing their token of choice, investors will inevitably gain exposure to other tokens in the index. If one of the tokens in the index loses its value, all else held equal, GLP will lose value too.
Liquidity provisioning in GLP is not delta neutral: trader profits will incur net losses on the GLP index, resulting in the potential loss of funds for investors.
Tips on how to integrate GLP into your portfolio
Utilize the strategy during volatile markets to best capture ROI. Volatile markets tend to produce situations where traders lose their money by entering directional positions. Remember that traders’ losses result in GLP profits.
Combine with Algoo Strategies's soft short strategy (SSETH) to create a delta-neutral strategy for ETH.
Combine this strategy with Algoo Strategies fixed yield products to increase the risk and reward ratio of your portfolio.
Risks and ways to hedge against them
Long bull or bear market trends (low-risk): this will result in net losses for GLP (due to a higher probability of trader profits). The best way to hedge this risk is by entering directional positions (e.g., soft-long or soft-short on the Algoo Strategies platform). The key thing to remember is that this risk is very low, as traders, on average, tend to yield losses in any market condition.
Exposure to BTC and ETH (medium-risk): for investors swapping into GLP with stablecoins. This is only a risk for users looking to short these two assets or remain delta-neutral. To hedge this risk, we suggest users use our soft-short strategy (SSETH). This will hedge the risk for ETH. Unfortunately, for BTC, users will have to short it on an external platform to mitigate this risk.
Shorting BTC and ETH risk: for investors purchasing GLP with BTC or ETH (medium-risk). To hedge this risk, an investor could open a long position by buying spot BTC and/or ETH and staking them on Algoo Strategies’ platform.
Fees
Performance fee: 10% of weekly profit (only if the strategy has generated profit); fees are deducted directly from the strategy shares each week.
Strategy address: https://debank.com/profile/0x152cc9606f4dc55f632f04a0c71e846bc190abaf
Maximum capacity: $10,000,000
SYNTHETIX DEBT HEDGE INDEX
This strategy mirrors the composition of the Synthetix Debt Pool, enabling users to hedge their Active Debt exposure with low risk. This strategy tracks both L1 and L2 debt pools. Liquidation events are not hedged, but will be returned to stakers in the form of escrowed SNX.
Full description
The Debt Mirror Pool token is a tool that replicates the payoff of the Synthetix Debt Pool, or the Synthetix debt distribution here: https://stats.synthetix.io/ - enabling users to hedge their Active Debt exposure. 1 sUSD worth of dSNX pool tokens hedges 1 USD worth of active debt.
All Synthetix currency positions (sUSD, sEUR, sJPY, etc.) are combined and mirrored into a single position of USDC. Currently, the pool holds WETH for sETH, WBTC for sBTC and LINK for sLINK. Positions with less than 1% weight are not considered. dUSD is a stable coin yield pool. The dUSD token will appreciate in price via LP fees and harvesting the rewards (ATM BAL). The performance mining rewards are extra on top of that, which currently include DHT, MATIC, and 1inch.
At a fixed time interval, a bot checks the SNX debt distribution and calculates new target allocations. It does this by reading the total supply from different Synthetix assets, calculating the USD value and percentage of the total supply of all assets, and establishing new weights. ETH locked in the EtherWrapper contract are deducted from the sETH supply, which currently results in a net short position of sETH. Currently, the pool holds USDC and WBTC as deposits on Aave, LINK as a normal asset position, and WETH as a debt position on Aave.
The bot calculates the percentages of current long/short positions, taking into account the deposited/borrowed assets on Aave and assets outside of Aave (current allocation). The bot compares current and target allocation and rebalances if the difference exceeds a defined threshold (currently set to 2%).
Rebalancing of asset outside of Aave (e.g. LINK):
Decrease allocation:
Trade asset into USDC on 1Inch
Deposit USDC into Aave
Increase allocation:
Withdraw USDC from Aave
Trade USDC into asset on 1Inch
Rebalancing of deposit asset (e.g. WBTC):
Decrease allocation:
Withdraw asset from Aave
Trade asset into USDC on 1Inch
Deposit USDC into Aave
Increase allocation:
Withdraw USDC from Aave
Trade USDC into asset on 1Inch
Deposit asset into Aave
Rebalancing of borrowed (short) asset (e.g. WETH):
Decrease allocation:
Withdraw USDC from Aave
Trade USDC into asset on 1Inch
Repay borrowed asset on Aave
Increase allocation:
Borrow more of the asset on Aave
Trade asset into USDC
Deposit USDC into Aave
Estimated returns and source of yield
The target ROI for this strategy is 60%, but it an vary depending on factors such as market conditions, trading fees.
Underlying coins and protocols
Coins: USDy, USDC, WBTC, WETH, sUSD, sLink
Protocols: Optimism
Strategy pros
Hedging against debt risks: One of the main benefits of the Synthetix Debt Hedge Index pool is that it provides a hedging strategy against potential debt risks in the Synthetix protocol. This can help investors protect their investments and potentially avoid losses in the event of a default or other issues related to debt.
Access to protocol rewards: Holding the Synthetix Debt Hedge Index pool tokens provides exposure to potential protocol rewards, such as SNX token rewards or other fees generated by the Synthetix ecosystem. This allows participants to benefit from the growth and success of the Synthetix protocol.
Automation: The pool operates based on predefined algorithms and smart contracts, automating various aspects of the investment process. This automation ensures efficient execution of trades, rebalancing, and participation in reward distributions, reducing the need for manual intervention.
Strategy cons
Dependence on the Synthetix ecosystem: The performance and stability of the Synthetix protocol can impact the performance of the Synthetix Debt Hedge Index pool. Any issues or challenges faced by the Synthetix ecosystem, such as technical problems, regulatory hurdles, or changes in market conditions, could affect the overall performance of the pool.
DeFi Protocol Risk. Algoo startegies builds strategies on top of fully audited protocols that have proven their sustainability, however, protocol vulnerabilities still exist. While Midas monitors all positions 24/7, systematic DeFi risk is shared with investors.
Limited asset selection: The Synthetix Debt Hedge Index pool's exposure is limited to specific synthetic assets within the Synthetix ecosystem. This means that participants may not have access to the full range of assets available in the broader market, potentially limiting their investment opportunities.
Investment tips on how to blend this strategy into your portfolio
Utilize this strategy in your portfolio to capitalize on the upside potential of Synthetix assets and derivatives.
Assess your risk tolerance: Evaluate your risk tolerance and investment objectives to determine if the Synthetix Debt Hedge Index aligns with your financial goals. Consider factors such as your investment horizon, liquidity needs, and comfort level with potential fluctuations in value. Access your risk tolerance in the (link) below
Allocate a small to moderate portion of the overall portfolio to this strategy. A range of 5% to 15% of the portfolio allocation to the Synthetix Debt Hedge Index strategy could be considered. This allows investors to benefit from the potential hedging and risk mitigation offered by the strategy while still maintaining a diversified portfolio.
Balance this strategy with exposure to ETH, BTC and stablecoins, which will give you a diversified portfolio covering a large portion of the market.
Combine this strategy with the Stablecoin Yield Aggregator Strategy to can benefit from the stability of the index position while also earning additional yield on your stablecoin holdings.
Fees
Performance fee: 20% of weekly profit (only if the strategy has generated profit); fees are deducted directly from the strategy shares each week.
If the user exits the investment strategy before the settlement day, then we calculate the difference between the current price and the price of the last settlement period and take 20% of the profit. If there is no profit, then the user does not pay performance fee.
Swap Fee
From Stables to Strategy — 0% platform fee + ~0.2% market spread
From ETH to Strategy: 0.3% platform fee + ~0.2% market spread
From BTC to Strategy: 0.3% platform fee + ~0.2% market spread
From all others to Strategy — 0.2% platform fee + ~0.2-0.8% market spread
Strategy address: https://debank.com/profile/0x7a7c5a94495c9c9c60d88a85f7e43b657c3b6b5c
Maximum capacity: $15,000,000
xETH Stable Yield
The xETH Stable Yield Strategy is a DeFi strategy designed to generate a target ROI of 45% through a combination of stablecoin yield and ETH price appreciation. Utilizing a diversified approach across multiple protocols and networks, this strategy aims to deliver consistent returns while maintaining a balanced exposure to ETH.
Full Description
Similar to Yield-Aggregating Pools (YAPs), an investment in this strategy will be composed of "shares". The strategy splits investments across different protocols to optimize yield and manage risk.:
Compound (47%):
USDbC on Base: 23.5%
USDC on Arbitrum: 23.5%
Provides stable and secure interest on USDbC and USDC deposits, offering consistent returns.
Convex (25%):
USDC.e/USDT LP on Arbitrum: Leverages Convex to enhance yield from the USDC.e/USDT liquidity pool.
Hop Protocol (23%):
USDC LP on Arbitrum: Uses Hop Protocol to provide liquidity for USDC, reducing risks associated with cross-chain bridge protocols.
Half of the BAL pool is converted to ETH and then provided as supply tokens to Aura Finance. These supply tokens are used as collateral for creating a 2x leveraged position on a basket of ETH-BAL liquidity pools. On average, a 10% increase in the price of ETH results in a 7.9% growth of the strategy's price due to the conversion of BAL to ETH. This strategy captures 45% ROI from fees and rewards, making it an excellent way to diversify a portfolio during choppy, bearish markets while maintaining exposure to potential crypto market rallies.
Estimated Returns and Sources of Yield
Target ROI: 45%
Sources of Yield:
Fees from ETH-USDC Liquidity Pool (~13% ROI)
Trading Fees from Uniswap (~10% ROI)
Aura Leverage: Yields are doubled by leveraging Aura Finance's protocols.
Borrow APR for Leverage (0.8%): Subtracted from the overall yield.
Underlying Coins and Protocols
Coins and Tokens: USDbC, USDC, USDC.e, USDT, BAL, ETH
Protocols: Compound, Convex Finance, Hop Protocol, Aura Finance
Strategy Pros
Efficiency: Combines high yields with balanced ETH exposure for efficient returns during flat and bullish markets.
Liquidity: Allows investors to enter and exit the strategy at any time with low fees.
Transparency: Enables tracking of strategy performance via on-chain analytics.
Strategy Cons
Limited Availability: Strategy availability is based on existing liquidity. Additional balances are added regularly to increase liquidity.
DeFi Protocol Risk: Despite using fully audited protocols, vulnerabilities still exist. Systematic DeFi risks are shared with investors.
Market Downtrend: Declines in ETH prices will affect the strategy's value.
Investment Tips
Flat Markets: Utilize this strategy to capture attractive yields while maintaining ETH exposure.
Diversification: Combine with other strategies, such as Algoo Strategies’ “Soft Short”, to balance long and short positions.
Stablecoin Allocation: Enter with stablecoins during market dips for a medium-risk, high-yield vehicle, and rebalance as needed.
Risks and Mitigation
Liquidation Risk (Low): Monitored closely, with liquidation occurs only if ETH’s price decreases by 57% from the entry position.
Impermanent Loss (Medium): Reduced due to the presence of USDC collateral; hedging with long positions on ETH can balance exposure.
Systematic DeFi Risks (Medium): Real-time alerts and proactive monitoring help mitigate risks. The strategy can exit to stablecoins if necessary.
Fees
Performance Fee: 9% of weekly profit, deducted from strategy shares each week.
Early Exit Fee: Calculated as 15% of the profit based on the difference between the current price and the last settlement period price.
Performance fee=(Current price−Last price)×0.09
Strategy Address:https://debank.com/profile/0x89f67f3054bfd662971854190dbc18dcabb416f6
Maximum Capacity: $1,000,000
xETH Wrapped LP
The xETH Wrapped LP Strategy leverages the liquidity and yield potential of ETH staking derivatives on Ethereum. By facilitating trades between wstETH, sfrxETH, and rETH, this strategy aims to generate yield through swap fees and additional rewards from Aura’s governance tokens, targeting a robust ROI while maintaining exposure to the leading ETH staking solutions.
Full Description
This strategy invests in the liquidity pools of three primary ETH staking tokens: wstETH (wrapped staked ETH from Lido), sfrxETH (Frax’s staked wrapped ETH token), and rETH (staked ETH token from Rocket Pool). The strategy's core mechanics involve borrowing, liquidity provision, and staking across Balancer and Aura protocols.
Yield Generation: The yield in this pool is primarily derived from swap fees paid by traders during exchanges between the three ETH staking derivatives.
Aura Boost: Additional yield is generated due to Aura’s significant holdings of BAL (Balancer governance tokens), which enhances returns for liquidity providers.
Balancer Pool: Borrowed ETH is deposited into the Balancer wstETH/ETH pool.
Staking LP Tokens: LP (liquidity provider) tokens obtained from the Balancer pool are staked on Aura to earn incentive rewards.
The strategy also taps into the composable stable pool factory v5 under BIP-451 on Optimism, further diversifying and optimizing yield opportunities.
Estimated Returns and Sources of Yield
Target ROI: 45%
Sources of Yield:
Swap Fees: Generated from trades between wstETH, sfrxETH, and rETH.
Aura Incentives: Enhanced returns due to Aura’s BAL holdings.
Incentive Rewards: Harvested from staking LP tokens on Aura.
Underlying Coins and Protocols
Coins and Tokens: wstETH, sfrxETH, rETH, ETH, BAL
Protocols: Balancer, Aura Finance, Notional Finance, Lido, Frax, Rocket Pool
Strategy Pros
Efficiency: High yields combined with diversified exposure to leading ETH staking solutions.
Liquidity: Allows investors to enter and exit the strategy at any time with low fees.
Transparency: Enables tracking of strategy performance via on-chain analytics.
Strategy Cons
Limited Availability: Strategy availability is based on existing liquidity. Additional balances are added regularly to increase liquidity.
DeFi Protocol Risk: Despite using fully audited protocols, vulnerabilities still exist. Systematic DeFi risks are shared with investors.
Market Downtrend: Declines in ETH prices will affect the strategy's value.
Investment Tips
Diversified Yield: Utilize this strategy to capture diverse yield sources while maintaining significant ETH exposure.
Risk Mitigation: Combine with other strategies, such as fixed yield products, to balance and hedge against market volatility.
Market Timing: Enter with stablecoins during market dips for a medium-risk, high-yield vehicle, and rebalance as needed.
Risks and Mitigation
Liquidation Risk (Low): Monitored closely, with liquidation occurring only if ETH’s price decreases significantly from the entry position.
Impermanent Loss (Medium): Reduced due to the presence of multiple ETH staking tokens; hedging with long positions on ETH can balance exposure.
Systematic DeFi Risks (Medium): Real-time alerts and proactive monitoring help mitigate risks. The strategy can exit to stablecoins if necessary.
Fees
Performance Fee: 15% of weekly profit, deducted from strategy shares each week.
Early Exit Fee: Calculated as 15% of the profit based on the difference between the current price and the last settlement period price.
Strategy Address:https://debank.com/profile/0x6d5dda04760f0515dc131ff4df76a5188ffcdfcb
Maximum Capacity: $4,000,000
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