I will post these calculations regularly, but currently borrowing rates on @aave are very low, and I haven't mentioned ETH yields in a long time. So, here's the calculation of the best long-term ETH yield over the past few years: In short: weETH has an annualized yield (APR) of 16% and can be accumulated indefinitely. The strategy is quite simple: ➢ Maximize the leverage of @ether_fi's weETH on Aave Why weETH? Because it offers a 3% annualized yield (APY) instead of the base 2.5% staking yield. weETH has a maximum loan-to-value ratio (maxLTV) of 93% in E-Mode. A 93% loan-to-value ratio means we can achieve over 14x leverage on weETH. The calculation is also straightforward. ➢ Maximum Leverage = 1 / (1 - Maximum Loan-to-Value Ratio) 14.28 = 1 / (1 - 0.93) Then, to calculate the net annualized return (APR) of this strategy, we can use another simple formula: ➢ Net Annualized Return (APR) = Annualized Collateral Yield * Leverage - (Leverage - 1) * Borrowing Costs Therefore, in this example, 3% * 14.28 - 2 * 13.25 = 16.34% Very simple. And since this strategy uses a basic oracle, the only liquidation risk is that borrowing costs will be unfavorable to you. Another risk is large-scale staking withdrawals, which can become difficult to exit during periods of high interest rates. This strategy is generally best executed long-term, lasting at least one month. Combined with your usual ETH shorting (on your preferred PERP exchange), it can earn credits and generate over 10% delta-neutral returns.
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