Recursive Leverage?
Last updated
Last updated
Instead of using SuperStaker, you could achieve the same end result by manually doing recursive leverage. Here is an example of how that could be done, assume an initial deposit of 1 ETH:
Stake 1 ETH via Lido and receive 1 stETH.
Deposit 1 stETH on Aave.
Borrow the maximum 69% LTV: ~0.69 WETH.
Withdraw (unwrap) the WETH to get 0.69 ETH.
Stake 0.69 ETH via Lido and receive an additional 0.69 stETH.
Deposit the 0.69 stETH on Aave.
Because you now have more collateral, you borrow more WETH against it. Borrow 69% of 0.69 = ~0.48 WETH.
Withdraw (unwrap) the WETH, etc.
You can keep repeating the above to recursively borrow, stake, and deposit. It has to be done in these incremental steps because Aave requires deposited collateral in order for you to borrow more. Note that each of the above steps represents an Ethereum Mainnet transaction that costs gas. To do this once you need to pay for 6 transactions. To continue through 15 levels, it would require ~60 transactions ... and considerable time.
SuperStaker effectively achieves the same thing as 15 levels of recursive leverage with only 2 transactions: one to approve the debt, and the other to do the rest. If you already have stETH, then it takes 3 transactions, with an additional approval needed. The SuperStaker magic is the use of Aave flash loans.