INSANE >100% APY Stablecoin Yield

Farming on Steroids Strategy 101

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Markets are down only, withdrawal symptoms are kicking after months of bullrun mania and your degen dopamine systems are trembling for a small rush…

I got your back, son.

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Get INSANE >100% APR on STABLECOIN Yield

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If you’re completely new to Avalanche, you need to set up your metamask by adding another chain.

Then you can either:

• transfer AVAX from a centralized exchange

or

• bridge your funds from the ethereum mainnet over the avalanche chain.

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This will be helpful for you:

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So how do you get this sweet >100% stablecoin yield?

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Enter Yeti Finance:

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Yeti Finance is a relatively new Collateralized Lending Protocol on Avalanche. It brings the best of AAVE, Beefy, Liquidity and Abracadabra

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So what’s revolutionary about Yeti Finance?

• Cross margin borrowing. You can put up your whole portfolio as collateral. Your yield bearing assets, your stable coins and your volatile assets all in one basket that’s called a trove. Instead of individual debt positions for each of your assets, you can now borrow against all your assets at once.

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• Highest leverage in DeFi. Up to 11x leverage on base assets (LP tokens, staked assets) and 21x on interest-bearing stables. For reference Abracadabra max leverage was 5x.

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• 0% interest rate, you only pay a one time deposit fee upon depositing assets into the trove.

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So how can you earn yield on Yeti finance?

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1. Borrow (Yusd against the value of your portfolio)
2. Stake (Stake YETI to get veYETI which can boost LP rewards, stability or reduce fees)
3. Pool (19% in $YETI rewards for staking YUSD or Curve LP tokens)

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For our yield farming on steroids strategy we’re using option 1.

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High level overview of this strategy:

1. Lend out USDC on Benqi. You end up with qiUSDCn.
2. Put qiUSDCn on Yeti Finance and borrow YUSD against it.
3. Swap YUSD on Curve.fi for USDC.

Go back to BenQi and repeat step 1.

This would be considered 1 loop so far. You want to loop it several times.

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STEP 1 - Lend out USDC on Benqi. You end up with qiUSDCn.

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You want to start with Benqi, because they actually pay you to supply USDC.

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The total APY that you receive for supplying USDC here is the supply APY + Distribution APY

Which at the time of writing (29/04/2022) are:

1.31% + 1.56% = 2.87% total APY

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Don’t get confused with the two types of USDC: USDC or USDC.e.

For this strategy you want to use USDC as it has a higher lending yield than USDC.e.

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STEP 2 - Put qiUSDCn on Yeti Finance and borrow YUSD

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• Open a collateralized debt position called a trove. The minimum amount needed to create a trove is $2000.

• Borrow YUSD by depositing assets, in this case qiUSDCn.

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Take note of Yeti Finance fees:
- 0.5% YUSD borrow fee

- 0.293% deposit fee (on qiUSDCn)

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It’s good to understand the inherent risks around borrowing:

The biggest one being liquidation. If you’re borrowing or even worse, looping with volatile assets, the chance of liquidation is very real.

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Yeti Finance has a mechanism to ensure that the entire stablecoin supply remains fully backed by collateral. They close or liquidate troves that fall under the minimum collateral ratio of 110%.

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Yeti has two modes: Normal mode & Recovery mode.

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During Normal Mode, you can get liquidated if your trove collateralization is below 110%.

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Recovery Mode is initiated if Yeti Finance falls below 150% of total collateral ratio. During these times your troves (if they’re backed by anything but stablecoins) can be liquidated if they’re less than 150%

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If your stablecoin trove is at an Individual Collateral Ratio (ICR) of > 115%, you'll be safe from liquidation unless the stablecoin collateral depegs, in both normal and recovery mode.

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Since we are working with stablecoins there’s a risk of depeg of both USDC and YUSD.

Whilst the risk of depeg of USDC is negligible in my opinion. The risk of YUSD is harder to quantify as Yeti is a newer Protocol and has not been battle tested.

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So far they have done well to maintain their peg:

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That being said they did spend a lot of time and money on security as a protocol: https://techdocs.yeti.finance/about-yeti-finance/audits-and-risks

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STEP 3 - SWAP YUSD for USDC

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You take your newly received YUSD from Yeti finance and swap it on Curve.fi (or TraderJoe, but Curve has better liquidity and slippage) for USDC.

You then take this USDC and return to Benqi to repeat Step 1.

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How many loops and what is the final APY?

So now that we have all the information we need, let’s go over the math:

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Total APY on Benqi: 2.87%

Performance fee of Yeti : 20%

Leverage/loops: 21x

Deposit fee: 0.293%

Borrow fee: 0.5%

LTV of Yeti: 95% (creating a 105% overcollateralized trove)

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Total of 2.87% APY on Benqi, minus Yeti’s 20% performance fee gives an APY of 2.296% --> (0.8 * 2.87%)

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Now if we looped it 21x our APY is 48.22% → (21 * 2.296%)

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Total deposit fee:  6.15% --> (0.293% * 21 loops)

Total Borrow fees:  10% --> (0.5% deposit fee * 20 loops)

Total Fees: 16.15%

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So we are left with a total yield of 32.07% —> (48.22% - 16.15%)

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Gee, this is very complex and where is this sweet >100% Yield you speak off?

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Coming in the next 2 weeks:

• One-click leverage. This means you no longer have to do the looping manually. And with one click of a button you can do these 11x or 21x loops.

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• Degenbox with aUST: A strategy that uses this same one-click leverage mechanism to loop the 18% APY of UST that then provides liquidation free >100% stablecoin yield

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