ynETHx and ynBNBx / Loan

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)