Understanding our GLP Vaults Tranches and How to Optimize Your Yield in Any Market Condition
Since Struct Finance launched in July 2023, we have introduced a range of innovative vaults designed to cater to various market views and risk preferences.
Our vaults are based on GMX’s GLP index, offering both fixed and variable tranches to help users optimize their yield for the length of the vaults’ term
As the market is heating up again, this article explores the dynamics of these tranches and provides guidance on how our users can select the different vaults effectively.
In particular, we focus on the variable tranche, which is the most prone to market volatility and has the highest degree of variance compared to our fixed tranche.
The Variable Tranche Dynamics
The variable tranche on our vaults appeals to more risk-on investors, who do not want to put a cap on their potential yields.
Understanding the dynamics of the variable tranche in Struct GLP Vaults is crucial for optimizing your yield.
The performance of these vaults can be influenced by various factors:
- Market Direction: Market movements influence GLP’s price, which, in turn, affects the variable APRs concerning the variable asset deployed.
- GLP Price: The price of GLP itself plays a significant role in determining the performance of the variable tranche.
- GLP Index Composition: The composition of GLP’s index of assets changes dynamically, impacting the performance of the variable tranches.
- Volatility: Increased market volatility leads to higher trading activity on GMX, resulting in trading fees and liquidations that can boost the GLP APR.
Understanding how these factors interact can help our users make informed decisions when utilizing the variable tranche in Struct GLP Vaults.
Navigating the Variable Tranche in Different Vault Pairs
Let’s explore each of the Struct GLP vault pairs, providing guidance on when and why users should consider these vaults, with a focus on the variable tranche.
The Vault Pairs & Variable Tranche Dynamics
Struct Finance currently offers five vault pairs, each with its unique characteristics. The specific dynamics of the variable tranche can vary depending on the vault pair selected.
Understanding the unique characteristics of each pair’s variable tranche is essential for optimizing your yield during the vault term.
We always say that there’s a Struct vault for every user out there.
Here’s a detailed breakdown of the pairs, including their stance, overview, and variable tranche strategy so that our users can have a thorough understanding of the different market dynamics behind our vaults:
1️. BTC.B-BTC.B Vault
Stance: Bearish Market Outlook.
Overview: This vault is designed for those who have a pessimistic view of BTC’s performance, and as such provides a strategic option to maximize returns during market downturns.
Variable Tranche Strategy: If you anticipate the market going down, consider the variable tranche in this vault. By doing so, you can potentially earn a higher APR for your BTC compared to simply holding it.
The variable tranche strategy for this vault is unique. It doesn’t simply short BTC; it’s a function influenced by changes in both BTC and GLP’s price. This tranche’s delta isn’t fixed at -1 (shorting BTC); instead, it depends on various factors, including the prices of underlying assets, fees generated, and trader P&L. The underlying currency being BTC contributes to this tranche having a negative delta concerning BTC price. Consequently, during market downturns using the variable tranche can potentially result in a higher APR for your BTC compared to simply holding it. This strategy aligns with a bearish market outlook and takes into account the complex interplay between BTC and GLP.
2. BTC.B-wETH Vault
Stance: Bearish Market Outlook for both BTC.B and wETH.
Overview: This vault serves as a hedge for investors with a pessimistic outlook on both BTC and ETH. It offers the potential for enhanced yields during market downturns.
Variable Tranche Strategy: For bearish market phases, putting wETH in this vault can result in a better yield outcome than just holding wETH. Consider this strategy if you expect both BTC and ETH to underperform GLP.
3. BTC.B-USDC Vault:
Stance: Bullish/Balanced (Less volatile than BTC.B-BTC.B, USDC-USDC and BTC.B-wETH).
Overview: This vault is suitable for investors with a balanced or bullish market view. It offers a delta-hedged approach to accommodate varying market sentiments.
Variable Tranche Strategy: For those with a bullish market outlook, consider using the variable tranche in this vault (USDC) to put your stables at work and gain yield.
4. wETH-USDC Vault
Stance: Bullish/Balanced (Less volatile than BTC.B-BTC.B, USDC-USDC and BTC.B-wETH).
Overview: This vault is suitable for investors with a balanced or bullish market view. It offers a delta-hedged approach to accommodate varying market sentiments.
Variable Tranche Strategy: For those with a bullish market outlook, consider using the variable tranche in this vault (USDC) to enhance your returns.
5️. USDC-USDC Vault
Stance: Bullish Market Outlook.
Overview: This vault is designed for investors with a bullish market view. It provides an opportunity to maximize returns during periods of market growth.
Variable Tranche Strategy: If you expect the overall market to rise, especially in the next two months, consider using the variable tranche in this vault to potentially boost your returns. This strategy aligns with a bullish market outlook.
Conclusion
Understanding how each pair’s variable tranche aligns with your market views and utilizing the right variable tranche strategy is crucial for maximizing your yield in Struct GLP Vaults.
There are so many vaults, and it is fundamental to understand which ones can be leveraged according to specific market conditions.
It’s important to note that the variable tranche dynamics can change over time due to various market conditions, including shifts in asset prices, trading activity, and overall market sentiment.
Therefore, staying informed about the latest developments and adjusting your strategy accordingly can be key to optimizing your yield in Struct GLP Vaults.
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Dive into Struct GLP Vaults now: https://app.struct.fi/
