How to combine farming and borrowing rewards
This page presents how to combine yield farming with the borrowing rewards provided by Mai Finance to increase your overall interests.
In September 2021, Mai Finance introduced vault rewards in order to promote its borrowing business and have people use their tokens to borrow MAI. It's not only taking a 0% interest loan with a small repayment fee, now people can also get paid to borrow money. This guide will propose a strategy based on stable coin farming using Augury Finance as a source of tokens that will feed the vaults on Mai Finance, leading to high borrowing incentives, and additional MAI that will then be re-injected in the farm.
Augury Finance is a yield aggregator that doesn't focus on auto-compounding your LP (Liquidity Pool) tokens. Instead, Augury will automatically sell the farm tokens of the farms it uses to buy other tokens in their Infusions.
As an example, you can farm the DFYN-WETH pair on Augury
Example of the DFYN-WETH mining pool on Augury Finance
This Infusion is using DinoSwap as the underlying farm, and a LP token that one can get on DFYN. With an APR of 123.43%, users who deposit liquidity in this pool will be rewarded with
- 30% of WETH
- 20% of LINK
- 20% of WBTC
- 15% of USDT
- 15% of WMATIC
If you farm on DinoSwap, you will be paid with DINO tokens, which price is very volatile. On other aggregator like Adamant or Beefy, you would increase your LP position, but with Augury you "secure" your position by getting tokens that are less likely to have very high volatility. The drawback is that your initial position won't grow over time since 100% of the harvest DINO is converted into the set of tokens composing the reward on Augury.
In our strategy, we will be using the USDT-UST tier2 farm that rewards users with a mix of WETH/WBTC/LINK/WMATIC/USDC, because Mai Finance proposes 4 vaults for 4 of the 5 tokens we will get as a reward. In order to maximize our profits, we will add AAVE between the output of Augury and the vaults on Mai Finance since 3 out of the 5 tokens we will harvest can be lended on AAVE.
Stable coin farming USDT-UST for our strategy
Curve is a blue-chip project that will reward users lending blue-chip tokens. The reward is composed of auto-compounded tokens (added back into the investment), WMATIC tokens and CRV tokens, which are 2 tokens that are also accepted as collateral on Mai Finance.
One of the very interesting things to note about Curve and its pools is that one doesn't have to deposit an exact amount of each token for a given pool. Instead, a single token can be provided and the algorithm that managed the pool will automatically adjust the other tokens by selling a portion of the deposit and buy the other tokens to maintain a correct ratio in the pool.
We will be using the atricrypto3 pool that accepts any combination of WBTC/WETH/USDC/USDT/DAI and we will add to this pool the USDC that will be generated by the pool on Augury.
Details of the atricrypto3 pool on Curve as of September 2021
As mentioned in the paragraph about Augury, AAVE is used to add a small reward to the tokens farmed on Augury before we use them on Mai Finance. Instead of putting our WBTC, WETH and WMATIC directly on Mai Finance, we will deposit these tokens on AAVE and use the yield instrument of Mai Finance to auto-compound the rewards from AAVE in the amToken pools, and use the camToken as collateral in vaults. You can get more details about this part by reading the tutorial about AAVE tokens.
AAVE lending rewards as of September 2021
Balancer is another blue-chip project like Curve. You will be able to deposit certain tokens in pools composed of more than 2 tokens, and you deposit a single token. The pool will automatically be balanced to get an equal proportion of each token that composes the pool.
For our strategy, we will be using the WETH/BAL/Qi/MAI/USDC pool. This pool will accept the Qi token that will be collected from vaults on Mai Finance, and will reward us with additional Qi, and BAL tokens that we will be able to deposit on Mai Finance in the BAL vault, allowing us to mint more MAI and increase our farming position on Augury.
Balancer 5-pool as of September 2021
What follows is a simulation made with an initial investment of $1,000 worth of ETH that is deposited in the camWETH vault to borrow $500 worth of MAI, converted in $500 worth of USDT-UST. This simulation assumes the following rewards for the different systems
- USDT-UST farming APR of 22.53%
- amWBTC APR of 0.39%
- amWETH APR of 1.71%
- amWMATIC APR of 3.80%
- atricrypto3 APR of 3.86% auto-compounded LP token, 13.09% WMATIC and 17.63% CRV
- 5-tokens Balancer pool with APR of 43.46% with a BAL:Qi ratio of 1:6
- Vault rewards APRs of
- 23.28% for camWBTC
- 21.52% for camWETH
- 32.93% for camWMATIC
- 24.51% for LINK
- 116.71% for CRV
- 62.38% for BAL
These APRs are all subject to change on the different platforms, and there's no guarantee that they will continue for a whole year, however we will take them as is for this simulation in order to get an idea of the possible overall APR of the system. In order to further "simplify" the simulation, we will not take in account price variations, nor transaction fees. Also note that this simulation is taking into account that the Vault Rewards on Mai Finance and the Balancer rewards are compounded daily instead of weekly, but these rewards are currently airdropped weekly to the users' wallet. Finally, for the sake of this simulation, we will assume the CDR (Collateral to Debt Ratio) is always 200%, meaning we're only borrowing half of what we deposit to keep getting the rewards, but prevent easy liquidations.
If you still have your $1,000 worth of WETH, deposit it in on AAVE to get amWETH, then deposit your amWETH on Mai Finance to get camWETH, and finally deposit your camWETH into the corresponding vault to be able to borrow 500 MAI.
Use the anchor to convert your MAI into USDT (or you can use another DEX like QuickSwap if there is no liquidity in the anchor), then you can use DFYN to swap 50% of your USDT into UST and form a USDT-UST pair that you can then deposit on Augury. Note that you will also need some OMEN that you can buy on QuickSwap too.
Hence, at the end of Day 1, we harvest the following rewards
These are only the rewards we get from farming and borrowing at the end of the first day.
Rewards are harvested, WBTC, WETH and WMATIC are sent to corresponding vaults on Mai finance after they went through AAVE and the yield instrument on Mai. LINK are directly deposited in the LINK vault, and USDC sent to Curve in the atricrypto3 pool. The Qi reward is sent to Balancer. At this point, we can borrow more MAI from the 3 camToken vaults and the LINK vault ($0.13 worth of MAI to be exact) and we can create more USDT-UST pair from the MAI we borrowed.
Hence, at the end of Day 2, we harvest the following rewards
At this point, the system is primed and rewards are flowing in a way that each step is feeding the next one, creating some nice little loop.
The daily routine is composed by the following transactions
- Harvest rewards on Augury
- Deposit WBTC, WETH and WMATIC on AAVE
- Deposit amWBTC, amWETH and amWMATIC on Mai Finance in the yield instrument
- Deposit camWBTC, camWETH and camWMATIC in the respective vaults on Mai Finance
- Deposit LINK in the LINK vault on Mai Finance
- Deposit USDC in the atricrypto3 pool on Curve
- Harvest WMATIC from Curve and use them in the camWMATIC vault
- Harvest CRV from Curve and use them in the CRV vault
- Borrow MAI from the different vaults
- Convert MAI into USDT on Mai Finance via the anchor
- Convert 50% of the USDT into UST on DFYN
- Create new USDT-UST LP pair on DFYN
- Deposit the new LP tokens on Augury
Additionally, you will get weekly rewards in BAL (from your Qi deposit on Balancer) and Qi tokens (from vault rewards). You will have to
- Deposit the Qi token on Balancer
- Deposit the BAL token on Mai Finance in the BAL vault
- Borrow MAI from your additional BAL deposit and convert them in USDT-UST pair to farm on Augury
A few notes:
- The growth of the USDT-UST pool is the only result of additional MAI borrowed from vaults
- The CRV pool is almost inexistant due to the very low amount of USDC deposited on Curve
- The BAL vault is not important due to the fact that 14.28% of the Balancer reward is paid in BAL tokens, the rest being paid in Qi tokens
- The amount in the Balancer pool is the biggest gain, and is only the result of Vault rewards and Balancer rewards
After a complete year, the final state of our investment would be
The total debt is actually the entire USDT-UST position, so $553.24, and the total reward generated is $280.63, corresponding to a final APY of 28.06%.
Getting a 28% APY on stable coin farming isn't too bad, but how does this compare to other easier strategies we could apply with the initial $1,000 worth of ETH? Let's check the final APY fo the following strategies
- Full stable farming on Augury: for this strategy, we sell the WETH and farm with $1,000 worth of USDT-UST on the same infusion on Augury
- Full stable farming on QuickSwap: for this strategy, we will use the camWETH vault to benefit from the vault reward, and farm with $500 worth of MAI on QuickSwap (MAI-DAI at 19.78% APY), using the dQUICK vault on Mai Finance to borrow additional MAI and re-invest into the farming pool (dQUICK vaults with an APR of 55.72%)
This strategy is really interesting and uses most vaults from Mai Finance, and this guide has been written mostly to showcase that, as of September 2021, this is the part that would generate the more rewards when faming stable coins. However, this strategy may not be the most interesting one, and involves a lot of manipulations of several platforms. Finally, Augury is a fantastic tool that generates specific tokens that can be included in several strategies, but probably not stable farming solely. And as a side note, no deposit fees nor performance fees have been taken in consideration when calculating the final APY.