Guide to Maximizing AirPuff Points Revenue: How to Use Leverage to Increase Expected Returns

Original title: "Leveraged Points Farming With Airpuff.io"

Author: THOR AND HYPHIN

Compiled by Shenchao TechFlow

Introduction

In the current DeFi activities , the strategy of airdropping points through leveraged exposure is likely to be the best strategy. Participants in Ethena’s Season 1 event received returns ranging from 100-500% depending on their leveraged exposure to Ethena’s “shards.” Many expect Eigenlayer and its LRT ecosystem to be comparable in terms of returns, with EIGEN points currently valued at $0.20 to $0.40. One way to get these points activities is through Airpuff.

Airpuff is a multi-chain currency market that provides leveraged exposure to points projects such as Eigenlayer, Renzo, Etherfi, Kelp, Ethena and more. Users can leverage points up to 12.75x, or trade by lending assets, which can earn annualized interest rates in excess of 50%. Airpuff is preparing for their $APUFF TGE, the Foundry LBP that will last until April 11th at 12:00 PM UTC. Today’s report will break down the Airpuff protocol, the $APUFF token, and finally give specific strategies and expected returns.

Use Airpuff for Leverage Points Airdrop Campaign

At its core, AirPuff is made up of two key components that work together to facilitate Leverage Points campaigns .

1. Lending

All necessary lending operations are performed through the lending pool, which allows depositors to provide liquidity to the platform Sex is highly profitable on multiple networks.

There are no fees for deposits, but there is a flat 0.2% fee for withdrawing assets from the lending pool.

Interest received from provisioned assets is determined by the utilization of the collateral pool, meaning it will continually fluctuate based on demand. Accumulated interest is snapshotted every hour and distributed to the value of the tokens being lent, effectively compounding interest.

In most cases, ETH is in high demand and has the most attractive yields. This is mainly because borrowing non-ETH assets will Collateral is automatically converted to ETH when a position is opened, effectively going long, thereby introducing additional price risk to the borrower.

Another benefit of participating in the loan market is that users receive a share of all points earned using collateral.

WhalesMarket data shows that liquidity providers have cumulatively earned approximately $77,000 in points across all lending pools

Borrowers are also eligible based on the provided Specific assets (ETH and stETH receive higher rewards), time and amount provided to receive AirPuff point rewards.

2. Airdrop

You can use the protocol’s native airdrop strategy Buffs to obtain amplified airdrop rewards.

Currently, there are 12 different buffs available on 3 different networks, with most strategies related to LRTs that provide EigenLayer points, while also providing Native protocol incentives. However, there are also options that include additional unique ecosystem rewards (for example, Mode Points for strategy on Mode).

Depending on the strategy, users can leverage multiple collateral options to maximize potential rewards from events, including AirPuff, with up to 15x leverage. When borrowing or lending on any asset, be sure to be aware of higher-than-normal interest rates and take into account the complexities of using non-ETH collateral.

10% of all points earned from leveraged positions will be distributed to lenders and an additional 5% will be distributed to veAPUFF participants. There is also a fixed fee of 0.2% for closing a position.

For speculators with a smaller risk appetite, you can also choose the non-leveraged airdrop option while taking advantage of the rewards and incentives provided by the platform.

Projected Returns

To illustrate the potential returns of the strategy, let’s look at the rsETH Liquid Re-Staking Token from Kelp . The image below shows the vault on Airpuff. While it's nearly full now, capacity is likely to increase in the future.

In this example, wstETH is lent against it with 10x leverage using 5 ETH as collateral. Each cycle then converts wstETH to rsETH. Since Airpuff draws points and distributes them to veAPUFF holders and lenders, the effective points leverage is 8.5x. In the lower left corner you can see the interest rates for various assets.

The following is the return calculation for this strategy. Eigen Points and Kelp Miles values ​​are based on TVL and airdrop percentage predictions from another post and should be taken with a grain of salt (though these prices are more conservative). As can be seen, by depositing 5 ETH, with 10x leverage and a duration of 30 days, and lending out wstETH, the strategy returns an ROI of 16.94%, equivalent to an annualized return of approximately 206%. Keep in mind that there are a lot of assumptions here, so actual returns may differ from estimates.

With utilization rates above 80% in various markets, borrowing rates are currently very high, which has a negative impact on returns (nearly $6,000 in interest paid). More information on these below:

• 0-80% Utilization: Rates will increase linearly from 5% to 15%.

• 80-100% Utilization: Rate will increase linearly from 15% to 45%.

# Why not borrow in USDC or ARB since the borrowing rate is much lower? Because you have to bear more liquidation risk. If the value of rsETH against USDC or ARB drops, you could be liquidated and lose your entire deposit. As leverage increases, so does the risk of liquidation. The risk is much lower when lending wstETH as they all track ETH, but you could also be liquidated if rsETH decoupled. Compared to lending wstETH, the returns for lending ARB are as follows:

As you can see, the returns are higher. However, it is important to note that liquidation risk is also higher.

TGE & $APUFF

Early depositors of Airpuff can not only obtain basic points through Eigenlayer and LRT, but also obtain "Airpuff Points", which will Converted to a $APUFF airdrop in May. A total of 7% of the $APUFF supply will be airdropped to protocol users over two seasons. 4% of these will be airdropped in the first season, and another 3% will be airdropped in the following season. For more information on how to qualify, please see this page.

Additionally, the $APUFF Liquidity Boot Pool (LBP) is currently live on Fjord Foundry from 12am UTC on April 8th to 12am UTC on April 11th. As of this writing, Airpuff has raised $2.5 million in $APUFF in LBP, which will bring the token’s market cap to $8.7 million and FDV to $58 million. Click here to enter the LBP’s website:

$APUFF tokens will be listed once the LBP ends. The initial circulating supply is 16% (15% from LBP and 1% from private placement). Here are some comparison metrics between Airpuff, Pendle, and Gearbox.

APUFF Token Economics

Airpuff uses the dual-token model of $APUFF. Users can choose to lock $APUFF to earn veAPUFF (similar to vePENDLE), which will give them the right to vote on token incentive allocations in various markets and earn rewards through bribery. These bribes come from the proceeds paid by protocols to Airpuff to develop library strategies and direct issuances as a means to promote the growth of their protocols and increase adoption.

To further strengthen the token holder base, and in order to be eligible for $APUFF issuance, users must lock at least 5% of the value of their holdings in veAPUFF. Finally, Airpuff takes a 5% fee from the points earned by all lenders and borrowers (Eigen points, LRT points, etc.) and distributes it to veAPUFF holders to further increase the utility of the token.

Conclusion

2024 is the year of points trading, and Airpuff achieves this in a unique way with its currency market and built-in leverage. In the coming months, Airpuff will integrate new vaults, launch more on-chain projects, and issue $APUFF tokens to give users greater exposure to various points projects.

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