Difficulty Level: Easy
Required Capital: Low
Potential Income: 15%-50%
Risks: Low
In this article, I will explain how you can independently create a strategy to earn money by replicating the strategy proposed by the Ethena project.
What we will need.
Lending platform + ETH
Perpetual DEX + stables
Since this strategy is quite simple, there won’t be a particular struggle in choosing; we will just select LST with the highest yield, which is mETH from Mantle in our case. Since mETH is a token that accumulates income from staking, there is no need to lend it anywhere; you can simply hold the tokens in your wallet. However, there is also an option to use mETH for farming points and potential airdrops. The INIT project with its recently launched Hooks is currently the best option for farming airdrops using mETH.
But remember, if you have 1 mETH and you perform a loop x5 against ETH, then on the perp DEX you should hedge the same 1 mETH, not 5.
Choosing a Perp DEX.
Here are my suggestions.
HMX - the optimal choice for those planning to use this strategy long-term, as besides the funding fee, you will also receive esHMX (which will subsequently bring you income) just for keeping a position open.
Vertex or Hyperliquid - two additional DEXs with minimal market commissions. On Vertex, you will also receive their tokens as trading rewards, and on Hyperliquid, you will accumulate points for an airdrop, and this DEX arguably has the highest funding fees out of these three (this will change soon).
Building the strategy.
The figures are approximate; the main thing is the proportions.
Buy 1 mETH. Yes, mETH is more expensive than ETH due to the continuously accumulating income, but let’s assume that mETH = ETH and it currently costs $3750.
Now, we need to deposit approximately $250 into a perp DEX. That is, for every mETH, you should have around $250.
Open a short on ETH with 15 leverage, which equals $3750. You can increase the leverage, increasing risks but reducing the necessary amount of stables required on your account.
I advise not to be greedy, and perhaps even drop to x10 leverage, then you will need to have $375 for each mETH.
Thus, we have 1 mETH, on which we receive approximately +7%, and against it, a short for the same amount, on which we sometimes even earn triple-digit returns.
What could go wrong ?
There is only one badscenario here, if the price of ETH suddenly rises significantly, causing you to get liquidated and meanwhile you fail to sell your mETH before the price drops below the point where you were liquidated.
There are other scenarios with lower probability such as mETH depegging from ETH, hacking of the projects you are using, but these are the risks you agreed to when entering crypto.
This strategy is quite simple and relatively safe if you follow the strategy discipline and are not greedy with leverage, but the temptation will be great, believe me.
In the following articles, we will look at more complex and profitable strategies with increased risk.
