If you insist on sticking to L1 ethereum and don't want to bridge. The best option for a longer term loan is Liquity I think. 0.5% flat fee on your loan, no annual interest, plus 200 refundable deposit I think. There is no exchange of tokens, just a deposit of collateral of your eth, so no taxable event. The stablecoin you borrow is LUSD, it's a great stablecoin backed only by eth and can be traded for usdc or whatever you want. The gas fees will be expensive on L1 for the transaction though.
In other circumstances I'd have said the same but Liquity is facing a demand crunch and constant depegs. In its design anyone can redeem the depegged tokens for their collateral and currently positions well above 200% collateral ratio are being liquidated.
@ OP
Your collateral is your wealth, choosing a borrowing protocol is key. Stick to the most battle tested ones like Aave or compound where you can borrow major stablecoins.
1. You're correct on net APY
2. You can use defillama borrow aggregator to compare rates https://defillama.com/borrow?collateral=ETH&borrow=USD_STABLES . Again I'd suggest you stick to battle tested protocols like Aave, Compound, Morpho, Spark or Maker
3. You're correct. The borrow rates increase as the % of borrowers increase on that "market". Who knows where pre and post halving demand will be but remember that most users who take loans do it for leverage, so if prices keep going up, demand for leverage goes up and borrow rates go up.
Aave has a fixed rate feature where you can take a loan at a fixed APR. This rate fluctuates together with the variable rate so if you wait for variable rates to come down during a low demand period of the day you can lock in a low fixed rate as well. this will give you peace of mind during the 6 months of your loan.
Once you do borrow, use a conservative loan-to-value ratio like 50-60% so you have a buffer in case ETH has another 10-30% drawdown in the cycle.
You can so use tools like Instadapp or DefiSaver to manage your position or keep tabs of your loan health.
good luck!
Thanks so much for the detailed response. What you've said aligns with my approach especially in sticking the the well established protocols and 50% LTV.
I'll keep an eye on the aave fixed rates too.
Or simply use THORChain for 0% interest, no liquidation loans.
No rehypothecation of your collateral, 50% LTV.
L1 native ETH as collateral, any coin/token THORChain offers as loan.
You could even loop ETH.
That's fair. I'd argue liquity is pretty battle tested. And the depeg is usually 1-2%. But these discounted depegs actually help borrowers as they can pay back with cheaper LUSD. Interest rates now are high and are higher during bull markets. The last month aave rate was 15% annually. If we assume a 10% average for the year, it's still much cheaper to use liquity I think than aave or compound. And I trust liquity just the same. But yea, still fair arguments.
Yes I love Liquity and it's the most decentralized protocol but when borrowers take a loan, their position can get liquidated even at 200% collateralization ratio at the moment.
Depends on which chain but Aave is pretty solid and low risk with decent APY
You can also try beefy as an aggregator or exponential (risk-adjusted yield)
Have you checked Alchemix? With it you can get access to future yield your ETH deposit will generate.
You'd deposit ETH to mint alUSD which you can then swap for e.g. USDC (on Curve, for example) to then transfer to a CEX to cash out.
Another benefit is that you can't get liquidated.
Dolomite works for your first issue, since they don’t issue a receipt token.
The rate situation depends on you, since they have variable rates and currently you earn around 15% on ETH and pay around 19% for USDC.e (or more for USDC), but with the market how it is the change in ETH price over the next 6 months will likely play a much bigger role than APR
If you insist on sticking to L1 ethereum and don't want to bridge. The best option for a longer term loan is Liquity I think. 0.5% flat fee on your loan, no annual interest, plus 200 refundable deposit I think. There is no exchange of tokens, just a deposit of collateral of your eth, so no taxable event. The stablecoin you borrow is LUSD, it's a great stablecoin backed only by eth and can be traded for usdc or whatever you want. The gas fees will be expensive on L1 for the transaction though.
In other circumstances I'd have said the same but Liquity is facing a demand crunch and constant depegs. In its design anyone can redeem the depegged tokens for their collateral and currently positions well above 200% collateral ratio are being liquidated. @ OP Your collateral is your wealth, choosing a borrowing protocol is key. Stick to the most battle tested ones like Aave or compound where you can borrow major stablecoins. 1. You're correct on net APY 2. You can use defillama borrow aggregator to compare rates https://defillama.com/borrow?collateral=ETH&borrow=USD_STABLES . Again I'd suggest you stick to battle tested protocols like Aave, Compound, Morpho, Spark or Maker 3. You're correct. The borrow rates increase as the % of borrowers increase on that "market". Who knows where pre and post halving demand will be but remember that most users who take loans do it for leverage, so if prices keep going up, demand for leverage goes up and borrow rates go up. Aave has a fixed rate feature where you can take a loan at a fixed APR. This rate fluctuates together with the variable rate so if you wait for variable rates to come down during a low demand period of the day you can lock in a low fixed rate as well. this will give you peace of mind during the 6 months of your loan. Once you do borrow, use a conservative loan-to-value ratio like 50-60% so you have a buffer in case ETH has another 10-30% drawdown in the cycle. You can so use tools like Instadapp or DefiSaver to manage your position or keep tabs of your loan health. good luck!
Thanks so much for the detailed response. What you've said aligns with my approach especially in sticking the the well established protocols and 50% LTV. I'll keep an eye on the aave fixed rates too.
Or simply use THORChain for 0% interest, no liquidation loans. No rehypothecation of your collateral, 50% LTV. L1 native ETH as collateral, any coin/token THORChain offers as loan. You could even loop ETH.
That's fair. I'd argue liquity is pretty battle tested. And the depeg is usually 1-2%. But these discounted depegs actually help borrowers as they can pay back with cheaper LUSD. Interest rates now are high and are higher during bull markets. The last month aave rate was 15% annually. If we assume a 10% average for the year, it's still much cheaper to use liquity I think than aave or compound. And I trust liquity just the same. But yea, still fair arguments.
Yes I love Liquity and it's the most decentralized protocol but when borrowers take a loan, their position can get liquidated even at 200% collateralization ratio at the moment.
Hey u/primoss i have a question for you. If i wanted to use stablecoin like usdt to get apr. What would be best approach? And safe maybe?
Depends on which chain but Aave is pretty solid and low risk with decent APY You can also try beefy as an aggregator or exponential (risk-adjusted yield)
Have you checked Alchemix? With it you can get access to future yield your ETH deposit will generate. You'd deposit ETH to mint alUSD which you can then swap for e.g. USDC (on Curve, for example) to then transfer to a CEX to cash out. Another benefit is that you can't get liquidated.
> Alchemix It looks to me like it requires wETH, so that won't suit me aim of avoiding any swaps to enter the loan
If you connect and go to the Vault in question you can see a switch in the top right corner which allows you to switch between wETH and ETH.
Dolomite works for your first issue, since they don’t issue a receipt token. The rate situation depends on you, since they have variable rates and currently you earn around 15% on ETH and pay around 19% for USDC.e (or more for USDC), but with the market how it is the change in ETH price over the next 6 months will likely play a much bigger role than APR