Crypto carry trading

[JohnnyDoe]

Some strategies:

1. Perpetual Futures

**BTC**
- Funding Rate: 0.01% per 8-hour period
- Daily Yield: 0.03%
- Monthly Projected Return: 0.9%

**ETH**
- Matching BTC rates at 0.01% per 8-hour period
- Similar yield structure to BTC markets

**Implementation Strategy**
For a $50,000 position:
- Short the perpetual contract
- Establish matching spot position for hedging
- Expected Monthly Return: ~$450 (pre-fee)

2. Stablecoin Yield Farming

**Current Market Rates**
- Aave Lending Platform
- USDC Deposit APY: 10.43%
- USDC Borrow APY: 14.96%
- Compound Finance
- USDC Supply APY: 6.73%
- USDC Borrow APY: 14.71%

**Optimal Strategy**
Using a $10,000 base position:
- Borrow DAI at 14.96% APR from Aave
- Deploy into Curve Finance pools targeting 20% APY
- Net Annual Yield: 5.04%
- Projected Annual Return: $504

3. Staking and Leverage

### Lido Finance + Aave Strategy
**Current Parameters**
- Lido Staking APY: 4.5%
- Aave ETH Borrow Rate: 2.0%

**Strategy Implementation**
Using $50,000 ETH position:
1. Stake ETH on Lido (4.5% APY)
2. Use stETH as collateral on Aave
3. Borrow ETH at 2% APR
4. Repeat staking process

**Financial Projections**
- Base Return Spread: 2.5%
- Annual Projected Return: $1,250
- Additional compounding benefits possible

4. High-Yield Stablecoin Deployment

**Market Conditions**
- BitCompare Stablecoin APY: Up to 20%
- Aave USDC Borrow Cost: 14.96%

**Deployment Strategy**
For $20,000 position:
1. Secure USDC loan from Aave
2. Deploy to high-yield platforms
3. Net APY: 5.04%
4. Projected Annual Return: $1,008

## Risk Assessment Matrix

### High Priority Risks
1. Market Volatility
- Collateral value fluctuations
- Potential liquidation events
- Required buffer maintenance

2. Platform Risk
- Smart contract vulnerabilities
- Protocol stability concerns
- Liquidity constraints

3. Rate Volatility
- Funding rate inversions
- APY sustainability
- Borrowing cost increases

## Strategic Recommendations

### Current Optimal Approaches
1. Perpetual Futures Arbitrage
- Most consistent current opportunity
- Manageable risk profile
- Regular yield generation

2. Staking Leverage Strategy
- Lower risk profile
- Sustainable yield structure
- Strong platform fundamentals

3. Selective Stablecoin Deployment
- Attractive when proper platforms identified
- Requires careful rate monitoring
- Consider shorter lock-up periods

### Approaches to Avoid
1. Direct Interest Rate Arbitrage
- Currently negative spreads
- Limited profitable opportunities
- Higher gas cost impact

## Operational Guidelines

### Position Management
- Maintain 30-40% collateral buffer
- Regular rate monitoring schedule
- Automated alert systems for key metrics

### Risk Mitigation
- Diversify across platforms
- Implement stop-loss mechanisms
- Regular position rebalancing

### Cost Management
- Calculate complete fee structure
- Include gas cost projections
- Monitor withdrawal fees

## Market Monitoring Requirements
- Daily funding rate checks
- Weekly APY comparison
- Platform health metrics
- Network gas price trends

Remember: all rates and opportunities require constant monitoring. Transaction costs, slippage, and platform risks should be factored into all calculations.

 

[Mercury]

Remember: all rates and opportunities require constant monitoring. Transaction costs, slippage, and platform risks should be factored into all calculations.

You perfectly sum it up. I've been through various DeFi strategies for yield, rates are unsustainable. Adding daily monitoring, frequent arbitrages and network fees DeFi, speaking about yield, can't compare CeFi on anything more than (very) short term.