⟡ Stratety on stcUSD - up to 54% APY
Use @Contango_xyz to transform PT-stcUSD 14% implied APY into effective 54% APY thanks to secure leverage.
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➪ Here is how :
With a simple PT-stcUSD (29 Jan 2025) the gain on $ 1k equity is at $65 (quite low) for a 112 days hold in DeFi
By using LEVERAGE on contango [x6-x9] the gain on 112 days with only $ 1k equity is up to [ $111 -$166]
The Schema explain what Contango is doing close door. As you see the main risk is on MORPHO when Borrowing.
Follow the step below to enter the position
What I like on Contango is it's pretty easy to see the PT price while on Pendle it is not display
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➪ Risk management :
The main Risk here are devaluation of the "PT-stcUSD"
Basically, when LTV > 1 or HR(health ratio) < 1 liquidation occur and sell at market price
You need to know in which condition does my collateral lose value and at what price. in order to put a secure leverage
Each leverage correspond to a certain price drop allowance. The higher the leverage the tighter the drop can be before liquidation.
Here for leverage x6 you can bear a 10% price drop, which correspond to a price of $0.87 for 1 PT or an implied APY of 57%.
You can calculate your own liquidation price with the calcul displayed
The more the implied is up the cheaper the PT is and so it's price.
That's not it, PT price can decrease due to the underlying asset devaluation. In this case $cUSD.
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➪ Anticipation :
Base yield on cUSD is close to 8% therefore I see the implied APY going down close to 8% as time pass. Maybe it can run to 26% implied APY but I doubt 57% implied APY could be reached, which makes x6 leverage quite secure
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