Exodia Combo on Fantom
In this guide, we will use the concept of bonds to get assets at a lower price than market price, and use high reward protocols to increase gains.
One of the most important things to keep in mind when you're investing in crypto is to make sure your initial is protected. If you keep this fundamental in mind, you may only put your gains at risk. However, there's another option if you want to invest in a token that represents some uncertainty: buying it with a discount, and make sure the rewards are high enough to cover your initial investment as fast as possible.
For a few months now, this is made possible with the introduction of bonds, and very high reward rates proposed by some projects. So today, we explore two projects on Fantom that are using the bonding concept in order to achieve 2 very different goals.
Exodia is a small project on Fantom that has gigantic potential. It's an Ohm-fork based on the EXOD token that is a reserve currency backed by different assets. The initial backing assets added to the Exodia treasury were DAI and FTM, but the team and DAO in charge of the protocol decided to develop ties with the Olympus community and to allocate 33% of its excess reserves to purchase assets denominated in OHM. As such, a small portion of the treasury is denominated in gOHM tokens.
Treasury breakdown of Exodia as of January 2022
In order to strengthen the ties, Exodia rececntly voted to increase the amount of OHM-related tokens in its treasury, and will soon accept a new token as part of their bonding program. The new token is an LP (Liquidity Providing) token that one can create on BeethovenX. One of the best things about BeethovenX tokens is that they can be created even if you only own a single asset from the selection in the pool, which makes it easily accessible. The LP token is compsed of
- 20% wFTM
- 20% EXOD
- 20% wsEXOD
- 20% gOHM
- 20% MAI
The Monolith LP pool on BeethovenX as of January 2022
This is probably the first Ohm fork using a Balancer fork LP token to bond. This is particularly interesting in the sense that you can now purchase new bonds using just your EXOD tokens. The steps involved would be:
- deposit your EXOD token into
The Monolithpool on BeethovenX to get the LP token
- sell your LP token on the Exodia app to purchase new EXOD with a discount
- wait the vesting period and collect your EXOD tokens
This drastically reduces the sell pressure on EXOD tokens, which can only benefit the protocol. Previously bond flippers would have to sell their EXOD for DAI to purchase additional bonds, which is partially detrimental by reducing the token price, and has a cascading effect on the treasury and the runway.
If you're not familiar with Ohm projects, I strongly recommend some more readings on the subject. You can refer to our guide on Klima (see the Polygon section) or go directly to the official documentation of Exodia. Also, you could join their discord and enroll in their education scheme.
You also see that the LP token accepts MAI, the stable coin that you can mint on Mai Finance. This will actually be our main source for the LP (see later). Once you purchased your bonds with a decent discount, you will get your EXOD tokens at the end of the vesting period. You can also stake this token at a decent APY (Annual Percentage Yield) of 38,787%, which is equivalent to an APR (Annual Percentage Rate) of 601%, or a daily gain of 1.65%.
We will be using the bonding system to purchase EXOD tokens with a discount, and profit from the very high APY to collect gains from rebase rewards.
Tomb Finance is a very particular project, original in many ways. The TOMB token is an algorithmic stable coin pegged to the FTM token, and designed to be a medium of exchange and to add additional liquidity to FTM,the gas token of the Fantom chain.
The Tomb Finance ecosystem proposes 2 more tokens:
- TSHARE: this is the governance token for Tomb Finance. Holders of TSHARE have voting power. TSHARE stakers will also receive additional TOMBs. The emission of additional TOMB tokens to TSHARE holders is following the same mechanics as Ohm forks with new token being minted at the end of each epoch with very high APY.
- TBOND: this is a special tokens that is primarly used to maintain the peg to 1 FTM. When the TOMB price falls below 1 FTM, users can purchase TBOND at the current price of TOMB tokens. They can do so by selling TOMB tokens to the protocol, and these tokens are burnt, which increases the value of TOMB back to 1 FTM. Buying TBOND at a discount and being able to redeem TOMB tokens gave the name to the TBOND token. When the TOMB token is above thee peg, people can redeem their TBOND for TOMB. New TOMB are minted, reducing the value of the token. In other words, this is an arbitrage token!
TOMB, TBOND and TSHARE values as of January 2022
Tomb Finance also proposes 2 LP pools that will earn you TSHARE tokens. This is particularly important for Tomb Finance to have a very important liquidity depth. However, to achieve the objective of geetting TOMB as an alternative solution to FTM, it's important for the protocol to have users using TOMB, hence owning the liquidity. When you farm the TOMB-FTM and TSHARE-FTM pools, you are rewarded with TSHARE tokens that will allow you to earn more TOMB tokens, which is a nice little closed loop within a single application.
Now that we presented the 2 big pieces for our strategy, let's quickly see the other pieces of the puzzle of the day.
Beefy Finance is a yield optimizer that will accept LP tokens from particular DEX (Decentralized Exchanges), farm reward tokens, and let their algorithms sell the reward for additional LP. As such, you can get an increasing investment position that will compound only the tokens from the LP and capture the value of the reward token at the time the token is harvested.
For our stratgy, we will be using the TOMB-FTM LP token. The reasons are multiple:
- TOMB being pegged to the FTM token, there's no IL (Impermanent Loss) on this pair, so the only variation will be linked to the price variation of FTM
- TOMB-FTM is rewarded with TSHARE, so selling TSHARE won't impact the 2 tokens from the pair
- TOMB-FTM has quite a high APY which for a LP token with no IL
- using the LP token on beefy will allow you to get
Tomb LP pairs on Beefy Finance aas of January 2022
For the purpose of this guide, we're using TOMB-FTM token because it presents less risk due to the absence of impermanent loss on the pair. However, you can totally use the TSHARE-FTM pair for higher rewards. Make sure you understand the risks and DYOR first.
Market.XYZ is a lending protocol on which you will be able to deposit some particular assets and borrow against them. When you lend your asset, you may get some lending incentives paid in the asset you lend. When you borrow, you will have to paay some interests at the time of repayment in the same asset you borrowed.
Market XYZ started a partnership with Mai Finance in 2021 in order to allow additional classes of assets to be used as collateral to borrow the MAI stablecoin. These assets are considered more risky than the ones currently accepted directly on Mai Finance, or are just waiting for an official ChainLink Oracle and are not accepted directly on the main app. This brings additional benefits: the QiDAO protocol is earning fees from borrowed MAI, borrowers are getting MAI at low interest rates (Mai Finance is adding more MAI from the treasury regularly based on demaand) and it is a very interesting use case for the stable coin, driving its usage up. On the flip side, lending markets are a great way to kickstart strong relations with different partners while they are waiting for their assets to be accepted on Mai Finance directly.
TOMB Beefy Locker on Market XYZ as of January 2022
The lending market we are interested in for this strategy is the TOMB Beefy locker. After we deposit our TOMB-FTM tokens on Beefy, we receive mooTombTOMB-FTM receipt token that is a "proof of ownership" for the token that is compounding rewards on Beefy. This receipt token can be used as collateral on MarketXYZ to borrow additional MAI.
Market.XYZ only allows loans with a minimum value of 0.05 ETH (~$170.00 at time of writing). Make sure you deposit enough collateral if you want to bororw from the different lockers.
In the screenshot above, you can see that we can
- deposit the mooTombTOMB-FTM token as collateral and get 355.4% APY on it, provided by Beefy
- borrow MAI against our collateral with a 15.02% interest rate (APR)
It's easy to see that the gains we get from the LP farming out-performs by far the borrowing interests, which makes this strategy viable. However, make sure you monitor properly the price of FTM and TOMB to prevent liquidation and make sure you borrow at a very high CDR (Collateral to Debt Ratio), which will let you enough time to repay your loan in case of a massive price drop.
If you're not interested in this strategy but you are a user of Mai Finance, Market XYZ is an amazing application to lend your MAI. You will be paid in additional MAI that will be compounded into your position.
To complete our investment loop, we will start with purchasing EXOD bonds using MAI. The EXOD rebase rewards will be used to purchase TOMB-FTM LP tokens. The tokens will be used on Beefy to compound the TSHARE rewards. Additionally, the LP token receipt will be used as collateral on Market XYZ to borrow more MAI, which sends us back to our initial step.
We will simulate with a few assumptions:
- all reward rates and prices remain the same over one year
- Exodia APY is 38,787%
- TOMB-FTM APY via beefy is 318.51%
- borrowing interest on Market XYZ is 15.02% APR (interest don't compound so we're using APR when we're referring to borrowing fees)
Also, we will assume that you are harvesting your bonds and extra EXOD tokens daily and stake 50% to benefit from rebases as soon as possible. Bonds will be purchased at an average of 0% discount for simplicity, but you will hopefully get them with a better discount, and we will assume that we can purchase new bonds every 5 days.
We need to first figure out which entry point presents the less risk. The TOMB-FTM LP seems to fit exactly this (see reasons detailed on the LP pair description), so we will start the loop at this point with $1,000 worth of TOMB-FTM tokens. Once the LP token has been created on SpookySwap, you can deposit it on Beefy Finance and start borrowing right away.
For this strategy, we will try to stick to a CDR of 300%. This means that we will be able to borrow $333 worth of MAI from the locker with an interest rate of 15.02%. The MAI borrowed will be used on BeethovenX to get a wFTM-EXOD-gOHM-wsEXOD-MAI LP token. Finally, we will purchase an EXOD bond with the LP. Note that all the setup can be done on Day 1. At the end of the first day (assuming 3 rebases) we will get:
The next few days, it's useless to do anything by harvest and compounding the EXOD rewards since the bond we purchased on Day is still vesting. So We can let the TOMB-FTM LP token grow in price without borrowing more and focus on EXOD rewards. 50% of the reward will be compounded into more EXOD, and the other 50% will be added to the TOMB-FTM LP. At the end of Day 5, when the bond is fully vested, we would have:
The additional TOMB-FTM and EXOD are only what is produced on day 5 and compounded at the beginning of Day 6.
The TOMB-FTM compounded on Day 5, as well as the 50% EXOD harvested, give you a total of $1,028.173 worth of TOMB-FTM at the beginning of Day 6. This means that your possible loan is $342.724, allowing you to borrow an extra $9.391 worth of MAI that will be used to buy a new bond on Exodia. At this point, the system is primed and can simply manage your investment via a light daily routine.
The routine is split into 2 parts: the real daily routine that you will have to operate daily, and one that you will have to operate every 5 days.
Daily, you will have to:
- Claim vested EXOD tokens on Exodia
- Stake 50% of the EXOD tokens on Exodia
- Sell 25% of the EXOD tokens for FTM on SpookySwap
- Sell 25% of the EXOD tokens for TOMB on SpookySwap
- Create a TOMB-FTM LP token on SpookySwap
- Deposit the TOMB-FTM LP token on Beefy Finance
- Deposit the mooTombTOMB-FTM receipt token on Market.xyz
Every 5 days, you will have to:
- Borrow additional MAI from Market.xyz to keep a CDR of 300%
- Deposit the borrowed MAI on BeethovenX in The Monolith pool
- Exchange your Beethoven LP token for EXOD bond on Exodia
Here are raw results month after month
After a complete year of farming this system, and assuming everything is the same as on Day 1 (prices, rates and everything else ...), you would have:
- $34,855.954 worth of TOMB-FTM LP tokens on Beefy
- $32,863.908 worth of EXOD tokens
- a debt of $11,618.651 worth of MAI on Market.xyz, with some additional interests to repay (corresponding to a total debt of $13,363.772)
It is very important to note that your Collateral to Debt Ratio remains close or above 300% at anytime during the exercise, so it is totally possible for you to sell a part of your TOMB-FTM or EXOD to repay it and lower the intests. It is also possible to adjust the portion of EXOD you sell daily to simply repay your initial loan and purchase new EXOD bonds by selling TOMB-FTM. The variations are endless, so feel free to adjust according to what you like the most.
In the end, from an initial investment of $1,000 you would end up with $67,719.862 and a debt of $13,363.772, which corresponds to an overall APY of 5,335.56%.
This is an experimental guide that is highlighting how you can increase your gains by adding Ohm forks in your investment loops. The simulation was done at a time where Exodia had very high APY on staked EXOD tokens. The same can be said about TOMB-FTM. These very high ratios are usually varying a lot, so you may expect a lot less benefits over the span of a complete year. Indeed, most Ohm forks are not designed to sustain such high yields for more than a few months, and generally drastically reduce their emission to continue emitting tokens.
Stay informed about the projects you're using, don't hesitate to ask questions, and as always, do your own researches.
This guide is definitely not financial advice, it was made with an educational goal in mind. You need to pay attention to price variations, supply and demand, reward programs end dates, impermanent losses etc ... The goal wasn't to propose recipes that can be followed blindly, so please do your homework and your own simulation, and only invest what you're ready to possibly lose.