Pods Yield: Accumulate more ETH through volatility without risking your capital [Sponsored]
Pods Yield's first vault, stETHvv, is the new best way to compound ETH with no market risk to your principal. The strategy unlocks the power of options to earn more with volatility.
By: Pods FinanceSponsored
Pods Yield is a new line of products from Pods Finance that allows users to invest in a strategy with just one click. So far, there’s only one strategy live for the public, stETHvv. stETHvv focuses on ETH accumulation over time and is perfect for ETH long-term holders. The strategy uses options to let users earn more ETH when the market is volatile without putting the principal at risk.
After working with DeFi options since the beginning, they were sure about how powerful these financial instruments were. At the same time, they noticed that most users would like to access the benefits of the options without worrying about the complexity that comes with them.
So Pods decided to create a product that would allow users to unlock the full potential of options in an easy way.
With this in mind, they recently launched Pods Yield, a one-click deposit investment product with a straightforward app.
stETH Volatility Vault
Pods Yield’s first strategy is stETHvv (Eth Volatility Vault) and is a low-risk strategy focused on ETH accumulation.
It combines Lido with a strangle to get a consistent base yield and unlimited upside during volatile markets. This means that:
- Lido always guarantees a minimum yield to the strategy. So even when the options do not end in the money, the strategy will result in a minimum positive yield. And that’s why the graph below is all green.
- This is a “principal protected” type of strategy. This means that the strategy preserves the principal from market risk, and users can expect to withdraw at least the same that they deposited.
The graph below shows the weekly payout structure (after fees) of a 100 stETH deposit according to the price movements of ETH:
Who would want this product?
(I mean… who wouldn’t)
stETHvv is perfect for those that hold ETH and want to accumulate more ETH over time. It uses ETH’s volatility in its favor and earns more every time ETH price bounces, up or down.
DeFi Dad knows what’s good 👀
The current market is quite unpredictable and knowing which direction ETH price will go is no easy task. The only thing we’re sure about is that the volatility will continue to happen massively in crypto, so why not earn big with it?
Backtesting the Strategy
To see how this strategy would have performed in the past, we’ve run a backtest since 2015, comparing the following three strategies. The results were as seen in the graph:
- Deposit on stETHvv,
- Investing ETH in a lending pool with 3.9% APY,
- Just hold 100 ETH.
Look at the stETHvv. And all this without touching your principal 🤯
On stETHvv strangle set up, we’re estimating the purchase of call and put options using 50% of the weekly yield. This also considers weekly 20% OTM options, priced with regular Black Scholes and assuming 90% implied volatility. This backtest also assumes stETH is always equal to one ETH.
You can see in the graph how the vault performs whenever there’s an exercise. The exercise profit amount gets incorporated into the initial deposit, and the following week will compound the yield on top of that newly incorporated sum. You can identify exercises on the graph by checking when the balance goes up a level or step.
Please note that past returns are NOT a guarantee of future returns.
So there are no risks at all?
The stETHvv strategy does not expose your funds to market risk since it uses only part of the yield to set up the strangle. But any DeFi protocol is subjected to other types of risks, such as smart contract risk. You can read more about risks here.
The vault charges 0.1% management fee on the withdrawal and 20% performance fee whenever an option gets exercised.
Amazing, how do I get in?
Here is a quick video tutorial for you to deposit into stETHvv:
What to expect after depositing
In most weeks, when the market is flat (or ETH price is not bouncing), you can expect to earn half of the yield generated by Lido. But when ETH is having a crazy volatile week, the vault can make dozens of times more than Lido’s yield on the same period. Sounds interesting?
Pods Finance has been around the options market since 2020, but the story began earlier. The team deployed the first options protocol on mainnet with Ohmydai in November 2019. In 2021, the team deployed one of the first custom AMMs for options. Apart from the open-source pricing and the 24/7 options trading venue, Pods has created Airdrip (or Options Factory), a way for anyone to create options and bring composability to the next level. And now Pods is creating derivatives strategies focused on DeFi native users.
Pods is backed by some of the best DeFi investors in the space like Framework Ventures, Boost VC, IOSG, Tomahawk, Zeeprime, and more.
Keep posted on the updates from Pods Yield, don’t forget to join Pods Discord, follow them on Twitterand try out stETHvv from Pods Yield! 🥳