DeltaPrime allows for a range of new and unique strategies, as well as redefining older -arguably outdated- strategies. The freedom that you have within the Prime Account enables you to design the strategy that suits you best, making the possibilities endless.
For starters, any strategy that you are currently running, can be performed better on DeltaPrime. Whether you borrow capital for on-chain gaming, airdrophunting, or need to liquify assets for anything in meatspace, we promise you: you can do it better on DeltaPrime. Check out the Efficient OC for more on this.
If you do want to check out the power of the new and unique strategies available on DeltaPrime, below we have outlined a few strategies that have become popular among the DeltaPrime community. Although they are popular, you have the complete freedom to design your very own strategy, or tweak them to your liking. After all, it is your strategy, and whether it fits depends on numerous factors, among which: your risk/reward, investment goals, available effort and time, expertise, etcetera.
Some strategies are easier than others. The simplest strategy by far is still to deposit into the DeltaPrime Savings pools for the most passive investment strategy. Other investors will do the work for you as they borrow your capital in return for interest; single click, no impermanent loss, and your capital is protected by liquidation bots.
Not convinced? Want to get everything out of your Prime Account instead? Great. Grab yourself a beer or coffee and let's dive in.
Overcollateralization (OC) is the normal borrowing play: borrow to keep exposure on a held asset, while using the borrowed assets in everyday life (groceries, mortgage, the usual). On first glance, DeltaPrime's walled garden makes it seem impossible to do this. After all, the cost of trustless undercollateralization is the inability to withdraw borrowed funds right?
Wrong. Efficient OC not only enables investors to use the exact same amount of fiat IRL-while keeping exposure-as on an overcollateralized protocol. Moreover, they can efficiently use their collateral simultaneously.
The Efficient OC is perfect for investors who want:
To simply copy their existing strategies
To liquify an asset, without losing exposure on said asset
Their collateral liquid and yielding, even while fully functional as collateral
In this strategy, an investor is planning to propose to his wife with a nice $700 wedding ring, yet to be purchased. While he does have the money to buy it right now, he holds it in BTC.b, an asset he expects short-term bullish price-action on. The total value of the BTC.b is $1000. He has three options:
1) Save ~250 a month and propose after three months. 2) deposit $1000 BTC.b on Avalanche's main overcollateralized protocol, borrow $700 USDC against it, and get liquidated if BTC.b drops by 6.6% before mooning + save 3 months in order to unlock the BTC.b for DeFi.
Or 3)
By using strategy 3, the investor can immediately liquify his assets, while keeping $1000 of BTC.b exposure. While from his perspective he borrowed undercollateralized, the protocol covers $700 in borrowed funds with $1000 in BTC.b, leaving him with the exact same exposure as in option 2: If BTC.b doubles in value, after repaying, he has the same capital gains as in option 2. Bonus: where in option 2 the BTC.b is locked as collateral, yielding 0.11%, with DeltaPrime, the investor can use the full $1000 BTC.b in integrated protocols for additional yield, potentially out-earning his interest. Efficient overcollateralization.
This way of borrowing does not lead to higher liquidation risk: with option 2, at the time of writing, liquidation happens if BTC.b drops 6.6% in value (max LTV = 75%). On DeltaPrime, liquidation happens if BTC.b drops 16% in value (max LTV USDC -> BTC.b = 500%). Moreover, the amount liquidated in option 2 is 50% whereas, with DeltaPrime, only 25% gets liquidated. This means a softer cushion for the mistaken investor. Leaving him with more collateral should his price expectation turn out to be wrong.
The goal of this strategy is to liquify part of your assets without losing exposure. It is very likely the Account APY is not at its optimal level, and possibly even negative (as it would be elsewhere).