Inside Sharpe Magnum: A Comprehensive Guide to Higher APY and Optimized Staking

Sharpe Labs
5 min readApr 18, 2023

Revolutionizing Liquid Staking with Sharpe Magnum

Decentralized finance has emerged as a game-changer in the financial world, offering users unparalleled control, transparency, and accessibility. Staking, a key DeFi feature, enables users to generate passive income by locking their digital assets in smart contracts. As the DeFi ecosystem continues to expand, liquid staking is expected to gain traction, creating opportunities for innovative platforms to optimize staking yields and deliver superior returns.

Enter Sharpe Magnum, an advanced leveraged staking optimizer designed to maximize staking yields while upholding underlying guarantees. Built atop Lido’s stETH and integrating Morpho and Aave, Sharpe Magnum serves as a staking optimizer, enhancing the capital efficiency of staking pools. This article delves into Sharpe Magnum’s unique features and how it outperforms traditional staking protocols.

Comparison with Lido and other competitors

While Lido and other staking platforms offer a straightforward staking experience, Sharpe Magnum takes it a step further by leveraging staked assets to achieve higher APY. By combining the best aspects of Lido, Morpho, and Aave, Sharpe Magnum creates a powerful, optimized staking platform that outperforms its competitors in terms of return on investment.

How we perform against traditional staking protocols.

I. Sharpe Magnum vs. Lido and Competitors: A Winning Formula

While Lido and similar staking platforms provide a simple staking experience, Sharpe Magnum goes the extra mile by leveraging staked assets for higher APY. By fusing the best elements of Lido, Morpho, and Aave, Sharpe Magnum develops a robust, optimized staking platform that surpasses competitors in ROI while still offering the same seamless staking experience.

II. Unlocking Higher APY with Sharpe Magnum

A closer look at Sharpe Magnum’s performance against Lido and other competitors reveals its superiority in generating higher APY. By merging Lido, Morpho, and Aave, Sharpe Magnum crafts an exceptional, optimized staking platform that dominates the competition in ROI.

It’s essential to highlight that Sharpe Magnum aims to enhance existing staking protocols rather than replace them. Our long-term objective is to serve as an optimization layer for liquid staking, working in harmony with established platforms to deliver superior results.

III. Decoding Sharpe Magnum’s Fees: A Deep Dive into the Staking Process

A common concern among users is the seemingly high fees associated with Sharpe Magnum compared to other staking platforms. By examining the staking process, we will demonstrate that the fees, while seemingly steep initially, are warranted and often more cost-effective than users attempting to leverage their ETH independently.

Sharpe Magnum executes a series of intricate transactions on the user’s behalf during both the withdrawal and deposit phases. Here’s a detailed analysis of the steps and associated fees for each phase:

tl;dr

Deposit flow (Example: https://etherscan.io/tx/0x087c93fe5ad23f2bdb39d7f15bc4b310f3a007666795295ff9a67a3b3f1cf941)

  1. User connects the wallet and deposits ETH
  2. Convert ETH to Wrapped Ether (WETH)
  3. ETH Flash Loan is executed for leveraging the staked assets
  4. Convert WETH to staked Ether (stETH) using 1inch v5 Aggregation Router
  5. Supply stETH to Aave to obtain interest-bearing aSTETH token via Morpho-AaveV2 Proxy
  6. Monitor and adjust the user’s staked position with on-chain oracles and smart contracts
  7. Staking complete, the user earns passive income

Withdraw Flow(Example: https://etherscan.io/tx/0x8cdc8e3223f01b32f2a7e14794f2ed0edcdc6e22a77a6a3a01fa8db8834c0d81)

  1. User initiates withdrawal
  2. Convert aSTETH to stETH using Morpho-AaveV2 Proxy
  3. Convert stETH to Wrapped Ether (WETH) using 1inch v5 Aggregation Router
  4. ETH Flash Loan is executed to assist in unwinding the leveraged position
  5. Repay borrowed funds with WETH
  6. Convert WETH back to ETH
  7. Complete withdrawal and return funds to the user’s wallet

Deposit Phase

  1. User deposits ETH: Users deposit ETH into Sharpe Magnum’s platform to obtain leveraged exposure to staked assets.
  2. Conversion to WETH: Deposited ETH is converted into Wrapped Ether (WETH), a versatile ERC20 token compatible with various DeFi protocols. + ETH Flash Loan is executed for leveraging the staked assets
  3. Acquiring stETH: WETH is converted to staked Ether (stETH) using the 1inch v5 Aggregation Router, enabling users to participate in staking and earn rewards.
  4. Staking via Aave and Morpho-AaveV2 Proxy: stETH is supplied to the Aave lending platform to receive interest-bearing aSTETH tokens. The Morpho-AaveV2 Proxy facilitates this transaction and manages user positions.
  5. Monitoring and adjustments: Sharpe Magnum constantly tracks users’ staked positions via on-chain oracles and automated smart contracts, ensuring leveraged positions remain healthy and within acceptable risk parameters. If needed, Sharpe Magnum adjusts user positions to optimize yield.

Withdrawal Phase

  1. Initiating the withdrawal: When the user decides to withdraw their assets, Sharpe Magnum commences the process of dismantling the user’s leveraged position.
  2. Transforming aSTETH to stETH: The platform converts interest-bearing aSTETH tokens back into stETH using the Morpho-AaveV2 Proxy.
  3. Converting to WETH: Following this, Sharpe Magnum turns the stETH into WETH with the help of the 1inch v5 Aggregation Router. + ETH Flash Loan is executed again but this time to assist in unwinding the leveraged position
  4. Settling borrowed funds: The platform utilizes the converted WETH to repay any borrowed funds used for leverage, ensuring the return of the user’s initial deposit and earned rewards.
  5. The final conversion to ETH: Lastly, WETH is changed back into ETH, fulfilling the user’s withdrawal request.

Unlocking the True Potential of DeFi: The Sharpe Magnum Revolution

As the DeFi landscape continues to evolve, the need for innovative and optimized staking solutions has never been more apparent. Sharpe Magnum steps up to the plate, pushing the boundaries of what’s possible in the world of staking and delivering a truly game-changing optimization.

By harnessing the power of Lido, Morpho, and Aave, Sharpe Magnum has crafted a unique solution that elevates staking to new heights. Our advanced leveraged staking layer offers users the opportunity to maximize their APY, increase passive income, and diversify their investments, all while enjoying a seamless and user-friendly experience.

In a rapidly growing ecosystem where staying ahead of the curve is crucial, Sharpe Magnum is not just an optimization layer for liquid staking — it’s a revolution. We invite you to join us on this journey as we redefine the future of DeFi staking and unlock the true potential of decentralized finance.

As part of our ongoing commitment to providing the best possible staking experience, we are also actively exploring integration with Layer 2 solutions such as Optimism and Arbitrum. This will allow us to further improve our platform’s fee structure and deliver even greater value to our users.

Experience the Sharpe Magnum difference for yourself and step into the future of optimized staking. The future is here, and it’s never looked brighter.

Join our Discord for some interdimensional staking adventures! https://discord.com/invite/tFAvMTw6Hx

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Sharpe Labs

Sharpe Labs is a DeFi R&D lab that creates open-source innovative investment solutions using our Institutional-Grade Asset Management tooling and infrastructure