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.

 

[JohnnyDoe]

I should also mention that carry trading works and has worked also on Fx, until 2008 happened… it’s not a risk free strategy.

 

[Propeller]

You really need to be a pro trader to fully understand what you’ve described here, it sounds very promising, and I can see there’s good money to be made using your investment strategy. How does one set this up? Are there examples of which wallets, exchanges, or similar platforms to use, or perhaps even recommendations for the best options?

 

[TheCryptoAnt]

Some strategies:

*French kiss

 

[JohnnyDoe]

How does one set this up?

You need to check the rates on the various platforms, you can do that manually or scrap data automatically. Or use aggregators like DeFi Llama, Zapper, Aave Watch, Yield Monitor.

Are there examples of which wallets, exchanges, or similar platforms to use, or perhaps even recommendations for the best options?

Ideally you should be ready to trade on every platform to maximize your chances of profiting from the best rates. The ones I use most are:
Exchnges: Binance, Bybit, OKX, Deribit, Dydx, KuCoin
Lending/borrowing: Binance, Nexo, Crypto.com, Aave, Compound, MakerDAO, Venus
Yield farming: Curve, Yearn, Convex, Balancer, Aura
Staking: Lido, Rocket, Aave, Frax

 

[cryptofriendly]

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)

Very nice analysis of most of the instruments to increase yield.

I found another platform (an exchange to be exact) that offers perpetual futures arbitrage without having to do it all manually, offering btween 9.9% (today) and 35% (2 weeks ago) on BTC futures-spot arbitrage, and even more on tokens like MEVIS (I have no idea what that even is, but I am earning 39% on it currently, without any risk beside of platform risk). The yields are changing every 8 hours, so the percentages aren't stable and vary a lot (I have just started playing with it, and experienced yields from 8.8%-79% APR in the last two weeks) They got an integrated insurance fund for any losses, and offer 0.01% even during times of negative yields. Platform risk of course, but I am using their exchange for 4 years now.

Another one, Bybit, offers also a lot of instruments to play with, but I haven't had time to go deep into it so far.

My current main strategy is borrowing USDT with BTC as collateral, and using that to fund selling daily put options on BTC to increase my yields. Depending on the market conditions and how far the options are from the strike, I am able to make 40-120% APY on them (I sold one today with 420% APY, as BTC is going wild, but we are talking average over a few months), with the risk being allocated BTC with the price of the option strike. In that case, I can either sell calls and get rid of the BTC while earning yield until it happens - or - if the yield of the call options is too low, I can use the BTC as collateral for borrowing more USDT to have capital to sell put options on BTC at a lower strike e.g. higher yield. My rule is making 4x the loan interest, which I changed to 2x now, as prefer holding a bit more BTC instead, catching the 4% daily moves that come with a bullmarket.

The yields are even higher if one does it with ETH, or other tokens, but I am more comfortable doing it with BTC,
as I don't mind getting more of it allocated.

Risk is liquidation if one gets silly with LTV (56% is my max), and platform risk of course.

 

[cryptofriendly]

Oh, there is one more:

Binance started fixed term loans a few weeks back, where one can offer loans to others with a fixed amount/interest/duration. They change a lot, but today there are people offer loans of 13% for USDT for 30-180 days, and people asking to borrow for 9.1% for USDT for 30 days. The offers change depending on the market (it was like 27% last week), but once someone accepts your offer, the loan and interest is fixed for the duration. All pretty safe with collateral, pretty much a P2P loan. Platform risk is manageable I think (Binance).