Title: ynETHx and ynBNBx / Loan
1. Select Your MAX LRT Category:
- ynETH MAX (ynETHx): Ethereum-based strategies
- ynBNB MAX (ynBNBx): Innovative BNB strategies
Strategy Description:
This strategy utilizes the underlying ETH from ynETHx as colateral to borrow BNB and deposit it into ynBNBx.
Protocol Risks:
- Smart Contract Risks: All protocols are batlle tested and have been audited several times.
- Market Risks: Potential Depeg, BNB Liquidation, Bad Debt, Oracle manipulation, Illiquidity in the event of a bank run, volatility that may cause fluctuations in borrowing and lending rates
- Operational Risks: None that I’m aware.
Protocol’s Liquidity History:
- Deep liquidity on Venus BNB pool (Venus Protocol)
- Deep ETH liquidity deposited into ynETHx aswell ~14.7M (ynETHx | YieldNest)
*Venus been around for a long time. Not aware of any liquidity issues or disruptions, specially on the BNB market.
Redemption Flows:
-
Detailed Flow:
1 - Bridge ETH on Ethereum to ETH on BNB Chain through the official BNB Chain portal (BNB Chain Bridge | Cross-Chain Transfer)
2 - Supply ETH on Venus (0.44% APY).
3 - Borrow wBNB on Venus (3.28% APY).
4- Deposit wBNB on ynBNBx (26.06% APY). -
Potential yield returns: ~23.22%
-
Potential Issues: Bad Debt, Oracle manipulation, Illiquidity.
Best-case Scenario:
- Maintain position for six months, monitoring ETH and BNB price stability on Venus. Adjust leverage if market conditions are favorable.
- Keep repaying BNB on Venus.
- Canalize all the rewards generated (from the borrowed BNB) by ynBNBx into ynETHx.
Worst-Case Scenario: *
Regarding borrowing BNB on Venus with ETH Collateral
- If Ethereum’s and BNB’s price changes dramatically in different directions due to a market downturn, Black swan event, or major hack it is possible that the soft-liquidation mechanism of the Venus algorithm could sell off all collateral into BNB. (Extrimely unlikely has normally ETH and BNB folow the market in similar ways)
Conclusion - Why Add This Strategy:
- Increase liquidity and TVL for ynBNBx.
- Bring Binance Launchpad returns to Ethereum (~39% historically)
- Relatively low risk specially if loan parameters are conservative!
Submitted by: (s1mkner)
Date: (03/04/2024)