Folding Strategies

Folding strategies is an innovative Yield farming strategy. Assets in this strategy are deposited on lending platforms and used as collateral to borrow more of the same asset and deposit again on the same platform to borrow more assets until reaching an optimal limit.

It is currently normal for lending platforms to offer incentives for users to both deposit assets and make deposits. Interacting with lending platforms is a very safe way to be rewarded with crypto assets distributed through incentives. Folding strategies maximize this yield farming capability by multiplying the exposure of assets to the lending platform's incentives.

The deposit and borrow loop can be repeated up to 20 times. The loop is only performed if the strategy's profitability is positive, if the scenario presents a situation where the folding strategy's profitability is not positive, the strategy will pay all borrows and only keep the assets deposited in the lending platform.

Unfolding

Folding strategies are able to unfolding the borrow and supply loops. The unfolding process takes place according to market conditions. The dynamics of lending and borrowing rates can eventually lead to low profitability, in this cases the folding strategy will respond by reducing the amount of borrow and supply loops. This behavior in the strategy can happen for example when borrowing rates become too high.

Risks

There is no risk of liquidation because the folding strategy supply the same asset that borrows, thus the assets of the folding strategy are not exposed to market price fluctuations. In case of low liquidity in the lending platform, the user will not be able to withdraw his assets from the folding strategy vaults. These events are rare, but they are not necessarily bad for users either since in high asset utilization scenarios on lending platforms interest rates rise significantly forcing users to pay borrowed money and incentivizing users to supply assets on the platform to increase liquidity.

Performance and incentives

The performance and incentives of the folding strategies can be checked by clicking on "info" inside the vault. Strategies earned TETU shows how much TETU the strategy bought back from the market. APR Rewards show xTETU rewards tokens available to vault users.

Single Assets

Folding strategies are based on single assets and can be a very effective solution for Yield Farming without impermanent loss. To find the folding strategies vaults in Tetu search for AAVE or Iron Lending in Tetu's search bar.

Resources

Iron Folding Strategies article on Medium.