What are the Midas Investment DeDeFi strategies, and is it worth investing in them?
We have invested in
- Soft Long ETH
- GLP Index Token
We will analyze these two CeDefi strategies together with our own APY resutls.
No Financial Advice, Information only. Do your own research
What is Midas Investment?
Midas Investment is a centralized crypto investment platform using Defi to maximize the yield for its users. Therefore, they are using the term CeDefi strategies, a centralized entity offering Defi strategies to its community.
Midas Investment is among the most transparent companies in communicating how they achieve the interest rates they pay to their customers.
In numbers, Midas Investment has attracted more than 10.000 investors and more than $250M in assets under management.
What are Midas Investment CeDeFi Strategies?
In the table below we have summarized the Midas Investment CeDeFi strategies.
Midas Soft Long ETH Review
We invested $4000 USDC in the Midas Investment Soft Long on ETH CeDefi strategy on the 23rd of September 2022, as you can see marked with a dot in the print screen below.
On the 1st of November, $4748 corresponds to an 18.7% increase.
During the same time, the ETH price went from $1292 to $1589, corresponding to a 23% price increase in dollar terms.
Conclusion: Soft Long ETH has partial exposure to ETH and will benefit from a price increase in ETH, but the CeDefi strategy will probably not keep up in a bull market. At the same time, the strategy will likely be less volatile in a bear market.
Description Midas Soft Long on ETH
The Soft Long on ETH is an investment pool on Midas. When you buy into this investment pool, you own a part of it, and the value is represented as a percentage of the total pool. You can’t track the performance anywhere else (like Coingecko) other than on Midas.
The investment pool invests into an ETH-USDC liquidity pool where half of the USDC pool is converted to ETH and provided as supply tokens to Alpha Homora (a DeFi protocol that leverages liquidity pools). These supply tokens are used as collateral for creating a 2x leveraged position on a basket of ETH-USDC liquidity pools.
The strategy is less volatile than ETH, where a 10% increase in ETH will result in a 7.9% growth of the strategy investment pool. Still, the investment pool will capture approximately a 45% ROI from fees and rewards.
This strategy may not keep up with ETH in a sharp bull market but will be less volatile than the ETH price due to the income from the fees. In addition, the investment pool still has exposure to ETH so it will benefit from an increase in the ETH price.
Midas Investment - Soft Long on ETH Expected Returns
This is how Midas present the expected returns of the soft long on ETH investment pool:
[Fees from ETH-USDC liquidity pool (~13% ROI) + trading fees from Uniswap (~10% ROI)] * 2 (Alpha Homora leverage) – borrow APR for leverage (0.8%) = approximately 45% ROI.
(13+10)*2 – 0.8 = 45%
Midas Soft Long on ETH Pros and Cons
- Efficiency. You will earn high yields at the same time as you have exposure to the ETH price.
- Liquid asset. You can enter and exit the investment pool at any time
- Transparency. You can track the performance via on-chain analytics
- Limited Availability. The availability of this strategy is calculated based on the liquidity within the strategy and can be limited.
- Defi Protocol Risk. Even if Midas builds strategies on top of fully audited protocols that have proven their sustainability there are always risks with Defi protocols.
Midas Soft Long on ETH Fees
There are performance fees and swap fees.
Performance fee: 15% of weekly profit (only if the strategy has generated profit); fees are deducted directly from each week’s strategy shares. The user retains the same number of SLETH tokens, but the price of each token is less than the success reward.
From Stables to Strategy — 0% platform fee + ~0.2% market spread
From ETH to Strategy — 0.3% platform fee + ~0.2% market spread
From BTC to Strategy — 0.3% platform fee + ~0.2% market spread
From MIDAS to Strategy — 1.1% platform fee + ~0.2-0.8% market spread
From all others to Strategy — 0.2% platform fee + ~0.2-0.8% market spread
MIDAS buyback: 2% (of the 15%) shall be used toward a MIDAS token buyback.
Midas GLP Index Token Review
We invested $4000 USDC in the Midas Investment GLP Index Token CeDefi strategy on the 23rd of September 2022, as shown with a dot marked in the print screen below.
On the 1st of November, $4285 corresponds to a 7% increase.
Description GLP Index Token Strategy
The GLP Index Token Cedefi strategy from Midas Investment is an excellent, reasonably low-risk way to receive exposure to ETH and BTC along with a significant and sustainable ETH yield (~30%).
Stablecoins account for around 40-45% of the index, while BTC and ETH have rounded out the remaining 50-55% of the index.
The GLP index token Cedefi strategy is, therefore, similar to a soft long exposure on ETH (~0.25x) and BTC (~0.25x).
In addition, investors will be eligible for ETH-denominated yield derived from activities performed by traders from the decentralized trading platform GMX.
The GLP token index Cedefi strategy will perform best during choppy markets when traders are most likely to lose money.
GLP Index Token Sources of yield
- 20% of the total yield comes from fees paid by traders on GMX. Fees are collected from swapping assets using GLP liquidity, opening and closing their leveraged positions on GMX, and liquidations on GMX.
- 80% of the total yield comes from traders’ losses: When traders lose money, their net losses are GLP’s net profits. GLP is effectively the counterparty for traders.