LYF Process with OpenWorld on Arbitrum

Daniel's Journey: Leveraged Yield Farming with OpenWorld

1. Collateral and Selection: Daniel begins with 100 USDC collateral, allowing him to borrow additional funds for investment. He can choose between USDC, ETH, or a combination of both.

2. Choosing Leverage: Daniel selects a leverage of up to 3x, which enables him to borrow more funds and magnify his investment. OpenWorld provides options for various risk levels associated with different leverages.

3. Automatic Rewards: OpenWorld reinvests Daniel's yields automatically, compounding his investment without manual intervention.

4. Calculating Returns: Given an 18% yield on assets and 7% borrowing costs, utilizing 3x leverage could potentially lead to 40% gains. This translates to an approximate Annual Percentage Yield (APY) of 43.24% with monthly compounding.

Leveraged Yield Farming Details

Assumptions:

• 1 ETH = 1000 USDC

• Initial Collateral: 100 USDC

• Leverage Factor: 3x

• Yield Farming APR for ETH/USDC: 18%

• Borrowing Interest for ETH: 7%

Total Farming Capital:

• Initial Collateral + Borrowed Funds = 100 USDC + 0.2 ETH = 300 USDC

Leverage Options and Position Details:

1. 1x Leverage Position:

   • Initial Collateral: 100 USDC

   • Leverage: 1x

   • Assets Borrowed: 0.0 ETH

   • LP Amounts: 50 USDC + 0.05 ETH

   • Position: Long

2. 2x Leverage Position:

   • Initial Collateral: 100 USDC

   • Leverage: 2x

   • Assets Borrowed: 0.1 ETH

   • LP Amounts: 50 USDC + 0.1 ETH

   • Position: Neutral

3. 3x Leverage Position:

   • Initial Collateral: 100 USDC

   • Leverage: 3x

   • Assets Borrowed: 0.2 ETH

   • LP Amounts: 150 USDC + 0.15 ETH

   • Position: Long 50 USD / Short 0.05 ETH

Total APR and APY Calculation:

• Total APR = Yield Farming APR - Borrowing Interest = (18% * 3) - (7% * 2) = 40%

• APY Calculation (Assuming Monthly Compounding):

  • Monthly Compounding: n = 12 (12 months in a year)

  • APY = (1 + (40% / 12))^12 - 1 = 43.24%