The purpose of this forum post is to discuss the upcoming RealYield{LINK, 1INCH, UNI, SNX, ENS} Cellar proposals. These are a series of 5 Cellars denominated respectively in the following assets:
- LINK
- 1INCH
- UNI
- SNX
- ENS
The RealYield[GovToken] Cellars aim to provide yield opportunities across a wide variety of assets. They all run the same strategy: borrow WETH on Aave, deposit WETH into Real Yield ETH, and periodically harvest yield in the base asset. The key capability enabled by Sommelier’s architecture is automated leverage management. If health factors decrease due to negative price movement of the base asset relative to ETH, the Cellar will redeem RYETH shares to pay back debt and boost the health factor.
For example, ETH yield harvested from the LINK cellar will be used to purchase more LINK increasing depositors’ LINK balance.
Initially, the core strategy being executed on each Cellar is to capture the arbitrage opportunity between the borrow and staking rate of ETH. In the future, the Cellars may evolve to capture any other yield opportunities in the base asset to remain best-in-class.
We believe these Cellars will be appealing to holders of the various base assets for several reasons:
- There exist very few yield opportunities for most of these assets. Of the yield opportunities that do exist, they are either capped (e.g. LINK staking) or very low yield (lending). In contrast, the RealYieldGovToken Cellars will immediately provide state-of-the-art yields for each respective asset.
- The earned yield will be used to purchase more of each respective asset, thereby providing support for each asset’s price.
This line of Cellars will be co-launched by Seven Seas and DeFine Logic Labs. We will update this post with more details, including contract deployments, in the coming days.