Crypto never sleeps and neither does the Web3 Wizard. We’ve been hard at work behind the scenes and it is definitely paying off: today we’re proud to announce that Ithil has received a grant by the Balancer community to build a novel strategy in collaboration with Aura.
The strategy will be completely focused on the constantly expanding Balancer ecosystem, as well as benefit from the boosting option available on Ithil.
How does the strategy work?
To use any Ithil strategy, you need to deposit some of your own tokens to the protocol. You can deposit any (whitelisted) token on Ithil, which in turn will give you increased capital to play with on a curated list of Web3 protocols.
For example, let’s say you deposit $10,000 worth of USDC; Ithil will give you the opportunity to use more than your $10,000 of capital in the strategy through internal undercollateralised lending. You can adjust this boost depending on your risk-appetite.
Once you’ve added a margin to safeguard your position, you can freely use the strategy: this means that you can single-side LP into any Balancer pool with one click of a button. The strategy will then automatically stake your BAL LP tokens on Aura to maximise your net rewards. This generates very interesting yield, even during a bear market!
For example, you can use your margin posted in USDC to deploy $10,000 to the USDC-USDT-DAI pool, earning a projected total APR of 5.13% The strategy will deposit the pool tokens in the correct ratio for you — no need to go swapping around.
You can also boost your deposit: let’s say you feel extremely confident about the stETH-ETH pool which has a projected total APR of 12.64%. Ithil allows you to stretch your $10,000 capital and deploy $50,000 to the Balancer+Aura strategy, boosting your returns by 5x! Just watch out for impermanent loss — aim for liquidity pools with tokens that have similar price movements.
When you want to exit, you simply close your position through Ithil. The strategy will automatically withdraw the liquidity, as well as any rewards that you’ve earned (trading fees, incentives in BAL&AURA).
The best part: all BAL tokens earned can be deposited to Ithil and used as collateral for any Ithil strategy!
How does this benefit the Balancer ecosystem?
1. Balancer‘s introduction of vested escrow tokenomics has propelled the long-standing, well-respected protocol with their unique take on liquidity pool balancing to new heights in the DeFi world. Unfortunately, not everyone can benefit from the great rewards available to Balancer LPs — largely due to prohibitive gast costs typical for Ethereum mainnet.
Ithil circumvents this problem by offering a boost to smaller (and even larger) users’ capital, enabling them to surpass the profitability threshold and partaking in Balancer’s great ecosystem.
This boosts TVL, and as a result lowers trading fees. This makes Balancer more attractive to DeFi users, which creates higher trading volume and thus more fees for balancer LPs. In turn, more users will be enticed to add funds to Balancers pool, at which point the cycle restarts. In short, the Ithil strategy creates a posititive feedback loop that everyone benefits from.
2. As soon as the strategy becomes available, Ithil will also whitelist the $BAL token. What’s more, there is a dedicated strategy available to make the most of these tokens. This adds to the value of and yield options available to the BAL token.
3. Ithil is a serious, long term project with a multi-year if not multi-decade time horizon. We are in the game to change it for the better by bringing more capital efficiency, safety, and ease of use to all Web3 users. The team has already secured multiple strong partnerships with projects that share a similar vision for the future of DeFi and Web3. And many more are to come, including Metaverse, NFTs and real world asset tokenisation!
In the future, a true partnership with Balancer can help further these goals and solidify both protocols as cornerstones of Decentralized Finance.
When will the strategy be deployed?
The first step is for Ithil to roll out the testnet, and conduct testing to create the best product possible before even deploying to mainnet.
The private testing will commence very soon, initially with a small amount of carefully selected testers. We will scale up the amount of users from our tester pool (apply here) gradually, until we feel ready to open up the public testnet.
During this phase we will further improve the user interface and experience, iron out any remaining bugs, and do some final tweaking.
While mainnet deployment is not planned, there’s a high chance that the Balancer strategy will immediately become available at launch.
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