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xETH

Synthetic ETH

About

APY: 20.9%

TVL: $M

LP for the ETH-USDC pool and dynamically hedges its IL with long inverse perps.

Key features:

  • Concentrated liquidity model;

  • Range from -25% to +35%;

  • LP for the ETH-USDC pool in a symmetric range.

  • Dynamically adjusts long inverse perps hedge to ensure synthetic ETH exposure.

Conditional rebalances:

  • Time-based: once per week

  • Price-based: after price change >10%

Learn more

Performance:

Performance:

Pure ETH
xETH

The backtested performance over the last 12 months (01.12.2023 - 01.12.2024) is 20.9% against ETH and 87.2% against USDC. The strategy perform sustainably during both fast upside, bear and crab markets. Effectively capturing arbitrage opportunities between spot and derivatives markets, while also collecting interest rates.

Risks:

To target precise synthetic ETH exposure - the strategy uses 50% of the funds to provide liquidity on Uniswap V4 for the ETH-USDC pool and 50% as an ETH reserve, which we further use to gradually increase our inverse perps 1x long position. This introduces a risk of liquidation after the ETH price change of -50%.


To prevent it, we execute conditional rebalances:

  • Time-based: once per week for LP range updating and trading fees compounding

  • Price-based: after price change >20%

Risks:

Risks:

To target precise synthetic ETH exposure - the strategy uses 50% of the funds to provide liquidity on Uniswap V4 for the ETH-USDC pool and 50% as an ETH reserve, which we further use to gradually increase our inverse perps 1x long position. This introduces a risk of liquidation after the ETH price change of -50%.


To prevent it, we execute conditional rebalances:

  • Time-based: once per week for LP range updating and trading fees compounding

  • Price-based: after price change >20%


Maintaining system stability and optimizing strategy performance.