Leveraged Yield Farming
Last updated
Last updated
When you perform a leverage to increase your yields, essentially you are minting MUSD equivalent to 90% of your collaterized assets and depositing it back for lending and this is looped up to 10x.
Eg, $100 tUSDC is deposited, $90 MUSD is minted, $90 MUSD is swapped to $100 USDC and deposited to tectonic and $90 tUSDC is then deposited and mint $81 MUSD and so on... for up to 10x
The APR that you will receive is equivalent to 5.7x of the returns on tectonic or other lending platform for a 10x leverage. Your yields are converted and generated in the form of your deposited assets. Eg, the Tonic tokens you earned are converted to your base asset like USDC. How to Leverage Yield Farm?
Step 1 and 2 - The user selects the desired leverage, obtains the tUSDC (or other receipts), and deposits them as collateral.
To obtain tUSD: First step of doing this leverage farming is to head over to https://app.tectonic.finance/markets to start supplying them with either USDC / USDT. For this example, $10 USDC is supplied into Tectonic Platform for staking.
Once you're done staking, please remember to allow it to be used as collateral. And you’ll receive Tectonic ibtoken known as tUSDC / tUSDT. tUSDC - 0xB3bbf1bE947b245Aef26e3B6a9D777d7703F4c8e tUSDT - 0xA683fdfD9286eeDfeA81CF6dA14703DA683c44E5
Now you can head over to MMF.MONEY is a gold mine (mmf.money/stand) to leverage on that monies you’ve just supplied to Tectonic platform! Since we’ve used USDC, we will go into USDC’s page shown below.
Now we will leverage our $10 USDC for maximum 10x leverage on mmf.money! Please note that for this example, we’ve used 80% borrow instead of a 90% borrow.
Step 3 - Given the selected leverage, the protocol borrows the respective amount of MUSD.
Step 4 - These MUSD are swapped into USDC (current price peg and slippage play an important role here).
Step 5 - These USDC are deposited into a Tectonic to receive tUSDC.
Step 6 - These tUSDC tokens are deposited back into the MMF Money to collateralize the user's position. Once that is out of the way, we’ve leveraged out $10 USDC into $44.865 USDC supply over at Tectonic! While you see the MUSD borrowed, it is used by or loaned from MMF.Money and supplied to Tectonic as USDC / USDT leveraging your stable farm there whilst still allowing you to have a little MUSD to borrow at the end.
Notice that all of these steps happen in one single transaction, and therefore only one gas fee will be required. If one of these steps fails, the whole transaction fails. Our UI automatically computes the optimal LTV and the number of loops for your leveraged positions. Moving the slider towards the right will increase those parameters, making your position riskier and therefore the liquidation price higher. Make sure to check the amount of MUSD leveraged in the box underneath, as well as your actual leverage.
The Liquidation Price changes dynamical with your slides, always make sure to double-check it before opening the leveraged position.
Underneath the Liquidation Price, users will be able to see the percentage drop in the current value of the collateral that will flag them for liquidation.
Note that a Borrow Fee will be charged on the leveraged MUSD amount that the user is borrowing.
Swap Slippage is the amount of change in value a user is comfortable with. Factors that affect the change in value when MUSD are swapped for other tokens are, the initial price peg difference at the market, and the slippage of trade from price changes during execution.
If the swap tolerance is not high enough, the transaction will fail and an error will pop up.
Note: The user will not end up with any MUSD in their wallet from this transaction, and will be farming yield at the leverage they have selected.
It should be noted that 1st-time users will be met with several transactions in the following order.
Users will have to approve the spending of their collateral token to MMF Money.
Then, users will need to approve the spending of their collateral token to the contract specific to the position they are entering.
Next, they will have to approve the spending of the MUSD they are borrowing to the contract specific to the position they are entering.
Finally, they will need to send the entire transaction to open up the position.
This is important to note, as each transaction will come with an individual gas cost.
User invest 1000 tUSDC into MMF Money https://cronoscan.com/tx/0xc233c978c0121141037343247c7010c462c02cd8af446ecf051f375e704e9ed5 Position size from 1000 tUSDC token become 6731.17 tUSDC from the 10x leverage at 90% collaterization
This means that user invested 100.3 USD worth based on the dashboard value. And when user deleverage: https://cronoscan.com/tx/0x46686c3d7e7064e42fae5a5fc6a9377c5c37cb5135d93121a94f5c54e5a62850
When i deleverage, i got back 96.604 MUSD tokens and also 3.3027 MUSD back in dust (do note that some portion of the capital will go to dashboard as dust for u to claim). Do note that there is interest and borrow fees and for your capital to be earning interest efficiency, you should stake for a longer period of time. By leveraging and deleveraging in under a few days, you will not be able to see profits because of the upfront fees. We recommend users to stake for at least 30 days. Do note that, the tUSDC is an interesting bearing token which means 1 tUSDC might be = $1 now but 1 tUSDC might be = $1.03 in 1 year's time assuming APR of 3%
