The Ether Condor Strategy: A Market-Neutral(ish) Approach to ETH Yield Generation 🦅

Hey DeFi fam! 👋 Today I'm breaking down an advanced strategy that combines concentrated liquidity provision with perpetual futures hedging - I call it The Ether Condor.

Here's a calculator that shows all of the inputs, unfortunately the results section calculations don't work, but you can see all of the inputs for the strategy in one place. That makes it a bit easier to understand the strategy.

Divergence Loss (Impermanent Loss) Research

Strategy Overview 📊

This is a delta-neutral(ish) yield farming play that aims to harvest both LP fees and funding rates while minimizing directional risk on ETH price movements.

The Setup (3 Steps) 🎯

Step 1: Deploy Your Concentrated Liquidity Position 💧

Allocate 20 ETH to a WETH/USDC pool on Uniswap V3 (Ethereum mainnet)
Use the 0.3% fee tier
⚠️ Critical: Set your range intentionally OUT OF RANGE (all in ETH)
This positioning is key to the strategy's mechanics

Step 2: Leverage Your Position 💰

Head over to Revert Finance
Borrow 40% of your LP position's USD value in USDC
This gives you working capital without selling your LP tokens

Step 3: Create Your Hedge 🛡️

Take 20% of your LP's USD value as initial margin
Open a SHORT perpetual futures position on GMX
Size = exactly the number of ETH you deployed in Step 1 (20 ETH short)

The Math Behind It 🧮

Profit Conditions: Your position becomes profitable when:

✅ CLP Yield + Funding Rate Yield > Divergence Loss on the CLP

Risk Profile:

🔴 Maximum loss scenario: ETH makes a sharp move higher before your CLP fees have time to accumulate
⏰ The key is that fees need time to offset any divergence loss from price movements

Why This Works 💡

You're earning from two yield sources simultaneously (LP fees + funding) 💵
The short perp hedges your ETH exposure from the CLP
When funding rates are positive (longs paying shorts), you're getting paid to hedge
The borrowed USDC can be deployed elsewhere or used as additional buffer

Important Considerations ⚙️

Monitor your liquidation levels on both Revert and GMX 👀
Funding rates can flip negative - factor this into your calculations 📉
Gas costs on mainnet for rebalancing ⛽
This works best in ranging markets with decent volume 📈

Risk Management Tips 🚨

Start small to understand the mechanics
Set alerts for when your position moves into range 🔔
Calculate your break-even time horizon based on current fee APR and funding rates
Keep some dry powder for adjustments 💸

This strategy requires active management and understanding of multiple DeFi protocols. Not financial advice - always DYOR and understand the risks before deploying capital.

Questions? Drop them below and let's discuss! 💬

What strategies are you running to generate yield in this market? 🤔

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