Strategy advice request : Using Aave collateral to borrow stablecoin used for DCA – Is this a viable strategy ?
Hi everyone,
As the title suggests, I'm currently thinking of a strategy to better DCA but I want to identify all the risks and flaws that this may induce :
For the last 3 years, I have been meticulously DCAing ETH and got some amount that I'm not willing to sell yet.
Rather than staking it, I'm lending it on Aave for various reasons.
Here's my point : Given the amount of ETH I own and lend, is it worth to borrow a fixed amount of stablecoin (let's say a year worth of DCA in stable) and use it to weekly DCA back into ETH ?
The yearly amount I'd be borrowing in stablecoin is approximately a third of all ETH lended so getting liquidated is relatively unlikely (but not impossible in case of huge bear market, I'm aware of that risk).
By the end of next year, when all stablecoin stash is used, repay the borrow + interest if I'm in the green with the ETH I bought.
To minimize fees, let's say that this will be done on a L2 like Arbitrum, Optimism, you name it.
My main fear is getting crushed by borrowing rates in case of a huge rally, like we saw in March of this year (rates came up to 25% on some days)
What do you guys think ? Is there any other risks or flaws that I didn't see ? I'm assured that there are lots of smarter people than me out there that may have thought about this earlier.
Stay safe !
(any scammy DMs will be ignored)
submitted by /u/Nisyth_
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