Today it was discovered that TreehouseFi's tETH APR is currently stable at 3.66%, while Compound's ETH market Borrow APR is only 1.83% – extremely low! The utilization rate is only about 52%, and the borrowing cost is much lower than the staking income, so there is an arbitrage opportunity with interest rate differentials. Let's do the math: Compound can easily earn more than 5% interest income by looping once (i.e., lending ETH once after supplying tETH and exchanging it for tETH) when interest rates are extremely low Simple calculation: Suppose you hold 1 ETH, exchange it for tETH, supply it to Compound, and lend 0.75 ETH at 75% LTV (equivalent to an increase of 1.75x after exchanging tETH). Net Gain ≈ (3.66% × 1.75)-(1.83% × 0.75) ≈ 6.41% -1.37% = 5.04% APR (ignoring gas fees and a small amount of slippage). This is much higher than the 3.66% apr yield of simply holding ETH! Add in $COMP rewards and Treehouse Nuts points, and the total return could easily break 6%. Here are the...
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