pJar 0.88

What is pJar 0.88?

We're going back to basics with pJar 0.88, allowing users to deposit base-currencies such as DAI, USDT, USDC, etc. The first pJar 0.88a will support DAI, and will be launched with a leveraged COMP mining strategy.

Using the deposited base-currency tokens, pJar 0.88 receives and re-invests COMP for you so you end up having more of the underlying base currency.

How does leveraging COMP mining work?

Leveraging mining COMP is achieved by recursively supplying and borrowing a single asset. Note that the act of supplying or borrowing assets on compound will yield us COMP tokens.

For example, if DAI has a collateral factor of 0.75, and we have supplied 100 DAI, we can borrow out a maximum of 75 DAI. We can resupply our borrowed 75 DAI, giving us a total of 175 supplied DAI and 75 borrowed DAI. We can now borrow an additional 56.25 DAI (175 * 0.75 - 75) and resupply it. We can keep repeating this supply and borrow loop until we hit a certain threshold.

The formula for calculating the maximum amount of leverage we can achieve is

1+(10.75)+(10.752)+(10.753)+....+(10.75n)1 + (1 * 0.75) + (1 * 0.75^2) + (1 * 0.75^3) + .... + (1 * 0.75^n)

Which can be expressed as an infinite geometric series:

Max Leverage=a11r=110.75=4Max\ Leverage = \frac{a_1}{1-r} = \frac{1}{1-0.75} =4

However, leverage mining COMP at max leverage is incredibly dangerous due to the difference in the supply/borrow interest rates. As such, the strategies launched will be employing an initial safety buffer of 0.10 collateral factor. Meaning the maximum safe leverage will be rougly 2.86.

Safe Max Leverage=110.65=2.85714286Safe \ Max\ Leverage = \frac{1}{1-0.65} = 2.85714286