YieldNest Multi-Chain Yield Optimizer

MAX LRT Strategies
1

Title: Multi-Chain Yield Optimizer

1. Select Your MAX LRT Category:

Selected Category: ynETH MAX (ynETHx) & ynBNB MAX (ynBNBx)

Strategy Description:

This strategy focuses on leveraging the power of ynETHx, in combination with the Euler protocol to borrow WETH. It bridges the borrowed WETH to Polygon, where it is deposited into Compound.blue to earn yield. Afterward, the strategy borrows USDC from Compound, bridges it to Binance Smart Chain (BSC), and deposits it into Venus to further optimize returns. The borrowed USDC is then used to borrow BNB from Venus, which is finally deposited into the ynBNBx pool for high-yield returns. The strategy is optimized through multi-chain leveraging and cross-platform integration to maximize returns across Ethereum, Polygon, and BSC.

Protocol Risks:

  • Smart Contract Risks:
    All protocols involved (Euler, Compound, Venus, ynBNBx) have smart contracts that may be subject to vulnerabilities or exploits, though they are audited. Users should be aware of the risks associated with interacting with smart contracts, including the possibility of bugs, exploits, or vulnerabilities leading to loss of funds.

  • Market Risks:
    Market volatility, particularly in the prices of WETH, USDC, and BNB, could impact the strategy’s returns. Major price fluctuations could also affect collateral value, potentially causing liquidation risks on borrowed assets if not carefully monitored.

  • Operational Risks:
    The operational risk is related to potential protocol governance changes, liquidity fluctuations, and network congestion across multiple chains (Ethereum, Polygon, and BSC). If any of the protocols change their terms or have downtime, it could affect the execution and returns of this strategy.

Protocol’s Liquidity History:

  • Current liquidity depth and health status:

    • Euler: $300 WETH in liquidity. While this is sufficient for most retail users, large-scale withdrawals or borrows may face liquidity issues, particularly during market stress.
    • Compound: $6.64M in liquidity, which is highly liquid and should provide smooth transactions for borrowing and depositing.
    • Venus: $700k in BNB liquidity, which is healthy for the protocol but may experience slippage during extreme market conditions.

  • Historical performance and stability during stress scenarios:
    “During periods of high volatility, liquidity in Compound has shown resilience due to its large liquidity pool, while Venus and Euler might experience temporary liquidity disruptions under extreme conditions.”

  • Note any past liquidity disruptions or challenges:
    “While there have been no major liquidity disruptions in the recent past, market-wide liquidity shortages or protocol updates could affect the strategy’s performance.”

Redemption Flows:

  • Detailed Flow:

    1. Deposit ynETHx into Euler.
    2. Borrow WETH from Euler using a maximum 85% LTV ratio.
    3. Bridge WETH to Polygon.
    4. Deposit WETH into Compound.blue on Polygon.
    5. Borrow USDC from Compound.blue using a maximum 50% LTV ratio.
    6. Bridge USDC to Binance Smart Chain (BSC).
    7. Deposit USDC into Venus on BSC.
    8. Borrow BNB from Venus using a maximum 50% LTV ratio.
    9. Deposit BNB into ynBNBx for high yield.

  • Potential Issues:
    There could be delays or slippage in asset bridging between chains (Ethereum to Polygon, Polygon to BSC), especially during high traffic periods. There is also the risk of insufficient liquidity in the lending platforms, which could delay borrowing or depositing processes.

Best-case Scenario:
Optimal redemption happens when the user can smoothly deposit, borrow, bridge, and earn yields without any network congestion, liquidity issues, or sudden market drops. The user receives their targeted yield across multiple protocols with minimal slippage.

Worst-Case Scenario:
In a worst-case scenario, extreme market volatility could lead to liquidation of borrowed assets if the collateral value drops significantly. Additionally, issues like high network congestion or protocol downtime could result in delays in borrowing, depositing, or redeeming funds. This could also lead to a loss of funds or missed opportunities due to price slippage.

Conclusion - Why Add This Strategy:

This strategy offers a diversified and highly optimized approach by utilizing multiple DeFi protocols across different blockchains. By leveraging ynETHx for Ethereum staking yield and borrowing, Compound.blue for Polygon yield generation, Venus for borrowing on BSC, and ynBNBx for high-yield BNB staking, it effectively maximizes returns while spreading risks across multiple platforms. This strategy aligns with YieldNest’s mission to provide non-custodial, risk-adjusted, high-yield DeFi solutions across various ecosystems.

This strategy provides enhanced flexibility, with a high yield from multiple sources, creating a robust, multi-chain DeFi strategy. It will appeal to users looking for diversified yield generation while maintaining exposure to Ethereum, Polygon, and BSC ecosystems.

APY Breakdown:

Total APY for the Strategy:

The total APY for the entire strategy is 19.60% based on the returns from Euler, Compound, Venus, and ynBNBx, minus the interest paid on borrowed WETH and BNB.

Assumptions and Final Outcome:

  • ETH Price Assumption: $1,800 per ETH
  • BNB Price Assumption: $600 per BNB
  • Initial Investment: 50 ynETHx, valued at $90,000

Step-by-Step Flow:

  1. Deposit ynETHx into Euler (6.91% Supply APY)

    • You deposit 50 ynETHx, valued at $90,000 (assuming ETH is priced at $1,800).
    • Annual Return from Euler Supply:
      • 6.91% of $90,000 = $6,219 per year

  2. Borrow WETH from Euler (3% Borrowing APY)

    • You borrow $76,500 worth of WETH (85% Loan-to-Value of $90,000).
    • Interest Paid for Borrowing WETH:
      • 3% of $76,500 = $2,295 per year

  3. Deposit WETH into Compound.blue on Polygon (7.25% APY)

    • You deposit $76,500 worth of WETH into Compound.blue at 7.25% APY.
    • Annual Return from Compound.blue:
      • 7.25% of $76,500 = $5,546.25 per year

  4. Borrow USDC from Compound.blue (-5.02% Borrowing APY)

    • You borrow $38,250 worth of USDC (50% Loan-to-Value of $76,500).
    • Since the borrowing APY is negative (you earn interest), Annual Return from Borrowing USDC:
      • 5.02% of $38,250 = $1,920.15 per year

  5. Deposit USDC into Venus on BSC (3.67% APY)

    • You deposit $38,250 worth of USDC into Venus on BSC at 3.67% APY.
    • Annual Return from Venus:
      • 3.67% of $38,250 = $1,403.78 per year

  6. Borrow BNB from Venus (3.24% Borrowing APY)

    • You borrow $19,125 worth of BNB (50% Loan-to-Value of $38,250).
    • Interest Paid for Borrowing BNB:
      • 3.24% of $19,125 = $619.65 per year

  7. Deposit BNB into ynBNBx (28.56% APY)

    • You deposit $19,125 worth of BNB into ynBNBx at 28.56% APY.
    • Annual Return from ynBNBx:
      • 28.56% of $19,125 = $5,462.10 per year

Net Return After Interest Payments:

  • Total Returns:

    • Euler (ynETHx Supply Return): $6,219
    • Compound.blue (WETH Deposit Return): $5,546.25
    • USDC Borrowing Return (Compound.blue): $1,920.15
    • Venus (USDC Deposit Return): $1,403.78
    • ynBNBx (BNB Deposit Return): $5,462.10

    Total Returns = $20,551.28 annually

  • Total Interest Paid:

    • Interest on Borrowed WETH (Euler): $2,295
    • Interest on Borrowed BNB (Venus): $619.65

    Total Interest Paid = $2,914.65 annually

  • Net Return:

    • Net Return = $20,551.28 - $2,914.65 = $17,636.63 annually

Final APY:

The final APY for the strategy is 19.60%, assuming the prices of ETH at $1,800 and BNB at $600.

Submitted by: Hin

Date: 31 March, 2025