Summary:
This is a proposal to build an ETH strategy, either as a stand-alone vault, or as a V2 strategy in another ETH vault. It proposes the use of Alpha Homora’s (AH) leveraged and lending contracts.
Abstract:
This vaults an idea to grow ETH while simultaneously benefiting on the market trading of YFI on uniswap. The protocol of choice for this would be Alpha Homora (https://homora.alphafinance.io/)
Motivation:
I have been watching this protocol for quite some time and they have been chugging alone nicely. Their community is responsive and they are continually adding new products to their suite. They support the promotion of $YFI, and I would like to support this product.
Specification:
The yearn vault will accept ETH deposits. The ETH is the vault will be divided up in a 20/60/10/10 proportions as to be described below.
The first 20 percent will be put into AH as lent ETH to obtain ibETH from there. Currently the ROI on lent ETH is 8.8% but I have seen is around 15% and as low 4%
The 60 percent will be used to open a fully leveraged position in ETH/YFI.
This position will need to be monitored and I am not sure if this is even possible in the coding, but I assume it is. This position will work hand-in-hand with our yYFI vault and capitalize on trading fees that are produced.
The 1st 10percent will be used in the event that our leveraged position moves into the danger of liquidations, perhaps below 5% of the kill buffer.
The exact risk level acceptable will need to be considered carefully and mathematically, which is beyond my abilities.
The final 10% should be left in the vault for withdraws.
In the event that the 10% held to cover liquidations is fully utilized, the ibETH, mentioned above, can be redeemed to further refill the position, and avoid liquidations.
Here is a simple flow
There is also currently ALPHA rewards paid to leveraged positions for a month, but this is not sustainable. Just a bonus
- Start to work on the balance to find the ideal numbers.
- Forget this and the risks of ImpLoss