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Borrow EURO3 and earn AAA points. 3A is also part of the Surge program to earn LXP-L.

wUSD+ Strategies

3A DAO

Overnight wUSD+ yield-bearing stable coin is now available as collateral for EURO3 loans in the 3A protocol. Users can borrow EURO3 against their wUSD+ without paying any recurring interest. This means users can buy more wUSD+ with their EURO3 and leverage their wUSD+ position at zero recurring cost. 

wUSD+ is a wrapped version of the USD+ yield-bearing stable coin. USD+ is a rebasing token, meaning that users holding it will see their balance increase automatically to reflect the earned yield. wUSD+ is a non-rebasing version of USD+, which can be used in different DeFi protocols, including 3A. The price of wUSD+ increases over time to reflect the yields, and wUSD+ can be unwrapped to the correct, higher number of USD+ which includes the yields. 

To acquire wUSD+ uses can wrap USD+ tokens using the Overnight app, in the MINT/REDEEM tab https://app.overnight.fi/ 

wUSD+ Leverage Strategy 

Here’s how this strategy works: 

  1. Deposit wUSD+ to your 3A vault in the 3A app https://app.3adao.org/vaults
  2. Borrow EURO3
  3. Swap EURO3 for USD+ on Lynex https://app.lynex.fi/swap
  4. Wrap USD+ to wUSD+ in the Overnight app https://app.overnight.fi/ 
  5. Deposit wUSD+ to your 3A vault
  6. If you want to increase your leverage, repeat steps 2 – 5
  7. Strategy Spreadsheet (how the strategy performs with different values)

Currently wUSD+ has a collateral ratio of 1.1, which means that for every EURO3 borrowed you need to provide 1.1 EUR  worth of wUSD+. The maximum leverage, if you loop this strategy (meaning go over steps 1 – 5 over and over again) is 9. This means that for every EUR worth of initial wUSD+ you can hold up to 9 EUR worth of wUSD.  

This leverage ratio also means that the USD+ yields are significantly increased by this strategy. For example, if the APR on the USD+ is 30%, using this strategy the APR would be up to 270% 

When you want to withdraw your wUSD+ you need to pay back the respective portion of your EURO3 loan, or provide a different collateral instead of wUSD+. For example, you can replace wUSD+ in your vault with ETH, withdraw wUSD+ and sell it. All without having to pay back the EURO3 loan in the vault. 

Keep in mind that every time you loop this strategy, the risk exposure of your vault increases and the Health Factor of your vault decreases. If the EUR price of wUSD+ goes down, the HF goes down as well. If the HF reaches 1, your vault will be liquidated and you will lose all your collateral. 

Since USD+ is a rebasing token, it may experience losses (negative rebasing), which in turn could impact the value of wUSD+. However, thanks to delta-neutral strategies such as ETS and spot-perpetual strategies, these methods hedge against price movements in underlying assets, minimizing risks and delivering consistent returns. But keep in mind that the $/EUR exchange rate may change over time and affect the EUR value of your wUSD+ collateral. 

wUSD+ Staking A3A Strategy 

Staking A3A is another strategy you can use. Here’s how it works:

  1. Deposit wUSD+ to your 3A vault in the 3A app https://app.3adao.org/vaults
  2. Borrow EURO3
  3. Swap EURO3 for A3A on Lynex https://app.lynex.fi/swap
  4. Deposit A3A to 3A Cashback Pool https://app.3adao.org/staking 
  5. Earn cashbacks and use them to repay your EURO3 loan. 
  6. If you want to maximize your stake in the 3A Cashback pool, repeat steps 2 – 5.

Currently A3A deposits in the cashback pool are subject to a 6 months lock. It means that the staked A3A should remain staked for 6 months. There’s an option to withdraw A3A sooner, but the protocol will charge a fee for the early withdrawal (currently at 40%). 

wUSD+ Redemption Strategy

Depending on the HF of your vault, wUSD+ may be available for redemptions. A redemption happens when someone else pays back some of your EURO3 loan in exchange for the equivalent EUR value of the collateral. The redeemer pays a redemption fee (currently 1%) to your vault, so effectively for every 1 EURO3 they pay back, they only receive 0.99 EUR worth of collateral. 

This means you can borrow EURO3 again and buy back wUSD+ without incurring any losses (the 1% redemption fee should cover the minting fee and the swap fees). Since the borrowing fee is at 0.5% and the redemption fee is at 1%, every time your vault is redeemed and you buy back your wUSD+, you gain an extra 0.5%.

Here’s a strategy that maximized the gains from the redemptions, A3A rewards and cashbacks:

  1. Deposit wUSD+ to your 3A vault in the 3A app https://app.3adao.org/vaults
  2. Borrow EURO3
  3. Deposit EURO3 in the 3A Stability Pool https://app.3adao.org/staking 
  4. Earn A3A rewards from the cashback pool, together with liquidated collateral
  5. If liquidations happen, claim your share of the liquidated collateral from the Stability Pool, convert it to EURO3 and deposit it back to the Stability Pool.
  6. Deposit A3A to 3A Cashback Pool https://app.3adao.org/staking 
  7. Earn cashbacks and use them to mint more EURO3. 
  8. Repeat steps 3-6
  9. If your vault is redeemed, used EURO3 in the Stability Pool to buy back your wUSD+ and go back to step 1

As mentioned above, currently A3A deposits in the cashback pool are subject to a 6 months lock. It means that the staked A3A should remain staked for 6 months. There’s an option to withdraw A3A sooner, but the protocol will charge a fee for the early withdrawal (currently at 40%). 

About Overnight Finance

Overnight is a cutting-edge decentralized finance (DeFi) platform that offers users innovative solutions to maximize their earning potential. At the core of Overnight is the concept of stablecoin-based DeFi. At the heart of its product line is USD+, which is a yield-driven stablecoin, fully backed by collateral. This collateral for USD+ is 1:1 peg to USDC for price stability and rooted in DeFi strategies that generate returns.

 

Disclaimer: The information provided in this post is intended for educational purposes only. It is not intended to serve as financial advice, and any actions taken based on the content of this post are at the sole discretion of the reader. The views and opinions expressed herein are those of the author and do not necessarily reflect the official policy or position of any organization. Readers are encouraged to conduct their own research and seek professional financial advice before making any investment decisions270

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