Leverage is Coming to Yearn Finance Via Alpha Homora Protocol

Yearn is getting another tool: leverage.

Yearn Finance, pioneer of yield aggregation, has started what participants hope to be a synergistic relationship with DeFi project Alpha Homora by way of its partner projects, C.R.E.A.M. and Sushiswap. 

Alpha Homora, a protocol which enables leverage for liquidity providing and yield farming, recently announced its version two (v2) of the project. The announcement lists C.R.E.A.M. and Sushiswap as partners and, as both projects are part of Yearn’s ecosystem, the yield aggregator is involved by extension. 

Yearn developed a number of partnerships within the DeFi ecosystem in the last year including ones with Pickle Finance, C.R.E.A.M., Sushiswap, and Cover, the insurance protocol. 

90x Leverage

At a high level, users will be able to employ cross-platform strategies to gain 90x leverage on stablecoins and 80x with ether. 

Cronje explained  the new functionality with an example: “Deposit 1k DAI can deposit 1k DAI and 1k USDC into Alpha Curve or 1k DAI and 1 ETH into Alpha Sushiswap borrowed indirectly via Iron Bank.” 

Complex 

Though Alpha Homora offers documentation on how the protocol achieves leverage,  collaboration between protocols is exceedingly complex. 

In order to use leverage as a yield farmer the protocol will borrow ETH from your pool based on your chosen degree of leverage, sell some ETH so as to be able to provide both assets to a liquidity pool, stake the target liquidity pool’s LP token into another liquidity pool, and resell the resulting farmed token for more ETH, at which point the leverage process repeats.

Alpha Homora pools all include ether as a pair. Now, as the Yearn ecosystem is integrating with the leverage protocol, users will be able to “deposit DAI and borrow an equivalent dollar amount of ETH via C.R.E.A.M and enter SushiSwap liquidity pools utilizing Alpha Homora’s leveraged yield-farming product,” according to the project’s newsletter.

Just a Degen

Upon further questioning of how the integration will work under the hood, a user on Yearn’s discord offered a key differentiator that now, the debt used for leverage can constitute a variety of assets through C.R.E.A.M., as opposed to only ETH.

To be sure, the user ended his comment with a disclaimer regarding their understanding, saying, “I’m just a degen.”

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