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ETH Yield is a dynamic vault which allocates TVL to long ETH strategies. There’s two main structures:
The first structure this strategy can take is via LPing into an asset-neutral LP pair directly.
For example, at ETH Yield strategy launch, the vault liquidity was was fully committed to the incentivized wstETH / WETH LP pair on Velodrome.
This strategy performance will be highly correlated to the price of ETH, in addition to yielding LP rewards from Velodrome Finance, which it compounds and reinvests.
The second structure is when vault liquidity is deposited as ETH to Aave, and assets borrowed against this ETH are committed in a delta-neutral fashion. For example, the BTC Yield strategy is currently allocated as below, with
- WBTC being the deposited collateral,
- WMATIC being borrowed against this WBTC, and
- The WMATIC LP’ed into an asset-neutral incentivized WMATIC/MATIC-X pair on Balancer.
This strategy is delta-neutral on WMATIC, so will perform correlated to the BTC price in addition to the yields generated from the WMATIC/MATIC-X incentives and fees.