Thanks to our service, which leverages DeFi to its fullest potential, we also offer advanced tools to help you grow your capital.
- Yield Farming with Leverage: This strategy involves borrowing additional assets to increase your exposure in yield farming pools. By using leverage, you can amplify your potential returns, though it also increases the risks.How It Works: You provide collateral in a lending protocol and borrow assets against it. These borrowed assets are then used in yield farming pools to earn rewards. The key is to balance the risks of liquidation with the potential higher returns.
Example: You deposit $10,000 worth of ETH as collateral on a platform like Aave and borrow $5,000 worth of USDT. You then use this USDT in a high-yield farming pool on another platform. The increased exposure can lead to higher returns, but you need to carefully monitor the collateralization ratio to avoid liquidation.
Risks:
- Liquidation Risk: Using leverage increases the risk of liquidation if the value of your collateral drops or if your farming returns do not cover the borrowed amount.
- Volatility Risk: Market fluctuations can impact your leveraged positions and potentially lead to substantial losses.
- Interest Rate Risk: The cost of borrowing can vary, affecting your overall profitability.
- Platform Risk: Risks associated with the lending and farming platforms, including potential smart contract bugs or platform insolvency.
- Flash Loan Arbitrage: Flash loans allow you to borrow large amounts of capital without collateral as long as the loan is repaid within the same transaction. This opens up opportunities for arbitrage, where you exploit price differences across various platforms.How It Works: You identify price discrepancies between different decentralized exchanges or lending platforms. Using a flash loan, you borrow funds, execute a series of transactions to take advantage of the price differences, and repay the loan—all within a single transaction block.
Example: You notice that ETH is priced at $2,000 on one exchange and $2,020 on another. You take out a flash loan to buy ETH on the cheaper exchange and sell it on the more expensive one. After repaying the loan, you keep the profit generated by the price difference.
Risks:
- Execution Risk: Flash loans require precise and timely execution. Failures in any part of the transaction can lead to the entire transaction being reverted.
- Smart Contract Risk: Vulnerabilities in smart contracts can lead to loss of funds or exploitation by malicious actors.
- Market Risk: Price discrepancies may close quickly, making it challenging to profit from arbitrage opportunities.
- Fees and Slippage: Transaction fees and slippage can erode potential profits from arbitrage opportunities.
- Liquidity Pool Token Staking (Meta-Farming): This involves staking your liquidity pool (LP) tokens on additional platforms to earn more rewards. By layering your staking, you can maximize returns from multiple sources.How It Works: After providing liquidity to a decentralized exchange and receiving LP tokens, you can stake these tokens on another platform that offers rewards for LP staking. This allows you to earn not only trading fees from the liquidity pool but also additional rewards from staking.
Example: You provide liquidity to a DAI/USDC pool on Uniswap and receive LP tokens. You then stake these LP tokens on a platform like SushiSwap that offers extra rewards for LP staking. This strategy gives you dual income streams from both platforms.
Risks:
- Impermanent Loss: Providing liquidity can result in impermanent loss if the value of the assets in the pool changes significantly compared to when they were deposited.
- Protocol Risk: Risks related to the protocols where LP tokens are staked, including potential bugs or security issues.
- Liquidity Risk: Difficulty in withdrawing LP tokens or converting them back into underlying assets if the pool becomes illiquid.
- Yield Volatility: The rewards from staking LP tokens can be variable and dependent on trading volume and protocol incentives.
- Delta-Neutral Strategies: Delta-neutral strategies involve creating a portfolio where the total delta, or price sensitivity to the underlying asset, is zero. This can be achieved through hedging, allowing you to earn yield while minimizing exposure to price volatility.How It Works: You could, for example, take a long position in a high-yielding asset and a short position of the same asset using derivatives. The gains from the yield are meant to offset any potential losses from the asset’s price movements, creating a neutral position.
Example: You stake 1,000 USDC in a high-yield protocol offering 10% APY. Simultaneously, you open a short position on USDC using a futures contract. If the price of USDC fluctuates, your short position offsets any gains or losses, while you continue to earn the yield.
Risks:
- Basis Risk: Differences between the underlying asset and the derivatives used for hedging can impact the effectiveness of the strategy.
- Execution Risk: Inaccurate or delayed execution of trades can affect the neutrality of the position and lead to unintended exposure.
- Funding Rate Risk: Costs associated with holding derivatives positions, such as funding rates in perpetual contracts, can erode profits.
- Complexity Risk: Managing delta-neutral positions can be complex and may require advanced knowledge and monitoring.
- Cross-Chain Yield Optimization: This strategy involves moving assets across different blockchain networks to take advantage of the highest available yields in real-time.How It Works: You monitor yields across multiple chains and move your assets to the network offering the best returns. Using bridges and cross-chain protocols, you can dynamically allocate your capital to optimize earnings.
Example: You start by farming on Ethereum, then move your assets to Binance Smart Chain (BSC) when you spot better yields there. Later, you switch to a Layer 2 solution like Arbitrum to benefit from low fees and competitive APYs.
Risks:
- Bridge Risks: Risks associated with using cross-chain bridges, including potential vulnerabilities or failures in the bridge technology.
- Fee Risks: Transaction fees for moving assets across chains can be significant and impact overall profitability.
- Network Risks: Different networks may have varying levels of security, liquidity, and reliability, affecting your investments.
- Opportunity Cost: The time and effort required to move assets between chains might result in missed opportunities or decreased returns.
- Farming Funding: Farming funding involves seeking assets with high funding rates in futures markets and profiting from them.How it works:
When the funding rate is positive, traders who are long pay a fee to traders who are short. Your goal is to find such an asset, buy it on the spot market, and open a short position in the futures market, earning from the funding rate.
Example : Assume you have $10,000 and have found an asset with a 75% annual funding rate. You purchase $7,000 worth of the asset on the spot market and open a $3,000 short position in futures with 2x leverage (which is equivalent to a $6,000 short position). Your risks include the possibility of liquidation if the asset’s price rises quickly by 50%.
- With a 75% annual funding rate on $6,000 held in futures, you will earn $4,500.
- Thus, with $10,000, you achieve approximately 45% annual returns on your entire capital.
Risks:
- Liquidation Risk: There is a risk of position liquidation if the asset’s price increases sharply, particularly if the price rises by 50% or more. This could result in substantial losses.
- Funding Rate Change: The funding rate may shift from positive to negative, which would lead to losses instead of gains if the rate is no longer favorable.
- Exchange Risk: There is a risk of issues with the exchange, such as hacking, technical failures, or insolvency, which could affect your funds and the ability to execute trades effectively.
- Market Maker VaultsMarket Maker Vaults, such as the HLP Vault on HyperLiquid and the Market Making Vault on Drift, leverage market making strategies to offer conservative returns. These vaults invest solely in stablecoins and earn income through trading fees collected from users engaging in the market. They are designed to provide steady yields with relatively low volatility.
How it works: Market Maker Vaults, such as the HLP Vault on HyperLiquid and the Market Making Vault on Drift, offer a more conservative approach to earning by engaging in market making. These vaults are entirely composed of stablecoins and generate returns through the fees charged to traders.
Example : On the HyperLiquid Vault, the average annual return is 25%. The maximum drawdown over time has been less than 6%.
- You deposit $9,000 into the vault and receive returns of 25-50% depending on the market conditions.
- These vaults are protected from significant risks due to professional market makers who hedge their positions.
Risks:
- Small Drawdowns: Unlike delta-neutral strategies, there may be minor drawdowns if market makers temporarily experience losses.
- Temporary Losses: There is a possibility of temporary losses if traders experience a winning streak on their bets.
Conclusion
These are not the only strategies we employ; as market conditions change, our strategies evolve and are refined to identify better earning opportunities. Thanks to process automation, our service continually discovers, adds, and enhances strategies that emerge in the market. Our users can select and combine various earning strategies based on their goals and preferences. With a diverse range of financial tools on our platform, each user can find the optimal solution for effectively managing their assets and maximizing their income.