From today, you can now enjoy sDAI Yield Loop strategies on Spark Protocol by borrowing against USDC and USDT.
By creating this position, you can access a higher APY than the standard Dai Savings Rate (DSR) when the borrowing cost of USDC or USDT is lower than the DSR.
What is the sDAI Yield Loop on Spark?
The sDAI Yield Loop strategy on Spark combines the power of Spark Protocol, with the superpowers of Savings Dai, or sDAI. It shares similarities with the Aave sDAI yield loop strategies, allowing users to multiply their exposure to the Dai Savings Rate of sDAI for potentially higher returns.
How Does It Work?
Here's a simplified breakdown of how the sDAI Yield Loop strategies for Spark operates:
- Start with sDAI: It starts with sDAI, a yield-bearing token representing DAI in the DSR, which you deposit into a new position against either USDC or USDT
- Set your Multiplier: Users can choose their multiply exposure to their sDAI collateral, potentially up to 12x, or a maximum LTV of 91%. This will borrow either USDC or USDT against the sDAI collateral using flash loans and swaps through 1inch to setup their position in a single transaction.
- Earn the yield: The APY you could earn from this position could up to 8-9%, though it will vary on the borrow cost of the debt token, in this case USDC or USDT. You must ensure your average borrow cost is lower than the DSR rate for this strategy to be profitable.
In essence, sDAI Yield Loop strategies on Spark allow users to multiply their exposure to the DSR rate of their sDAI holdings to multiply their yield returns potentially. Increasing exposure up to 12 times and an estimated APY of up to 8-9% presents an enticing opportunity for those willing to take a bit more risk for higher rewards. However, it's essential to remember that, as with all DeFi, it carries inherent risks, and it's crucial to do thorough research and understand the specifics of any protocol before getting involved.
Boost your sDAI on Spark: https://summer.fi/earn/DAI?protocol=sparkv3&network=ethereum
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