Hi @ChaosLabs
Whilst monitoring the ETH Reserve on Prime, where AGRS is currently active, we have observed that market conditions have evolved and the methodology would benefit from being updated. Re-introducing the discount to the Lido stETH Index Rate would lead to the following benefits:
- Increased wETH Utilisation
- Increased wstETH Deposits
- Increased Revenue
For revenue specifically, the increase in the amount of debt, will offset the lower revenue per unit of debt. Not a recommendation and only for illustrative purposes, reducing Slope1 to as low as 2.45%, leading to utilisation narrowly under the Uoptimal, whilst a very large change still results in a minor increase in revenue, ~1%, it also generates >$85M (~14%) in wstETH deposit upside.
The additional wstETH deposits helps the LRT deposits grow, or if no resulting inflow occur then the LRT/LST leverage strategy is slightly more profitable. Given the EIGEN price performance of late, it is not likely new LRT inflows will materialise. However, the improved performance may lead to higher retention of LRT deposits.
The green line is Base + Slope1 and the Blue is the Borrow Rate over 14 days with hourly sample points.
For easy reference updates to the wETH Borrow Rate can be found via the Chaos Labs dashboard below:
More generally, updates made on the 3rd Feb and 5th Feb coincided with InstadApp Lite generating a negative return which triggered a refinancing and the following ETH debt adjustments, decrease on Prime, increase on Core and an increase on Spark. This product is agnostic and optimises for returns, making it a good tool for monitoring how funds flow across liquidity protocols.