Delta-Neutral Yield Farming
The current DeFi ecosystem offers many strategies for earning a return on capital by providing liquidity to decentralized exchanges (known as yield farming or market-making). Most of these strategies, however, require exposure to one or more volatile assets. Until Scion Finance, few options existed for earning a competitive yield on stablecoin deposits alone.
Scion Finance offers users market-making strategies that provide exposure to the returns of farming volatile assets while hedging the market risks of those assets. For example, a user can earn yield from providing liquidity to the USDC/AVAX with a USDC-only portofolio, without holding any AVAX. These kinds of strategies are called delta-neutral, because they are not dependent on any particular market direction to make a profit (unlike, going long or short ETH for example).
Our strategies can also work in reverse. If someone wants to hold 100% AVAX and earn yield on AVAX/USDC they can do so by depositing funds into an AVAX strategy.
In order to remain delta-neutral we are automatically rebalancing the strategy as prices move up and down. The rebalancing eliminates impermanent loss (losses resulting from price movements when offering liquidity to automatic market makers, more on this below).
We are currently working on adding leveraged market-making strategies (using protocols like Impermax and Alpha Homora). This will allow users to enter leveraged positions, increasing their returns up to 5x.
Our future plans involve developing Uniswap V3 hedged strategies, and an options trading/issuing protocol.
Last modified 1yr ago