Strategy 2: Borrow to Farm – BTC/ETH
0xFC4d
June 28th, 2022

Low volatility assets on BENQI: BTC.b, wBTC.e, and wETH.e.

Strategy Steps (Taking WETH.e as an example):

1. Deposit 10 WETH.e on BENQI. Supply APY: 1.86%. The collateral factor of WETH.e is 75%.

2. Borrow $6,876 AVAX on BENQI (LTV: 56.25%). Borrow Interest: 4.48%

3. Deposit AVAX in Vector for yield farming. APY: 18.0%

4. Use CIAN’s automation primitives to protect your position and optimize your capital efficiency. (The suggested target collateral ratio is: 75% collateral factor)

Total APY of 10 WETH.e:

The final APY for this strategy is 9.46% ($11,460 profit based on the current price). The total APY is subject to change due to market conditions.

Tutorial

  • How to build a “Borrow to Farm” position:

    1. Select BENQI as the lending platform. Deposit WETH.e* and Borrow AVAX**. Enter the desired amount of WETH.e and borrowed AVAX. Make sure the LTV(D/C) is around 56.25%.

    *(For the sake of this example, we will use WETH.e, that said, users are free to select WBTC.e / BTC.b / WETH.e as collateral) **(We strongly suggest AVAX for the borrowed/farming asset owing to the current APY%)

    2. Select Vector’s AVAX pool. Execute the position.

  • Use “Auto Borrow” to increase your capital efficiency:

    1. Drag and drop your Loan (BENQI) and Farm position (Vector).

2. Set the “Target Collateral Ratio” to 56.25%, “Auto Borrow Limit” to 45%, and “Duration” to 12H, “Max Deposited” no maximum, and “Automation Level” to fully automatic. Then, submit the task.

  • Use “Auto Repay” to prevent liquidation.

1. Choose your two positions on BENQI and Vector.

2. Set “Target collateral ratio” to 56.25%, “Auto repay threshold” to 65%, and enable “fully automatic”. Then, submit the task.

  • Use “Flash Repay” to prevent liquidation under extreme market conditions.

1. Select your lending position on BENQI. Set the “triggering collateral ratio” to 70% and the “target collateral ratio” to 56.25%. Then, submit the task.

Enjoy 9.46% APY with your WETH.e on CIAN.

Risks / Fees:

1. Smart contract vulnerability

This strategy interacts with three protocols: BENQI, VECTOR, and CIAN. If one of these protocols was to get targeted by an exploit, it may result in a loss of funds.

2. Liquidation

CIAN’s “Auto Repay” and “Flash Repay” can protect users’ lending positions from liquidation under most market conditions. However, CIAN’s automation primitives couldn't protect users’ position in case of an extreme market crash (eg. LUNA).

3. Collateral reduction

If “Flash Repay” is executed at the triggering collateral ratio, though your position would avoid getting liquidated, part of your collateral would be transferred to your borrowed assets to reset the TVL.

4. Deposit fee and withdraw fee on Vector

Since Vector is mainly using PLATYPUS’ pools, deposit fees and withdraw fees may apply depending on the Coverage Ratio. Learn more: https://docs.platypus.finance/platypus-finance-docs/concepts/deposit-fee

Useful links

Discord: https://discord.com/invite/CIAN

Website: https://cian.app

Medium: https://cian-app.medium.com/

Docs: https://docs.cian.app/

Twitter: https://twitter.com/cian_protocol

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