aleanos / CompoundLoop

Experiment with stablecoin leveraged reborrowing on Compound

CompoundLoop

What is this

DeFi strategy to invest USDC in Compound in a loop in order to earn COMP rewards for approx x7 of the initial investment.

E2E Tests

The tests are explained here. Run them on a mainnet fork with Hardhat:

npm install
npm run test

Contract deployment

It's recommended to use Remix to deploy the contract using Trezor. Instructions:

1. Create a clean Remix project and upload /contracts/*.sol into the Remix /contracts directory

2. Fix OpenZepplin imports in all files by replacing @openzeppelin with https://github.com/OpenZeppelin/openzeppelin-contracts/blob/v3.3.0

3. Under Solidity Compiler tab:

   • Set Enable optimization: 200
   • Click Compile CompoundLoop.sol
   • After compilation, copy its ABI by clicking ABI below

4. Under Deploy & run transactions tab:

   • Set Environment: Injected Web3
   • Set Gas limit: 4000000
   • Near deploy, set address _manager to your Trezor address
   • Click Deploy

Management roles

• Owner can withdraw funds
• Manager can enter/exit the position in Compound

For simplicity, you can leave both roles as the deployer Trezor account since handling the contract can be manual (no bot needed).

Sending management transactions

It's recommended to take the ABI created during deployment and upload it as private custom ABI to Etherscan and this way we can easily use Etherscan's read/write interface (with Trezor) without publishing the contract source.

Gas costs

• Entering/exiting with $1M inside (with $10K minimum) takes ~5.5M gas
• Entering/exiting with $5M inside (with $50K minimum) also takes ~5.5M gas
• Claim COMP takes ~1M gas

Monitoring against liquidations

• Call getAccountLiquidity to see that the liquidity is not dropping to zero (approaching liquidation). The liquidity should usually increase over time since combined interest rate should be positive.
• For more exact results, it's better to static call (from a script) getAccountLiquidityWithInterest since this takes the latest interest into account too.

Emergencies

If exitPosition fails, exit can be done manually:

1. Using multiple manual rollback transactions, see test #3

2. The owner of the contract can also execute an arbitrary transaction using emergencySubmitTransaction

3. By sending more USDC to the contract before running exitPosition again, this will reduce the numebr of exit iterations

4. By limiting the number of allowed iterations in exitPosition or reducing redeemRatio below 1