Ethereum

Yield

<p>A profitable strategy involving ETH and stETH is being utilized by crypto whales according to on-chain analyst <a href="https://twitter.com/lookonchain/status/1711234297926132207?t=MjHu40-TebuMdSehGiQ6-g&amp;s=19" target="_blank" rel="noopener noreferrer nofollow">Lookonchain</a>. At first glance, the mechanics of this strategy appear simple – exchange ETH for stETH on a decentralized exchange, then redeem stETH for ETH on Lido. However, the strategy has gained traction for its ability to generate consistent yields upwards of 8.6% APY for whales with substantial capital.</p>
<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="602" src="https://captainaltcoin.com/wp-content/uploads/2023/10/image-209-1024x602.png" alt="" class="wp-image-352045" srcset="https://captainaltcoin.com/wp-content/uploads/2023/10/image-209-1024x602.png 1024w, https://captainaltcoin.com/wp-content/uploads/2023/10/image-209-300x176.png 300w, https://captainaltcoin.com/wp-content/uploads/2023/10/image-209-767x451.png 767w, https://captainaltcoin.com/wp-content/uploads/2023/10/image-209-1536x904.png 1536w, https://captainaltcoin.com/wp-content/uploads/2023/10/image-209-2048x1205.png 2048w, https://captainaltcoin.com/wp-content/uploads/2023/10/image-209-255x150.png 255w, https://captainaltcoin.com/wp-content/uploads/2023/10/image-209-100x59.png 100w, https://captainaltcoin.com/wp-content/uploads/2023/10/image-209-595x350.png 595w, https://captainaltcoin.com/wp-content/uploads/2023/10/image-209-788x463.png 788w, https://captainaltcoin.com/wp-content/uploads/2023/10/image-209.png 680w" sizes="(max-width: 1024px) 100vw, 1024px">
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<p>The whale’s strategy revolves around the exchange and redemption of ETH and stETH. A single ETH can be exchanged for 1.0038 stETH on decentralized exchanges (DEX), such as 1inch. Simultaneously, on the Lido platform, one stETH can be redeemed for one ETH at a 1:1 ratio. This creates an arbitrage opportunity where 1 ETH can be used to earn an additional 0.0038 ETH, equivalent to approximately $0.6, per transaction.</p>
<p>However, it’s crucial to note that gas fees play a significant role in the feasibility of this strategy. The gas fee, in this context, refers to the cost of executing a transaction on the Ethereum blockchain. For smaller funds, the incurred gas fee may outweigh the profits from the arbitrage. Thus, this strategy is primarily suitable for whales – entities with substantial funds.</p>
<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="515" src="https://captainaltcoin.com/wp-content/uploads/2023/10/image-210-1024x515.png" alt="" class="wp-image-352053" srcset="https://captainaltcoin.com/wp-content/uploads/2023/10/image-210-1024x515.png 1024w, https://captainaltcoin.com/wp-content/uploads/2023/10/image-210-300x151.png 300w, https://captainaltcoin.com/wp-content/uploads/2023/10/image-210-768x386.png 768w, https://captainaltcoin.com/wp-content/uploads/2023/10/image-210-1536x772.png 1536w, https://captainaltcoin.com/wp-content/uploads/2023/10/image-210-2048x1030.png 2048w, https://captainaltcoin.com/wp-content/uploads/2023/10/image-210-298x150.png 298w, https://captainaltcoin.com/wp-content/uploads/2023/10/image-210-100x50.png 100w, https://captainaltcoin.com/wp-content/uploads/2023/10/image-210-696x350.png 696w, https://captainaltcoin.com/wp-content/uploads/2023/10/image-210-788x396.png 788w, https://captainaltcoin.com/wp-content/uploads/2023/10/image-210.png 360w" sizes="(max-width: 1024px) 100vw, 1024px">
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<p>To illustrate, the whale exchanged 1,370 ETH for 1,370.3351 stETH on 1inch and subsequently redeemed 1,370.3351 ETH with 1,370.3351 stETH on Lido. The transaction cost 0.0061 ETH in gas fees and yielded a profit of 0.329 ETH, or $540. While $540 might appear insignificant for a whale, employing 1,370 ETH for arbitrage daily would accumulate to 118 ETH ($194K) after one year, boasting an Annual Percentage Yield (APY) of 8.6%.</p>
<p>Moreover, if ETH and stETH were to depeg, the whale stands to gain even more. For instance, in May 2022, ETH/stETH depegged to 0.94, meaning 1,370 ETH could be used to arbitrage a staggering 87 ETH in a single transaction.</p>
<p>The whale’s strategy sheds light on the intricate and potentially lucrative world of crypto arbitrage, especially within the Ethereum ecosystem. It underscores the necessity of substantial capital and a keen understanding of the market dynamics, gas fees, and platform mechanics to navigate the depths of such arbitrage opportunities successfully.</p>
<p>While the strategy is not without its risks, particularly concerning the stability of pegged values, it offers a fascinating glimpse into the methods employed by crypto whales to accumulate wealth in the digital finance realm.</p>
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<p>The post <a rel="noopener noreferrer nofollow" href="https://captainaltcoin.com/how-one-crypto-whale-is-profiting-from-an-eth-steth-arbitrage-opportunity/">How One Crypto Whale is Profiting from an ETH-stETH Arbitrage Opportunity</a> appeared first on <a rel="noopener noreferrer nofollow" href="https://captainaltcoin.com">CaptainAltcoin</a>.</p>

How One Crypto Whale is Profiting from an ETH-stETH Arbitrage Opportunity

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