mETH yield strategies
Explore the opportunities that our newest money market brings.
Lendle has recently enhanced its lending markets by integrating $mETH, a product of the Mantle Liquid Staking Protocol (LSP). This integration marks a significant milestone, as real yields are now available on Lendle thanks to this Liquid-Staking Derivative token, offering new opportunities for yield farming strategies.
Understanding $mETH: The Mantle Liquid Staking Protocol
Mantle LSP, known for its permissionless and non-custodial approach, allows users to stake $ETH and receive $mETH in return, which accrues value over time. The protocol operates on Ethereum Layer 1 and is under the governance of Mantle.
Yield Boosting by Mantle
A remarkable feature of $mETH is Mantle’s commitment to boost yields for $mETH. Starting from December 22, 2023, for a minimum of two months, Mantle will double the yields by allocating its own $ETH staking rewards to $mETH stakers. This initiative significantly elevates $mETH’s annual percentage yield (APY), offering an enticing opportunity.
Innovative Yield Farming Strategies with $mETH enabled by Lendle
Delta Neutral Strategy
- Process: Users supply $mETH, borrow Wrapped ETH ($WETH), and then sell $WETH to acquire more $mETH, which they can again supply and keep on looping.
- Benefits: This strategy is delta neutral, due to the price of $mETH being pegged to that of $ETH.
$mETH-Long Strategy
- Process: Similar to the first strategy, but instead of borrowing $WETH, users borrow stablecoins and loop the process.
- Risks and Rewards: This strategy offers massive yield potentials but positions the user long on $mETH. It’s crucial for participants to be mindful of $mETH’s price volatility to avoid liquidation risks.
At the moment of writing, the yields these strategies offer would translate to the following:
Delta Neutral Strategy
- $mETH has a base staking yield of 7.4%, no supply interest and a $LEND incentive APR of 12.52%
- $WETH has a borrow interest of -2.83% and a $LEND incentive APR of 9.69%
- The $mETH total deposit APR therefore adds up to 19.92%
- The $WETH total borrow APR therefore adds up to 6.86%
- By supplying $mETH, borrowing $WETH, swapping $WETH for $mETH and re-supplying that in the maximal loop possible a max APR can then be reached of up to 97.3%!
$mETH-Long Strategy
The $mETH-Long strategy works in the same way, but when borrowing another asset that is non-correlated to $ETH you build up a leverage short agains the other asset.
Please apply proper risk management for these leveraged strategies in order not to get liquidated!
The maximal yields for these $mETH-collateralized strategies can be found in the table below:
One-Click Looping with 1delta
To streamline these strategies, our partners at 1delta emerge as a one-click destination, simplifying the process of implementing these yield farming methods. Start your looping here.
Purchasing mETH on Mantle Network with 1delta
Not only can users easily access these yields in a streamlined manner on 1delta, but our partners’ protocol also offers best-in-class swapping rates through its swapping aggregator.
Thus, make sure to trade $mETH on Mantle Network here in order to incur the cheapest costs.
Parameters and Considerations for $mETH Markets
For $mETH markets on Lendle, specific parameters are set:
- 80% Loan-to-Value (LTV)
- 86% Liquidation Threshold
- 12.5% Liquidation Penalty
These parameters are designed to balance opportunity with risk management, ensuring a robust framework for participating in these strategies.
In conclusion, Lendle’s incorporation of $mETH into its lending markets, backed by Mantle’s yield-boosting initiative, opens up new avenues for yield farming. Whether opting for the delta neutral or $mETH-long strategy, users are equipped with innovative tools and a supportive framework to maximize their DeFi engagements.
