add sushi LPs as potential collateral on kashi (or a separate bento app) where you can then borrow either of the LP assets against the other asset
Sushi LPs are essentially 2-asset, automagically rebalancing indices. This means you get some of the upside from each asset, but not all of it as the index rebalances leading to impermanent loss (IL). One way to potentially mitigate or remove IL, and increase capital efficiency at the same time, could be to use the LP as collateral to borrow more of the asset you’re worried about appreciating over time against the asset you’re worried about depreciating (relatively speaking). An example: you fund USDC-ETH, but are worried about eth going up a lot against usdc in the near term. So you borrow usdc with usdc-eth as collateral & then immediately swap it to eth (thru sushi, naturally). Depending on how much you borrow/swap, you are now providing usdc-eth swap liquidity and may actually be in a levered eth long position. The loan can be overcollateralized & charge interest, some of which can go to xSushi holders etc etc. (aside: In theory at any given exchange rate I think there is an ~exact amount of loaned asset that would perfectly eliminate IL (assuming you’re directionally correct about the divergence), but ofc it changes as the exchange rate changes & so gas fees probably make it impossible to track dynamically on-chain. Perhaps possible to ~closely track w pooled funds via yearn or pickle or something)
Increase capital efficiency & potentially reduce IL for LPs. UniV3 breaks LP homogeneity, sushi should be leaning into its LP homogeneity. One way is to create collateral pools from LP positions for lending.
Feel like I covered this well enough (for now) in the abstract
add kashi pools (or a separate bento app) which take LP positions as collateral for borrowing 1 of the LP assets & immediately swapping to long the other.
- for - increase capital efficiency of LP positions & reduce IL!
- against - i h8 capital efficiency &/ something’s busted with this idea