# Stable Yield Maxxing: Shifting an Open Position from Silo to Euler for Optimized Returns

#### **Silo’s PT Lending Market and the Leverage Opportunity**

During the recent **Sonic** yield farming frenzy, Silo launched a **PT-wstkscUSD-29MAY2025 vs. USDC.e** lending market, allowing traders to unlock leveraged fixed yields on stablecoins.

For those prioritizing predictable returns over speculative points/gems farming, this strategy presents a lucrative opportunity.

Here’s how it works:

* Users can **deposit PT assets** (fixed-yielding) at approximately **12% APY**.
    
* They can **borrow USDC.e** at a variable rate to **increase leverage** on the trade.
    
* The profit stems from the **spread between the fixed PT yield and the variable USDC.e rate**, which is currently subsidized by both **Silo and Sonic points**.
    
* If the realized variable borrowing rate at PT maturity is lower than the fixed yield at which the PT was purchased, the trader secures this **spread as profit**.
    

This also functions as a **leveraged short yield trade**—if the variable rate matches the fixed rate, the return is **zero** unless the PT fixed rate drops, causing the collateral to appreciate relative to the debt, leading to trader profit.

Currently, **wstkscUSD’s yield is artificially high due to Sonic and Ring point incentives**, making it an attractive negative carry trade for those betting on lower future yields.

#### **Silo Arbitrage and the Market Response**

At launch, the Silo trade was quickly arbitraged:

* PT assets were initially **selling at ~15% fixed yield**.
    
* Leverage was rapidly introduced, pulling the **Silo USDC.e borrowing rate to ~10%**.
    
* This, in turn, **compressed the PT yield down to similar levels**.
    

The best entry was **early on**, when PT yields were higher, allowing traders to lock in profits as borrowing costs rose gradually.

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### **Euler Vault Emerges: A More Capital-Efficient Alternative**

A few days later, **MEV Capital** introduced an **Euler lending vault** with a similar PT strategy:

* **Depositing PT fixed-yielding collateral**
    
* **Borrowing USDC.e at a variable rate**
    

However, Euler’s **Interest Rate Model (IRM)** proved far superior to Silo’s:

* Despite the **larger supply of USDC.e** being borrowable against multiple markets, Euler’s **IRM offers better funding for the short-yield trade**.
    
* **Comparison at 50% utilization:**
    
    * **Silo USDC.e borrow rate:** **11.74% APY**
        
    * **Euler USDC.e borrow rate:** **5.44% APY**
        

This **significant cost difference** is especially crucial for highly leveraged traders, making Euler a **far more attractive funding environment**.

However, early traders who **locked into Silo** when it was the only leveraged PT vault needed a **seamless way to migrate their positions** to Euler.

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### **The Migration Plan: Seamlessly Shifting from Silo to Euler**

Rather than manually unwinding the position—an inefficient and capital-intensive process—a secure, capital-efficient **migration solution** was developed.

With deep knowledge of both codebases, we quickly built and deployed a **bespoke contract** to execute the transfer within hours of the Euler MEV vault’s activation.

#### **Migration Steps:**

1. **Authorize the contract** to claim the Silo collateral assets.
    
2. **Enable contract permissions** as an operator on the Euler Vault Connector (EVC).
    
3. **Take a flash loan** in USDC.e for the total Silo debt balance.
    
4. **Use the flash loan** to **repay the Silo vault debt**.
    
5. **Withdraw** the **full PT collateral**, as no debt remains.
    
6. **Enable PT collateral** in Euler and **set USDC.e borrowing vault** as a controller.
    
7. **Deposit PT collateral** into the Euler vault.
    
8. **Borrow USDC.e** from the Euler vault against the deposited PT collateral.
    
9. **Repay the flash loan** in full.
    
10. **Revoke contract permissions** over the user’s account.
    
11. **Reset Silo collateral approval** to **prevent future risks**.
    

All of this executed from forge script and hardware wallet with steps 3 through 10 being a single contract call.

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### **Conclusion: Efficient Yield Optimization**

This migration strategy enabled seamless **position transfer between lending platforms** without requiring manual unwinding, additional capital, or unnecessary trading exposure.

By capitalizing on **Euler’s superior IRM and lower borrowing rates**, traders can significantly **improve their leveraged yield strategies** while maintaining capital efficiency.

This approach highlights the importance of **early entry, market inefficiencies, and technical execution** in DeFi yield arbitrage.

Full write up with more technical details to come. Feel free to contact me on X → [@yielddev](https://x.com/yielddev)  
  
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