Sharpe Magnum addresses the issue of low capital efficiency in staking pools by utilizing flashloans to boost exposure to staked assets. Traditional staking is inefficient since it requires a 1:1 ratio of staked assets. This reduces the overall potential rewards for users.
Sharpe Magnum overcomes this challenge by borrowing more assets via flashloans to increase exposure to the staked assets, effectively optimizing user returns. This means that users will be able to earn higher APYs on their staked assets while still benefiting from the underlying protocol guarantees and deep liquidity of existing staking pools.
How does Sharpe Magnum improve staking yields?
Sharpe Magnum improves staking yields by increasing exposure to staked assets through the use of flashloans. Sharpe Magnum is able to borrow extra assets to increase the staking exposure, resulting in higher yields for users. Staking pools' greater capital efficiency means that users can receive higher returns on their assets without locking up additional capital - capital-efficient staking at its best.
Furthermore, Sharpe Magnum's on-chain keepers regularly check the spread between the cost of borrowing vis-a-vis the yields from staking. Sharpe Magnum will employ its contingency mechanism to automatically deleverage and ensure that staked assets earn the maximum potential yields through staking if the spread narrows or becomes unprofitable. This helps ensure the long-term sustainability of returns and steady yields with calculated risks.