Market Yield Strategies
Algoo Strategies offers cutting-edge market yield strategies that leverage advanced quantitative analysis and algorithms to help investors achieve high yields and superior returns in the crypto market
Ethereum Delta/Asset Neutral Yield(ETHy)
This automated strategy earns yield on ETH by providing liquidity directly or borrowing other assets and generating a profit on them. The strategy is a hybrid strategy containing two execution methods. In one method, the yield on ETH is generated by providing liquidity on exchanges with pair pegged to ETH, in the second method, the yield on ETH is generated by borrowing any crypto asset and depositing it into liquidity that produce more profit than the cost to borrow.
Full description
ETH Yield is a dynamic strategy which allocates TVL to long ETH strategies. There’s two main structures:
Asset neutral LPing
The first structure this strategy can take is via Liquidity providing into an asset-neutral LP pair directly. The asset neutral strategy involves providing equal amounts of two different ERC-20 tokens in a liquidity pool. For example, at ETH Yield strategy launch, the strategy's liquidity was was fully committed to the incentivized stETH / WETH LP pair on the Velodrome protocol. This strategy's performance will be highly correlated to the price of ETH, in addition to yielding LP rewards from Velodrome Finance, which it compounds and reinvests.
Delta Neutral LPing
The second structure is when the strategies liquidity is deposited as ETH to Aave, and assets borrowed against this ETH are committed in a delta-neutral fashion. For example, using ETH as the deposited collateral and WETH as the asset being borrowed against ETH. The strategy will utilize the deposited ETH to borrow WETH, which will be used as liquidity to provide liquidity into an asset-neutral incentivized stETH / WETH pair on Velodrome protocol.
Assuming the current market price of ETH is $4,000 and the current market price of WETH is $4,050, the strategy will deposit 1 ETH into Aave and borrow 101 WETH. The borrowed WETH will then be used to provide liquidity into the stETH / WETH pair on Velodrome protocol, which currently has a liquidity pool of 10,000 stETH and 100 WETH.
The strategy will deposit the 101 WETH into the liquidity pool, which will increase the liquidity of the pool to 201 WETH. The strategy will then mint 9,900 stETH using the deposited liquidity of 101 WETH. The total liquidity of the pool will remain the same, but the strategy will earn the transaction fees generated by trading in the pool.
If the market price of WETH drops below $4,050, the strategy can sell the 9,900 stETH for WETH and use the WETH to repay the borrowed WETH from Aave, generating a profit. If the market price of WETH increases, the strategy can use the profits to repay the borrowed WETH from Aave and take a loss.
In this way, the strategy can remain delta neutral, with the value of the assets deposited in Aave always equaling the value of the assets being borrowed, while generating profits by providing liquidity in the incentivized wstETH / WETH pair on Velodrome protocol.
Estimated returns and source of yield
Rewards in this strategy comes from 3 sources
The target ROI for this strategy is 53%, but it may vary based on liquidity in the pools and incentivisation of the protocols.
Underlying coins and protocols
Coins: ETH, WETH, stETH, DyDx, LDO
Protocols: AAVE, Velodrome, LIDO, Curve, Convex, LSDx Finance
Strategy pros
Consistent returns: The algorithm seeks to generate returns by taking advantage of small price differences between assets, so it may be able to generate consistent returns over time.
Hedging risks: The delta-neutral approach aims to reduce risks by hedging against price movements, which could help protect against sudden market volatility.
Low volatility: By using an asset-neutral strategy, the algorithm may be less vulnerable to sudden market movements that could cause significant losses.
Diversification: The algorithm can be used to provide liquidity and generate returns across multiple markets, which could help to diversify a portfolio and reduce overall risk.
Strategy cons
Interest Rate Risk: Changes in interest rates can affect the profitability of the strategy. If interest rates on the borrowing platform rise, the cost of borrowing increases, reducing the profitability of the strategy. On the other hand, if interest rates on the lending platform fall, the returns from lending will also decrease.
Impermanent Loss Risk: The strategy involves providing liquidity to a liquidity pool, which exposes the LP to impermanent loss risk. If the price of the assets in the pool changes significantly, the LP may lose value compared to simply holding the assets.
Investment tips on how to blend this strategy into your portfolio
Utilize this strategy in your portfolio if you have a strong belief in the potential of Ethereum and want to participate in its ecosystem while mitigating price risk. The asset/delta neutral yield strategy allows investors to maintain exposure to Ethereum while minimizing the impact of its price fluctuations.
Utilize this strategy to hedge against potential downside risks or protect against adverse price movements in Ethereum. By maintaining a delta-neutral position, the strategy aims to minimize exposure to price fluctuations and potential losses.
Combine this strategy with the “Risk Parity Rebalancing” strategy to build a portfolio with enhanced diversification across different asset classes. Risk parity aims to allocate capital based on the risk contribution of each asset, rather than focusing solely on market capitalization or equal weighting..
Combine the strategy with the "Synthetix depth hedge index" method to obtain access to a greater range of assets and marketplaces, increasing the trading opportunities and possible returns in your portfolio. derivatives, commodities, and other cryptocurrencies are all traded within the synthetix depth hedge index strategy
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: Swap fee: 0.2% (into and out of this strategy).
Strategy address: https://debank.com/profile/0x81d8e42177369613ae358283414201ed5e671ee4
Maximum capacity: $12,000,000
Bitcoin Delta/Asset Neutral Yield (BTCy)
Similar to the ETHy strategy, the BTC Yield strategy aims to farm the highest-supported, safe Bitcoin pools on Polygon and borrowing other assets to further increase yield. The algorithm will switch farming pools when higher Bitcoin yield opportunities arise over time, for long term performance.
Full description
Like the ETHy strategy, this strategy is executed in a delta neutral and asset neutral manner.
First, the algorithm identifies the most popular Bitcoin pools on DEXs such as Polygon and provides liquidity to these pools by depositing Bitcoin. In return for providing liquidity, the algorithm receives a share of the transaction fees generated by the pool.
Next, the algorithm borrows other assets, such as stablecoins or wrapped tokens, at a low interest rate and then provides liquidity with these assets in other pools. The goal is to capture the spread between the borrowing rate and the lending rate on the other protocol, which generates yield for the algorithm.
For example, the BTC Yield strategy is currently allocated as below, with
WBTC being the deposited collateral,
WMATIC being borrowed against this WBTC, and
The WMATIC LP’ed into an asset-neutral incentivized WMATIC/MATIC-X pair on Adamant.
This strategy is delta-neutral on WMATIC, so it will perform correlated to the BTC price in addition to the yields generated from the WMATIC/MATIC-X incentives and fees.
Estimated returns and sources of yield
BTCy source of yield is %100 sustainable. Rewards come from five sources:
Interest earned from lending WBTC on AAVE: By depositing WBTC as collateral on AAVE, the strategy can borrow WMATIC, which can then be used to provide liquidity on the Balancer pool. The WBTC can earn interest while it is being used as collateral, adding to the overall return of the strategy.
Liquidity provision incentives: By providing liquidity on the asset-neutral incentivized WMATIC/MATIC-X pool on Adamant, the strategy can earn a portion of the trading fees generated by the pool. Incentives may also be offered in the form of governance tokens, which can appreciate in value over time.
Impermanent loss mitigation: By utilizing an asset-neutral strategy, the Bitcoin yield algorithm can mitigate the effects of impermanent loss on the liquidity provision side. This can help to reduce losses and preserve capital.
Price appreciation of VMATIC: As the strategy is providing liquidity in the form of VMATIC, any price appreciation of VMATIC can lead to additional gains for the strategy.
Potential arbitrage opportunities: The strategy may be able to take advantage of arbitrage opportunities between different markets or exchanges, potentially generating additional profits.
Target ROI: ~65%
Underlying tokens and protocols:
Tokens: WBTC, VMATIC, MATIC, WETH
Protocols: Adamant, Polygon
Strategy pros
Capital Efficiency: The strategy aims to optimize capital allocation by leveraging Bitcoin assets to generate additional yields. This allows for better utilization of the underlying assets while seeking to maximize overall returns.
Exposure to BTC growth: The strategy provides exposure to BTC growth without the need for direct ownership of BTC. This can be advantageous for investors who want to benefit from BTC's potential appreciation but may not want to deal with the complexities of holding and securing BTC themselves. By maintaining a neutral position with respect to BTC, the strategy allows investors to capture the potential upside of BTC's growth. This means that as the price of BTC increases, the value of the BTC holdings within the strategy also grows.
Reasonably low risk: By maintaining an asset/delta neutral position, the strategy helps mitigate the risks associated with price volatility in Bitcoin. This allows for more stable returns, regardless of the market conditions.
Strategy cons
Market Concentration Risk: The bitcoin asset/delta neutral yield farming strategy relies on the liquidity and trading volume of the protocol's WMATIC/MATIC-X pool. If the pool has limited liquidity or a concentrated user base, it can expose the strategy to market concentration risks.
Tips on how to integrate this strategy into your portfolio
Investors with substantial capital to allocate and a desire to diversify their portfolio may find the Bitcoin Delta/Asset Neutral Yield strategy appealing. This strategy allows them to deploy their funds in a way that can generate consistent yield while reducing exposure to Bitcoin price movements.
Evaluate your risk tolerance and ensure the strategy aligns with your investment objectives. Delta-neutral strategies can still carry risks, such as counterparty risk and market volatility, so it's essential to understand and be comfortable with the potential risks involved. To find out if this strategy is the best fit for you, take this brief test to determine how risk-tolerant you are.
Combine with Algoo Strategies's "Threshold-based rebalancing" strategy to manage the exposure to Bitcoin and ensure that your portfolio remains within your desired range. This approach allows you to capture the potential upside of Bitcoin while mitigating the risk of an overly concentrated position.
Combine this strategy with Algoo Strategies fixed yield products to increase the risk and reward ratio of your portfolio.
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: Swap fee: 0.2% (into and out of this strategy).
Strategy address: https://debank.com/profile/0x175d7e98d5ab60bb19c97d92c499c7e7fd412b9d
Maximum capacity: $20,000,000
STABLECOIN YIELD AGGREGATOR (dUSD)
This USD yield aggregator strategy aims to farm Polygon's most lucrative and safe-supported stablecoin pools. It will switch farming pools when higher stablecoin yield opportunities arise for long-term performance.
Full description
The Algoo Strategies Stablecoin Yield strategy hunts for the best safe USD yields to hedge inflation. This strategy automatically farms incentives from polygon-based stablecoin yield farms.
Every time the pool stakes more tokens, it automatically harvests the rewards and rebalances the newly acquired stablecoins to restore equal weighting. After ensuring equal weighting, the pool then provides those assets as liquidity and restakes.
Upon depositing into dUSD, the algorithm ensures the deposited assets are properly rebalanced so they can be supplied as liquidity and staked.
dUSD is designed in such a way that investors have an auto-compounding stablecoin instrument that optimizes for the best yield without having to continuously manage the position themselves.
Polygon based pools utilized by the dUSD strategy
Balancer USDC-DAI-miMATIC-USDT
Estimated returns and sources of yield
Rewards come from two sources:
Underlying coins and protocols
Coins and tokens: USDC
Protocols: Polygon
Strategy pros
Diversification: The strategy can leverage multiple liquidity pools, which helps diversify the exposure to different stablecoin pairs and protocols. This diversification can help mitigate risks associated with individual pools or platforms and reduce the impact of potential market fluctuations.
Efficient capital utilization: By automating the process of farming liquidity from stablecoin yield farms, the strategy allows for efficient deployment of capital. It enables the strategy to constantly monitor and optimize the allocation of funds across various liquidity pools to maximize returns.
Utilizing Stablecoin Pairs: By focusing on stablecoin pairs, the strategy aims to minimize the potential for significant price volatility, reducing the likelihood of impermanent loss compared to trading pairs with more volatile assets.
Liquidity Analysis: The strategy analyzes the liquidity depth and order book of the target assets across different platforms or exchanges. It identifies liquidity pools or trading pairs with sufficient liquidity to execute trades without causing significant price slippage.
Strategy cons
Dependency on Liquidity Provider Platforms: The strategy relies on the functionality and reliability of the liquidity provider platforms it interacts with. Issues such as platform downtime, smart contract failures, or changes in platform economics can impact the strategy's performance. Traders should consider the reputation and track record of the platforms utilized by the strategy.
Limited scalability: if the strategy sees overwhelming demand, it is likely that the yields in liquidity pools get diluted.
Investment tips on how to blend this strategy into your portfolio
Utilize this strategy if you are bullish on the Polygon network and its ecosystem
Combine with Algoo strategies’s Bitcoin Asset/Delta Neutral Strategy, to balance the risk exposure and potential returns between stablecoin yield farming and Bitcoin-related strategies.
Combine this strategy with Algoo Strategies fixed yield products to increase the risk and reward ratio of your portfolio.
Monitor your investments and the performance of the protocols traded in this strategy on a regular basis. Keep up to current on protocol revisions, changes in yield rates, and associated challenges. During periods of poor performance, adjust your portfolio with other Algoo's Hedging strategies.
Performance fee: 10% of weekly profit (only if the strategy has generated profit); fees are deducted directly from the strategy shares each week.
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 — 0.3% platform fee + ~0.2-0.8% market spread
Strategy address: https://debank.com/profile/0x32f067b4ec8476197a09b74f04574a8000a5007f
Maximum capacity: $10,000,000
1.5x Long on ETH (LETH)
DeFi strategy with 1.5x leverage on ETH that also generates up to 6% APR by providing liquidity in correlated liquidity pools. Users benefit from leveraged ETH exposure, as well as some yield on top of that.
Expected APR: 5-6% (estimated yield farming rewards, excluding ETH performance)
Overall risk: Medium
Full Description
"1.5x Long on ETH" is a directional instrument with a linear payoff replicating ETH price movements with 1.5x leverage. The strategy obtains 1.5x leverage by swapping deposited USDC to ETH, supplying ETH on Aave, borrowing stablecoins at 3.34 health factor and swapping stablecoins back to ETH. The strategy earns yield by supplying borrowed ETH on Ribbon protocol. Half of borrowed ETH is swapped to sETH and deposited in a Syntetix sETH-ETH pool on Velodrome.
Depending on the market situation, the pool composition may change slightly. Algoo Strategies team will be notifying the community of any updates to the allocations within the strategy. Earned rewards are reinvested for higher efficiency. The strategy is rebalanced regularly to preserve 1.5x leverage. Note that rebalancing will affect the strategy’s performance relative to ETH in the long-run.
Estimated returns and sources of yield
The goal of "1.5x Long on ETH" is to generate yield on top of a long ETH position. Rewards come from two sources:
Underlying coins and protocols
Coins and tokens: ETH (and its derivatives like wETH and sETH), USDC
Protocols: Aave, Ribbon, Synthetix, Velodrome
Strategy pros
Capital efficiency: users can achieve desired ETH exposure with less of their assets tied up in a position than if they held spot ETH.
Amplified ETH volatility: by using this strategy, investors will be able to benefit from 1.5x leveraged ETH price appreciation.
Predictable payoff: unlike in a previous version of Soft Long, ETH is deposited in a highly-correlated liquidity pool, therefore minimizing impermanent loss and making the payoff curve very close to linear.
Strategy cons
Underperforming in bearish markets: Since this strategy uses 1.5x leverage, investors will incur more significant losses than if they held spot ETH.
Limited scalability: if the strategy sees overwhelming demand, it is likely that the yields in liquidity pools get diluted.
Risk of liquidation: while Algoo Strategies team will be monitoring the position to maintain a safe health factor, it is still possible for a position to get liquidated either during extreme market conditions or due to a price manipulation (which is highly unlikely) or an exploit.
Investment tips on how to blend this strategy into your portfolio
Utilize the strategy during bullish markets. If you want to make a directional bet on ETH price, consider using this strategy to earn yield on your deposit.
Combine with Algoo Strategies’s 0.5x Short on ETH strategy to hedge your exposure or 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 presented risks
A hack or an exploit of one of the underlying protocols would negatively affect the strategy performance. Algoo Strategies will be making sure to do due diligence on each protocol up to our highest standards. Necessary alerts and metrics are set up to monitor the protocols 24/7. Nonetheless, investors are strongly advised to do their own research of the underlying protocols.
Leveraged exposure to ETH. Since the strategy tracks ETH performance at 1.5x leverage, investors should be aware that SLETH will perform poorly during a continuous bear market.
Fees
Performance fee: 15% 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 15% of the profit. If there is no profit, then the user does not pay performance fee.
Swap fee: Swap fee: 0.5% (into and out of this strategy).
Strategy address: https://debank.com/profile/0x0ef25ad333a465910a0c469627523903a28e320a
Maximum capacity: $5,000,000
0.5x Short on ETH (SETH)
DeFi strategy with 0.5x leverage on ETH short that also generates up to 3% farming APR by providing liquidity on Convex, Users benefit from an on-chain short instrument that also provides some yield, similar to a perpetual futures contract with a consistently favorable funding rate.
Expected APR: 2-3% (yield farming rewards, excluding ETH performance)
Overall risk: Medium
Full description
0.5x Short on ETH is a directional instrument with a linear payoff replicating ETH price movements with 0.5x leverage. The strategy obtains 0.5x leverage by depositing users’ USDC on Silo, then borrowing ETH at 1.7 Health Factor and selling it for USDC. Strategy liquidity is deposited into a correlated FRAX-USDC liquidity pool on Convex to earn yield.
Depending on the market situation, pool composition may change slightly in favor of a more optimal pool in terms of a risk-reward ratio. The investment team at Algoo Strategies is in charge of monitoring relevant pools and will notify the community of any updates to the allocations within the strategy. Earned rewards are reinvested for higher efficiency. The strategy is rebalanced regularly to prevent liquidations and preserve 0.5x leverage.
Estimated returns and source of yield
The goal of "0.5x Short on ETH" is to generate yield on top of a short ETH position. Rewards come from two sources:
Underlying coins and protocols
Coins and tokens: ETH, WETH, USDC, FRAX
Protocols: Silo, Convex, Synthetix,
Please note that the list of protocols and tokens is subject to change. Algoo Strategies team will be posting updates for this strategy allocations in the community Telegram.
Strategy pros
Muted downside ETH exposure: by using this strategy, investors will be able to benefit from ETH price depreciation at a lower rate than if they were selling their ETH.
Predictable payoff: unlike in previous version of Soft Short, which had a confusing payoff due to impermanent loss, the updated version only supplies liquidity to highly correlated pools, minimizing impermanent loss and making the payoff curve close to linear.
No negative funding payments: by depositing funds into DeFi protocols, Algoo Strategies ensures that the strategy earns competitive yield, while having muted exposure to ETH price action. Unlike most short instruments on CEXs and DEXs, Soft Short does not charge any funding fees. Instead, users benefit from a straightforward short strategy with additional yield on top.
No risk of liquidation: The Algoo Strategies team monitors the health factor of AAVE borrowing position and will rebalance the strategy to maintain a safe health factor.
Highly scalable: the protocols and pools used in strategy are highly liquid, so that the strategy is able to scale to meet potential demand
Strategy cons
Poor performance in a bullish market: Since the strategy gives exposure to ETH downside, sustained upward price movements will cause the strategy to incur losses.
Investment tips on how to blend this strategy into your portfolio
Utilize the strategy during bearish or choppy markets. If you are unsure about the market’s direction but still want to retain some short ETH exposure, consider using Soft Short to earn yield on your deposit.
Combine with Algoo Strategies’s "1.5x Long on ETH" strategy 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 presented risks
A hack or an exploit of one of the underlying protocols would negatively affect the strategy performance. Algoo Strategies will be making sure to do due diligence on each protocol up to our highest standards. Necessary alerts and metrics are set up to monitor the protocols 24/7. Nonetheless, investors are strongly advised to do their own research of underlying protocols.
De-peg of one of the underlying assets. As with the risk of an exploit, Algoo Strategies is doing due diligence on all of the underlying assets. However, investors can open short positions or purchase de-peg coverage in a third-party protocol to hedge against potential downside.
Exposure to ETH. The strategy will perform poorly during a continuous bull market.
Fees
Performance fee: 15% 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: 0.5% (into and out of this strategy).
Strategy address: https://debank.com/profile/0x51cd838f1b536f3116546e1e97a9ebf188acb7d9
Maximum capacity: $5,000,000
Risk-Managed Yield(RMy)
This strategy aims to earn a high yield with low volatility on the underlying assets. The yields are targeted to be higher than a typical stablecoin yield, with a small exposure to market movements. The current strategy earns yield in an optimism (OP) pool and hedges with ETH because the two assets are correlated in price movements.
Full description
The strategy starts by depositing USDC into AAVE, a lending platform, and borrowing ETH against the USDC collateral. This allows the strategy to leverage the USDC and obtain ETH for further operations.
The borrowed ETH is then converted to OP tokens, which represent ownership in the Optimism (OP) pool. This pool provides yield opportunities through various decentralized finance (DeFi) activities
To hedge against potential risks, the strategy also lends a portion of the ETH acquired from step 1 into the OP-USDC pool on Velodrome. This helps to earn additional yield on the lent ETH while maintaining exposure to the OP ecosystem.
By participating in the OP pool and lending ETH on Velodrome, the strategy can generate yield from both activities. The yield earned from the OP pool helps to offset any potential losses or volatility in the borrowed ETH, while the yield from lending ETH on Velodrome provides an additional income stream. The rewards are automatically compounded
The strategy rebalances to maintain the borrow health factor and hedge
Estimated returns and source of yield
The target ROI for this strategy is 37%
Source of yield: the interest earned by lending the borrowed ETH on AAVE, the yield generated by participating in the OP ecosystem through OP tokens, and the interest earned by lending ETH on the Velodrome OP-USDC pool.
Underlying coins and protocols
Coins: ETH, USDC, OP
Protocols: Optimism
Strategy pros
Risk Management: The strategy incorporates risk management techniques to mitigate potential losses. By hedging with ETH, which is correlated with the OP token, the strategy aims to reduce the impact of adverse price movements. This helps in preserving capital and minimizing downside risk.
Yield Generation: The strategy leverages borrowing and lending mechanisms to generate yield. By borrowing ETH and lending it on Velodrome's OP-USDC pool, the strategy can earn interest from borrowers and benefit from yield-generating activities within the OP ecosystem. This allows for the potential for consistent income generation.
Diversification: By participating in different platforms and pools, such as AAVE and Velodrome, the strategy diversifies its exposure and reduces reliance on a single source of yield. This diversification helps in spreading risks and enhancing overall portfolio stability.
Scalability: The strategy can be scaled up by increasing the amount of USDC collateral available for borrowing and deploying into the various yield-generating activities. This scalability allows for potential growth and increased returns over time
to the upside following price increases of the DeFi tokens.
Strategy cons
Liquidity Risk: The strategy relies on the availability of liquidity in the OP-USDC pool on Velodrome and other platforms it interacts with. If there is insufficient liquidity or if the strategy's trading volumes are relatively large, it may face challenges in executing trades at desired prices, resulting in slippage or suboptimal returns.
Platform Risk: The strategy is dependent on the reliability and security of the platforms it utilizes, such as AAVE and Velodrome. Any issues with these platforms, including downtime, hacks, or regulatory changes, can impact the strategy's performance and yield generation capabilities.
Fees
Performance fee: 15% 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 15% 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/0x12a4fd54aa321eb16b45310ccb177bd87c6ae447
Maximum capacity: $7,500,000
Pendle ETH Index
The Pendle ETH Index strategy leverages Pendle Index's unique yield trading protocol to capitalize on future yield opportunities within the DeFi space. By utilizing tokenized Ethereum restaking strategies through Eigenlayer, this strategy aims to maximize yield earnings and accrue points for future airdrops. The strategy employs liquidity provision, yield trading, and point farming to generate above-market ETH yields.
Full Description
The Pendle Finance ETH Index strategy follows a structured approach, executing trades through eight basic steps. It begins by staking LP tokens via Penpie to enhance vePENDLE APY, thereby earning PENDLE, ARB incentives, and Eigenlayer points. The algorithm continuously monitors the price of Pendle yield tokens (YT) and principal tokens (PT) on Pendle’s AMM. When the price of YT or PT deviates from a predefined threshold, signaling a potential market imbalance, the algorithm triggers a trade.
To manage yield tokens effectively, the strategy sells a portion of YT and buys more PT if YT prices rise, and conversely, sells PT to buy YT if PT prices increase. This dynamic management aims to accumulate more of the undervalued token, potentially generating profits from price discrepancies and yield trading fees. Risk management is a key component, with the Algoo Strategies team implementing measures such as setting maximum exposure limits, stop-loss orders, and adjusting position sizes to mitigate risk.
The strategy includes periodic rebalancing of yield tokens to maintain the desired asset ratio and may reinvest profits in compound earnings. Finally, the algorithm continually monitors and optimizes the strategy by analyzing market conditions, yield token dynamics, and trade execution efficiency to maximize profitability.
Estimated Returns and Source of Yield
Target ROI: 50%
Source of Yield:
Token Price Appreciation: If the price of YT or PT increases while holding the tokens, the value of the tokens will also increase, resulting in capital gains.
Market Volatility: The algorithm benefits from market volatility as it executes trades based on price movements, potentially generating gains in any market condition.
Yield Trading Fees: Traders earn a portion of the trading fees generated by Pendle’s AMM. These fees are distributed proportionally based on their share of the total liquidity provided.
Underlying Coins and Protocols
Coins: ETH
Protocols: Pendle Finance, Eigenlayer, Penpie
Strategy Pros
Potential Risk Mitigation: The strategy includes adjusting position sizes based on previous trading outcomes, aiming to recover losses and generate profits.
Scalability: The algorithm is scalable and can accommodate different trading volumes, allowing for potential growth and increased trading opportunities.
Arbitrage Profit Potential: The strategy aims to capitalize on price discrepancies and market volatility, offering potential profits in both upward and downward price movements.
Strategy Cons
Increased Risk of Large Drawdowns: If the market moves against the algorithm continuously, it can lead to significant drawdowns and potential capital depletion.
Slippage and Transaction Costs: There may be slippage and transaction costs associated with trades, reducing overall profitability.
Investment Tips for Portfolio Integration
To effectively integrate this strategy into your portfolio, consider a few key investment tips. Start by ensuring diversification, balancing this strategy with exposure to ETH, BTC, and stablecoins to create a well-rounded portfolio. Allocate 5-15% of your portfolio to this strategy to maintain diversification and mitigate potential risks. Additionally, combine this strategy with other yield-generating approaches to maximize your portfolio's return on investment potential. Regularly review the strategy’s performance and make necessary adjustments to your portfolio in response to changing market conditions and the strategy’s effectiveness.
Fees
Performance Fee: 20% of weekly profit (only if the strategy has generated profit); fees are deducted directly from the strategy returns each week.
Early Exit Fee: If the user exits the investment strategy before the settlement day, the difference between the current price and the price of the last settlement period is calculated, and 20% of the profit is taken. If there is no profit, no performance fee is charged.
Strategy address: https://debank.com/profile/0x7256588f19fe9218e4c4330a2c6d29280f7e7d61
Maximum capacity: $900,000
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