Suggested strategies for optimizing Dual Investment
This section presents a few strategic approaches and methods you can consider to optimize your use of Dual Investment. Whether you're a seasoned investor or just starting on your financial journey, this section will help you navigate Dual Investment with confidence.
These strategies are for educational purposes only and are not financial advice.
I’m here for the interest!
The core strategy of why Dual Investment is a great investment product is the interest earned on your deposit in a vault. Whether you’re holding WBTC or USDC, you can deposit into a vault and earn interest whether or not your Linked Price is reached.
Here are perhaps the two simplest interest bearing strategies:
Increase your WBTC holdings: Deposit WBTC into a Sell High vault and select a Linked Price that you think will not be reached by the Expiration Date. If the price is not reached as you expected, you get back your WBTC principal plus interest in WBTC.
Increase your USDC holdings: Deposit USDC into a Buy Low vault and select a Linked Price that you think will not be reached by the Expiration Date. If the price is not reached as you expected, you get back your USDC principal plus interest in USDC.
The next step is to take your principal and interest and deposit into a new vault to compound the earnings.
Compound earnings
After you’ve withdrawn from your first vault, it’s time to reinvest into a new vault and compound the earnings! Compound earnings refer to the process by which the interest on an investment, both the initial principal and the accumulated interest from previous periods, earns additional interest in subsequent periods. In simple terms, it's interest on interest.
For example, if you deposit into a Buy Low vault and the Linked Price is reached at expiration, you receive WBTC at the Linked Price plus your earned interest in WBTC. You can then take this cumulative return in WBTC and deposit into a Sell High vault to continue the compound earnings cycle.
Here's how compound earnings work:
Initial Investment: You start with an initial amount, which is your principal.
Interest Calculation: The interest is calculated on the initial principal amount and added to the principal for the next period.
Compound Effect: In each subsequent period, the interest is then calculated on the new total (initial principal + accumulated interest from previous periods).
Continuous Growth: This process continues, leading to exponential growth in the total value of the investment over time.
The formula for compound interest is often expressed as:
Where:
A = the future value of the investment, including interest
P = the principal amount (initial investment)
r = the APY (decimal)
n = the number of times that interest is compounded per unit t
t = the time the money is invested for, in years
Compound earnings allow for exponential growth over time, making it a powerful factor in long-term investing and savings.
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