Yield Generation through Collaterized XAUm

Earn yield from collaterized XAUm on lending platforms by arbitraging stablecoin deposit/borrow rates across venues

Stablecoins can be borrowed on lending platforms (e.g. Kinza, Avalon) using XAUm collateral, and subsequently deposited into venues with higher relative deposit APY to earn a nett yield. This enables a yield generation opportunity which can be quickly captured through mostly on-chain transactions.

Examples of a yield opportunity on 18 Nov 2024:

XAUm	Borrow	Borrow APY	Deposit APY	Nett APY
$200,000	$120,000	7% (Kinza USDC)	16% (Aave USDC)	USDC Nett APY 9.0% XAUm Collateral Nett APY 5.4%
$200,000	$120,000	7% (Kinza USDC)	20-31% (OKX USDC)	USDC Nett APY 13.0-32.0% XAUm Collateral Nett APY 7.8-14.4%

As deposit/borrow rates fluctuate across different venues, yield opportunities arise. With the strategy of using the generated stablecoin yield to periodically buy additional XAUm, this provides an effective return in XAUm denomination.

Moving forward, Matrixdock will be launching tools to simplify the entire process, in areas of monitoring markets to spot yield opportunities or provide the convenience of bundling the actions into an automated execution flow.

Disclaimer: This article serves as an illustration of potential yield opportunities, and does not constitute as financial advice or recommendation of any actions. Users should exercise their own discretion when executing their positions, and are aware that lending market rates might be volatile.