A new strategy for Flamincome’s USDT pool is predicted to increase its APY to 15%, according to a recent announcement by the Flamingo team. Deposited USDT assets will be gradually migrated to the new strategy automatically.
Originally, Flamincome’s USDT pool adopted DForceUSDT strategy from Yearn Finance. This contract works by staking deposited assets with the dForce platform, accruing it’s native DF reward token. These tokens are then sold via Uniswap along the WETH -> USDT route, increasing the total pool’s USDT balance and proportionally distributing the proceeds to investors.
However, due to the limited number of DF remaining for distribution in the pool and dependency on DF token price, this strategy currently offers relatively low yield. Data from stats.finance/yearn places the current weekly APY for the DForceUSDT strategy at 1.30%.
As the name implies, Flamincome’s new CurveYUSDT strategy makes use of Curve Finance’s Y Pool. Curve primarily acts as an exchange for stablecoins, intended to provide low fees and low slippage. Users that provide liquidity are rewarded primarily from the trading fees.
However, in the Y Pool, rewards are subsidized through the use of Yearn to lend stablecoins to whichever lending protocol offers the best current rates. The Compound, Aave, and dYdX projects are currently used for lending purposes.
A similar Curve-based strategy is currently in use for WBTC staked on Flamincome. This supplemented income from the Y Pools enables higher expected returns, up to the predicted 15% based on current statistics from Curve. It should be noted that the greater complexity and increased variety of supported protocols in this strategy increases the risk in addition to the potential reward.
The Flamingo team notes that in the future, the ability to select and activate new strategies will be handled by the Flamincome DAO.