What is Airpuff ?
Airpuff is a platform for farming airdrops that offers various earning methods tailored to your risk profile:
Buff: In this section, you can farm airdrop points using looping with up to x15 leverage. This method allows you to accumulate a large number of points, but you'll have to pay lenders an annual interest rate of 20-80%.
Lend: Here, you can provide your assets to be used by leveraged farmers. You'll receive 10% points of what leveraged farmers harvest plus interest on the use of your money.
Air-con: This is similar to lending but your assets are not used by anyone else, meaning you won't earn significant profits. Here, you can farm project points and Airpuff points without any leverage.
For our strategy, we will focus on the Buff section.
By registering on Airpuff using these invite codes, you will join the mediumrare team and unlock bonus percentage points on your daily earnings and the overall team income will be higher.
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Strategy Explained: Leveraged Farming of weETH on Arbitrum
Opening the Strategy: Look at the interest rates. You need to choose the asset you will borrow for looping. Note the interest rate you'll pay for borrowing.
Option 1: Create a long position by borrowing a stablecoin. This strategy incurs lower interest rates, but there is a risk of liquidation if the price of ETH falls, although it also offers additional profit potential if the price rises.
Option 2: Borrow wstETH or ETH. This option only carries the risk of depegging, but the interest rate is almost twice as high.
Unfortunately, Airpuff does not support features like stop-loss, so we will skip the leveraged long option for now and use ETH as the borrowing asset.
Implementing the Strategy: In this example, you deposit 1 weETH and borrow ETH with x15 leverage. This nets you x12.75 EigenLayer points and x12.75 Etherfi points, but you will have to pay an annual interest of 47% on your position.
Finding a perpDEX: You need to find a perpDEX where shorting ETH can fully or partially offset these losses through funding rates. At the time of writing this guide, suitable funding rates are available on exchanges like HMX and Vela.
Therefore, open a short position on ETH equivalent to your position on Airpuff to achieve free leveraged points farming.
Risks
Depegging Risks
Strong Price Increases: A significant rise in the cost of ETH can lead to the liquidation of your position on perpDEX, so it is crucial to monitor your position and possibly rebalance your strategy occasionally by partially selling ETH from Airpuff and adding collateral on perpDEX.
Increase in borrow rates on Airpuff - the rates may rise due to a decrease in available assets for lending.
Decline in funding rates on perp dex - an increase in shorts on ETH on perp dex will result in funding rates no longer compensating for your costs on the borrow position.
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