In the last DeFi newsletter, we’d promised 🤝 all of you that we’ll be writing on how to get high returns on your Bitcoin, so here we are, Lessgo 🚀!!
Also, if you haven’t read our last newsletter, you can read it here 👇:
So, hoping that you have gone through the previous post , now let’s hop on and reap 🏃♂️ BTC !
A quick detour 🔁to what we are going to discuss in this newsletter📜, So, we are going to discuss two strategies, one which is fairly easy and comparatively less riskier🌞, while the other works on leverage, so a bit riskier🥵.
Let’s start with the riskier one first😬.
Strategy 1️⃣
This strategy is on the Fantom network so, you obviously need to have funds on Fantom network.
If you are unaware of how to transfer funds to your Metamask wallet, press here!
So, what you have to do is, lend your BTC & keeping it as collateral, you can borrow stablecoins and swap it with MAI or USDC. Now, with USDC or MAI that you own, provide liquidity🧪 to the USDC-MAI liquidity pool and then let it auto compound on Beefy Finance, GG 🔥 right?
Now, for lending, we will use AAVE on the FTM network, where we lend WBTC.
WBTC also called wrapped BTC is just a BTC on chains other than Bitcoin network.
All of us are aware that the returns we get for lending BTC are almost 0 😥, but that’s not what we are here for 🧏♂️ .
So, as soon as we supply BTC, we will use that as collateral🔁, and borrow stablecoins 💰 against it.
But don’t forget, there is something called LTV or Loan to Value Ratio 🎯.
For example, Satoshi Nakamoto (🙂) lends Rs.100 worth of BTC as collateral and borrows Rs.50 worth of stablecoins against it, i.e. his LTV is 50%.
But you gotta keep your eyes wide open 👀 and see if the price of the collateral drops 📉 say to Rs.60, now the LTV is 50/60 ie. 83%, but AAVE is not dumb🤐, so they have set the liquidation 🧪 at LTV 70% i.e.:
So, if Satoshi’s collateral (BTC in above case) drops below Rs.71, then he will be liquidated 🌊
Now what’s liquidation 🤷♂️?
The moment Satoshi’s collateral value drops below Rs.71, AAVE is gonna sell 🤳all his collateral, pay back the loan of Rs.50 with interest, a bit of a liquidation penalty, and give the rest of the money to Satoshi.
The catch 🙋♂️ here is that different protocols have different liquidation rates and you gotta watch out 👀 for the liquidation rates before borrowing 🤲, so that you can just come back and repay your loan before you get liquidated 💯.
Also, if you wanna know how you can get some great returns on your stablecoins in the ongoing bear market 🐻, you can check the video below.
Strategy 2️⃣
We have BTC & renBTC on arbitrum.
So arbitrum is a network that doesn’t have its own token, so people are expecting its airdrop very soon (the clock’s ticking ⌚), so one way you could possibly be eligible for it is by using its network, doing swaps or transaction.
As it doesn’t have its own token, the gas fees are paid in ETH, don’t worry, it’s much cheaper than the ETH network.
On beefy finance, we can see that we are getting around 5.5% on wBTC & renBTC.
What is renBTC?
So let’s just say that ren is a company that mints renBTC by backing it by BTC, technically these two are the same assets if they hold the peg very well, which it has been doing already for a long time.
All you have to do is, provide liquidity on curve finance, and stake those LP tokens on beefy finance which is basically an autocompounder, so you won’t be exposed to $CRV tokens but everything will be autocompounded to $BTC itself.
Now, you gotta decide on the options that you can bet on for your stablecoins👛.
We will be bringing in more such crypto and DeFi in the next newsletters, so don’t forget to hit that subscribe button.
Namaste 🙏.
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