ETH Yield Master
ETH Yield Master strategy description.
Overview
The fija ETH Yield Master utilizes Ethereum liquid staking derivatives (LSDs), such as stETH, OETH, and frxETH, to provide liquidity on the decentralized exchange Curve and further utilizes the yield optimizer Convex to boost profitability. The used LSDs allow ETH holders to engage in Ethereum's block validation process and capture staking rewards. Additionally, the strategy incorporates automated rebalancing and safety mechanisms to ensure optimized yields and maximum security of the investment.
Blockchain: Ethereum Mainnet
Deposit Currency: ETH
Tokens used: ETH, stETH, oETH, frxETH
Protocols used: Curve, Convex
fija Safety Score: 7.6/10
Strategy Description
The fija ETH Yield Master is a strategy based on cryptocurrencies that replicate the value of Ethereum and at the same time enable participation in profits of staked ETH. This is done through liquid staking derivatives (LSDs) of ETH. This allows any holder to participate in Ethereum’s block validation process and capturing staking rewards.
Used Tokens:
The strategy uses three different LSDs which are always 100% collateralized by ETH:
stETH: Lido Staked Ether is the LSD offered by Lido, which is the largest platform for liquid staking of Ethereum.
OETH: OETH is offered by the Origin protocol, a decentralized Ethereum staking protocol which is one of the biggest staking providers.
frxETH: frxETH is offered by the trusted stablecoin issuer Frax and represents one of largest liquid staking offerings.
Liquidity providing on Curve:
The strategy provides liquidity in the form of the mentioned ETH LSDs and regular ETH on the decentralized exchange Curve. On Curve, crypto owners can exchange their coins for other currencies. To facilitate the exchange, Curve holds liquidity on both sides of a currency pair. This liquidity is provided by users as a liquidity position. This is also the case with the „fija Ethereum Strategy“: Liquidity positions are formed with the contributed Ethereum LSDs and regular ETH, thus enabling trading on Curve. As proof of the deposit, the strategy contract receives so-called "liquidity pool tokens" (LP tokens). For providing liquidity, the strategy contract receives a share of the trading fees earned on the platform. In addition, the Curve platform issues its own tokens (CRV tokens) as an incentive. The strategy builds three liquidity positions. One with the pair stETH – ETH, one with OETH-ETH and the third with frxETH-ETH.
LP staking on Convex:
To further increase profitability, the LP tokens received are deposited with the DeFi application Convex. For staking on Convex, the strategy contract receives the cryptocurrency CVX. The CVX and CRV cryptocurrencies received by the strategy contract are exchanged for the input currency ETH and reinvested in the initial liquidity positions. The trading fees received are also reinvested.
Risk Management & Optimization:
The strategy has a rebalancing mechanism that adjusts the allocation between the liquidity positions every 90 days to optimize the return. The strategy also utilizes a safety mechanism that triggers an exit of the strategy once activated. The mechanism triggers once the exposure in each of the pools rises above 15% of the respective total pool TVL.
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