Unlocking the Potential of sUSDe Yield Farming: A Deep Dive into Levva’s Approach

The markets are heating up, and funding rates are on the rise. Strategies like Ethena’s delta-neutral approach, which earns 3% on stETH staking and 15-20% on perpetual funding rates, are gaining a lot of attention. On the other hand, Pendle’s Principal Tokens (PT) on sUSDe and USE tokens are offering some very attractive APYs. 

But here’s the big question: How can we leverage farm that yield effectively? IN the following blog we will take a look at how Levva is designed under the hood, and then explore how Levva’s pools and vaults can optimize your yield farming strategy. 

The Architecture Behind Levva

Levva was built with modularity in mind. This modular design ensures that every component can be optimized to provide the most efficient DeFi experience. Here’s a breakdown of Levva’s core components:

Pools: These are highly optimized two-sided lending markets that support auto-liquidations of risky positions. Lenders earn interest and liquidation penalties, while traders can leverage long or short positions. Levva’s pools ensure that farmers never pay more in interest than they earn, with customizable interest-rate curves to suit any market scenario.

Adapters: Adapters act as connectors between Levva pools and various trading venues. Our protocol integrates with major platforms like Uniswap V3, Algebra, Balancer, and Curve, enabling seamless access to the best liquidity sources.

Oracles: Accurate pricing is crucial for DeFi operations, which is why Levva relies on robust on-chain oracles from the above DEXs/AMMs, as well as data feeds from PYTH and Chainlink.

Vaults: Levva’s vaults automatically manage liquidity allocation by connecting to both Levva pools and external protocols. These vaults are designed to optimize returns for lenders, allowing them to earn passively with minimal effort.

Portfolio Management System (PMS): The PMS periodically rebalances vault allocations to meet Levva’s predefined objectives on return and risk, ensuring the best possible outcomes for users.

Now that we understand how Levva’s architecture works, let’s dive into a practical example: leveraging the yield on PT sUSDe tokens.

The Curious Case for sUSDe

sUSDe is an interesting token to trade that presents a unique challenge for users. The question we face is: What quote asset should we use for borrowing and leverage?

To maximize exposure and liquidity, it makes sense to attract USDC(t) as the lending liquidity rather than sUSDe. Why? Pure holder statistics show that there are roughly 100 times more USDC(t) holders on the mainnet compared to sUSDe holders (you can check Etherscan if you’re curious). This disparity in holder numbers means that focusing on USDC(t) ensures we have deeper liquidity and more accessible trading.

Current sUSDe Liquidity Pools

Here’s the current state of sUSDe liquidity on-chain:

- sUSDe / USDT Uni v3 pool: ~$2.4M TVL

- sUSDe / USDC Balancer pool: ~$3.8M TVL

- sUSDe / sDAI Curve pool: ~$40M TVL

While the Curve pool with sDAI has the highest liquidity, it also poses a problem. Using sDAI as a quote asset doesn’t align with our objectives at Levva due to its limited holder base and lack of substantial trading volume against USDC(t). This highlights the need for a more efficient solution to leverage sUSDe.

Introducing Levva’s Adaptive Solvers

To address these liquidity challenges, Levva’s adapters need to evolve into solvers. Instead of hardcoding which pool to use, solvers will dynamically select the best trading routes to optimize yield farming strategies. 

Imagine you want to open a position on PT sUSDe / USDC(t). With a solver in place, Levva’s system can automatically find the most efficient exchange rates between sUSDe and USDC(t) at the time of trade execution. This not only optimizes returns but also minimizes slippage and transaction costs.

How Levva’s Solvers Work

Let’s take a look at an example of how a solver could optimize the route for trading PT sUSDe:

1. Borrow USDC from Levva.

2. Swap USDC for DAI on Curve’s 3pool.

3. Stake DAI to receive sDAI.

4. Swap sDAI to sUSDe on Curve’s sUSDe pool.

5. Use sUSDe to buy PT sUSDe on Pendle with leverage.

The solver doesn’t just pick any route—it selects the optimal one based on transaction fees, protocol commissions, and market impact. The goal is to minimize costs and maximize returns, using a strict objective function to guide decisions.

Additionally, smart solvers could go a step further by integrating staking strategies. For instance, they could automatically stake DAI or USDe tokens with platforms like Summerfi or Ethena to receive respective staked tokens, further reducing market impact.

The Bottom Line: Making DeFi Simpler and More Efficient

At Levva, we’re always thinking about how to make DeFi easier, more efficient, and more rewarding for our users. By integrating adaptive solvers and automating the yield farming process, we’re creating a protocol that takes the hassle out of managing your DeFi investments.

Our goal is simple: to provide a seamless, automated experience that maximizes your returns while minimizing risk. As we continue to evolve, we’ll keep pushing the boundaries of what’s possible in DeFi.

So, if you’re tired of constantly monitoring liquidity pools and rebalancing your positions, Levva has you covered. Let our automated smart vaults and solvers do the heavy lifting, so you can focus on what matters most—growing your assets.

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