Stake DAO launches DeFi’s first-ever open arbitrage Strategy on Avalanche.

Democratising access to one of the market’s most sophisticated strategies, only with Stake DAO NFTs!

4 min readSep 29, 2021

Today, Stake DAO reveals something entirely new for the Herd, an arbitrage strategy debuting on Avalanche. The Arbitrage Strategy is a capped, high-yield product open exclusively to Stake DAO NFT holders, with zero performance or withdrawal fees!

Launched in partnership with quantitative hedge fund Stake Capital, the strategy uses a proprietary arbitrage strategy on the Avalanche chain to generate revenues of over $2 million a year, at current rates.

How can I deposit in the Strategy?

The goal of Stake DAO NFTs has always been to reward our most loyal users, which is why we’re opening up the Arbitrage Strategy solely to holders of two newly released NFTs, Tamiel and Leviathan.

Once you secure a Tamiel or Leviathan NFT (by redeeming points in the Palace, excluding the Unique Leviathan), you can stake it in the strategy, which allows you to deposit a certain number of SDT, you can see this below.

Users stake SDT and receive a share of the rewards pool proportionate to their share in the strategy, as well as the rarity of their staked NFT. The user limits on SDT deposits have been calculated in order to ensure that the strategy maintains the highest yield possible, and access is democratized as much as possible.

In simple terms the steps to enter the strategy are:

Redeem Tamiel or Leviathan NFT in Marketplace
Head to Premium Strategies tab
Stake NFT (you will see your NFT ID on the tab) & deposit SDT
Receive rewards on ETH network, Stake DAO is taking care of the bridging!

How do I receive my rewards from the strategy?

Rewards can be claimed on a regular basis via the Avalanche Arbitrage Strategy tab (target reward distribution cycle is every week). They will be distributed in sdFRAX3CRV, so that users can already get some additional yield on their rewards even before they’ve claimed them.

Once claimed, users are invited to stake their sdFRAX3CRV in the Frax gauge to earn additional returns. To convert into stablecoins, they can just withdraw FRAX3CRV from the Frax Passive Strategy on the “Strategies” page, and withdraw, from Curve’s Frax pool.

How can I withdraw from the strategy?

Users can withdraw at any time from the Avalanche Arbitrage Strategy as there is no lock or withdrawal period. However, prior to withdrawing, users need to claim their rewards manually, as they are not automatically distributed at withdrawal.

Fees

The DAO attributes zero performance fees or withdrawal fees to the Avalanche Arbitrage Strategy.

How is the price of Tamiel and Leviathan calculated?

A key question in this new NFT gated access framework is the Palace point cost for NFTs. It is a complex question to answer, as the following considerations have been made:

The NFTs should not be all redeemable in the first block so that everyone gets a chance to redeem one;
Unique NFTs need to be more attractive than rare ones, themselves more attractive than common ones, so that it is always better to mint one Rare rather than several commons, or one Unique rather than several commons/rare;
The best strategy for all users is to try to mint the rarest NFT as possible, and given this, all users should ideally at first be able to mint a maximum of one NFT

With these objectives in mind we set the “Maximum SDT stake per point redeemed” as the key attractivity criteria of each scarcity.

This objective and the will to allow anyone to participate in the race for each scarcity enabled us to determine the Palace points costs of NFTs and their utility:

Detailed calculation on how those thresholds have been determined can be found here.

NB: The one Unique Leviathan card will be auctioned off on OpenSea and not redeemed from the Palace. Stay tuned for announcements.

The best of DeFi, for everyone

For users that have just discovered Stake DAO — welcome! With the launch of the Avalanche Arbitrage Strategy, Stake DAO is doubling down on its commitment to opening up the best of DeFi to anyone and everyone. If you are an Avalanche user, you can earn AVAX rewards by staking on our delegator, instructions here!

If you haven’t earned enough Palace points to redeem a Tamiel or Leviathan NFT, you can start earning today by staking SDT for xSDT in Governance.