Below is a summary of the strategies, including fees and expected returns. Please refer to the tables for full details and note the associated risks outlined below.
Note that strategies might share the same general risks, and differences in returns may come down to how effectively the providers optimize yield under varying market conditions.
There are no guarantees or risk-sharing by the providers. As described below, fees are based on the allocation of assets to each provider and/or their performance.
Note that for the Arbitrum Strategy, while both applicants use Myso they have wildly different reported return profiles (hence different risk profiles).
Stablecoin Strategy
| Stablecoin Strategy | Protocols Used | Exp. Returns | Fees |
|---|---|---|---|
| Gauntlet | AAVE V3 | 8% | Free |
| karpatkey | Compound, Dolomite, Fluid, Uniswap V3 | 12-20% | 0.5% management |
| AvantGarde/MYSO | AAVE V3, Compound | 5-15% | 0.5% / 10% management/performance |
Arbitrum Strategy
| Arbitrum Strategy | Protocols Used | Exp. Returns | Fees |
|---|---|---|---|
| karpatkey | Myso | 7-20% | 0.5% mgnt |
| Avantgarde/MYSO | Myso | 30%+ | 15% perf |
Key Risks
Stablecoin Strategy
- Stablecoin Risk: The possibility of a stablecoin depegging.
- Smart Contract Risk: Exposure to potential hacks of the protocols used by each provider.
- Liquidity Risk: Funds may become locked if the lending rate reaches 100%.
- Optimization Risk: The provider’s optimization might not perform as intended or may fail to beat the benchmark.
- Custody Risk: Since the Foundation remains the custodian, custody risk is effectively transferred to the Foundation.
Arbitrum Strategy
- Smart Contract Risk: Inherent risk of the protocol being compromised.
- Asset Risk: ARB could lose all value.
- Counterparty Risk: If no counterparty is found, the strategy’s yield could drop to 0%.
- Liquidity Risk: Liquidity is locked for the duration of the call (30 days for monthly, 7 days for weekly).
- Covered Call Risks:
- Potential Conversion Risk: If the strike price is reached, the ARB allocation may convert into stablecoins (see “Managing Potential Conversions”).
- Premium Fluctuations: Option premiums vary based on ARB’s volatility.
- Secondary Market Risk: If a covered call isn’t held to expiry, exposure to secondary market prices may result as the matched trading firm buys back the call.