Thread by @lemiscate

Today's #Frenchchart is a preview of an arb opportunity allowed by Aave V3 emode.

To allow it :
V3 deployed ✅
rETH snapshot vote starts tmr 🔃
cbETH AIP this week 🔃
wETH interest rate new parameters vote start tmr 🔃

Read the next tweet for how it works & risks!

This strategy use leverage to benefit on peg deviation of two Liquid staking derivative cbETH (coinbase) (underpeg of ~2%) and rETH (rocketPool) (overpeg of 1%)

It leverages emode to increase position size and eat that derivation theoretically up to x10 (don't do max leverage)

The whole bet is when the shanghai upgrade is activated, LSDs will be arb back to peg.

This is what happened with others networks allowing unstaking such as Matic.

But nothing is guaranteed, and even if that works, it might take longer than you're comfortable holding.

Also, the bet can be correct, but you can STILL be rekt if, for some reason, prior to the upgrade, the LSD you use as collateral depeg violently.

Something bad can also happen with the upgrade, and you're REKT. Nothing out there is risk-free, exercise caution and DYOR folks.

Recap:

This is a short rETH/long cbETH strat that uses Aave V3 emode to up to x10 arb the current peg derivation
leading to potential ~25-30% ETH profit (most likely less than that. Don't leverage to max anon) until shanghai upgrade.

DYOR, beware of risks, and have fun!