Thread by @ASvanevik

You can margin-trade DAI/USDC when the peg strays from $1, in case you're not aware!

Example using @compoundfinance :
1. You have $1,000 $USDC on Coinbase
2. Buy $DAI @ $0.99 (incl. fees) => You now have $1,010.10 DAI
3. Lock your DAI into @compoundfinance

(thread)

4. Receive $68.69 in yearly *supply* interests (current rate)
5. Borrow 50% of your supplied DAI in USDC, i.e. $505.05
6. Pay $63.79 in yearly *borrow* interests (again current rate)

7. Buy more DAI @ $0.99 for your borrowed USDC => You now have $510.15 more DAI
8. Lock your new $510.15 DAI up in @compoundfinance for an additional $34.69 in yearly supply interests
9. You're now net positive on your interests: $39.59/year, or 3.96% on your initial capital

10. Assuming $DAI makes it back to the $1 peg (incl. fees), you will have earned $15.20 on the DAI/USDC price alone. And the borrowed capital was free.

This is *not* risk-free:
i) Rates can change, so your net interests become negative. However, the @MakerDAO stability rate naturally anchors $DAI to a higher interest rate than $USDC (which indirectly gets its rate from the Fed; yet Coinbase/Circle controls circulating supply).

ii) The DAI/USDC price could in theory tank, thus liquidating your position on dYdX. Managing your borrowing power in @compoundfinance can mitigate this risk to some extent.

Finally, you need more capital than $1k for this to be worth your time.

And once you increase capital substantially, your trades will impact the market (DAI/USDC price + interest rates).

Not financial advice #DYOR

P.s. Track cheap DAI on Coinbase here: dai.defi.ai