Yields: Up to 25% APR on Stablecoins, 6-14% on ETH and BTC
DeFi Alpha is a weekly newsletter published for our premium subscribers every Friday, contributed by Defiant Advisor and DeFi investor at 4RC, DeFi Dad, and our Degen in Chief yyctrader. It aims to educate traders, investors, and newcomers about investment opportunities in decentralized finance, as well as provide primers and guides about its emerging platforms.
Motivation
Two years ago, DeFi investors could easily name every yield farming opportunity without much effort. It was a simpler time, when only a handful of teams had launched with any liquidity to trade, lend, borrow, provide liquidity, or even demonstrate new primitives such as no-loss savings by PoolTogether.
But times have changed! Before the current bear market took hold, DeFi liquidity had grown to hundreds of billions of dollars across Ethereum with new burgeoning DeFi economies taking shape on EVM-compatible chains such as Polygon and Avalanche and non-EVM chains such as Cosmos and Solana. Any given day, a new DeFi or NFT project is launched.
So, after writing and creating countless DeFi guides and tutorials since 2019, we at The Defiant agreed it’s time we publish a more detailed weekly guide on all you need to know to keep up with new opportunities.
This is DeFi Alpha by The Defiant.
Any information covered in DeFi Alpha should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions. Any mention of a token or protocol should not be considered a recommendation or endorsement.
🙌 Together with:
DeFi Saver provides you with automated management strategies for most trusted protocols. Alongside Stop loss, Take profit and automated leverage, Maker and Liquity users can now rely on the advanced Trailing stop strategy.
📈 Yield Alpha
Each week we will provide options to earn yield on ETH, WBTC, stablecoins, and other major tokens.
ETH – 14.1% APR with wETH/sETH LP staked in Velodrome on Optimism
This yield is accrued in VELO.
To participate, one must deposit and stake in this wETH + sETH LP.
WBTC – 5.9% projected vAPR with Curve tBTC2 LP staked in Convex
This yield is accrued in CRV, CVX, and trading fees.
To participate, one must first deposit tBTC, renBTC, sBTC and/or WBTC into this Curve tBTC2 pool and then stake the LP here in Convex.
Stablecoins – 25.39% APR with sUSD/LUSD LP staked in Velodrome on Optimism
This yield is accrued in VELO.
To participate, one must deposit and stake in this sUSD + LUSD LP.
AVAX – 5.9% APR lending AVAX to sAVAX/AVAX pool on Platypus via Vector
This yield is issued in VTX, PTP, QI, and AVAX.
To participate, one must deposit into the AVAX Stake option here on Vector.
SOL – 6.51% APY lending stSOL on Tulip Protocol + 5.5% APY from the underlying SOL liquid staking rewards issued to stSOL holders
This yield is backed by interest paid by borrowers on Tulip + staking rewards.
To participate, one must deposit stSOL in the Tulip lending tab.
To obtain stSOL, one can trade on a Solana DEX or mint it here on Lido.
MATIC – 17% APY with 50/50 MaticX-WMATIC LP on MeshSwap
The yield is backed by validator rewards using the MaticX liquid staking derivative + MeshSwap trading fees + MESH rewards + SD rewards.
To participate on Polygon, I use the Stader MaticX dApp to mint MaticX.
Then, I deposit into the MaticX-WMATIC pool on MeshSwap and stake the LP.
ATOM – 19% APR staking ATOM with Keplr Wallet on Cosmos Hub
The yield earned is issued in ATOM.
To participate, one must set up a Keplr Wallet, go to the Cosmos Hub validators on Keplr Dashboard, rank by APR, choose a validator, and click Delegate.
Then, I can specify how many ATOMs and follow the prompts to Delegate.
FTM – 13% APY staking sFTMx liquid staking derivative by Stader
The yield is issued in FTM rewards, as sFTMX is earning FTM via validator rewards to support Fantom’s PoS network.
To participate, one must deposit FTM to receive sFTMX here on Stader.
HBAR – 22.4% APY staking with HBARX liquid staking derivative by Stader
The yield is issued in HBAR rewards, as HBARX is earning validator rewards.
To participate, one must deposit HBAR to receive HBARX here on Stader.
📱DeFi Alpha Call
The DeFi Alpha call is held every Monday at 2pm ET in Discord.
In case you missed it, check out the recording of this week’s call.
👨🎓 Starter Tutorial
Stake ATOM for up to 19% APR with Keplr Wallet
Cosmos is an ecosystem of interconnected blockchains that can scale and interoperate with each other. While Cosmos has been in active development for years and launched the Inter-Blockchain Communication protocol (IBC) in April 2021, the Cosmos team has recently released a whitepaper which proposes to position Cosmos Hub as the center of the ecosystem, improve revenue capture, and reduce ATOM issuance over the next three years. You can learn more about the details through coverage in The Defiant.
Source: The Cosmos Hub Whitepaper
Given the excitement over this and the continued development of DeFi and Web3 applications such as Osmosis on Cosmos-based chains, we’ll show how one might stake ATOMs with Cosmos Hub validators, using Keplr Wallet’s Keplr Dashboard.
Before we get started, please be aware of these risks.
Smart contract risk in using Keplr Dashboard
Front-end spoof attack on the Keplr Dashboard website
Liquidity, as staking locks ATOMs for 21 days
Step 1: To get started, I go to the Keplr Wallet download page and choose the appropriate option for Chrome, Firefox, iOS, or Android. I prefer a browser-based extension wallet so I choose Chrome or Firefox.
I carefully follow the prompts to Create Account, followed by saving a password, and writing down my 12 or 24-word seed phrase on paper, to be stored in a safe place offline, and never shown to anyone.
If I don’t have ATOM already, I can use a centralized exchange to buy ATOM with fiat, before transferring it to my new wallet address in Keplr Wallet.
Step 2: I can click the Stake option in my Keplr Wallet to get here to Keplr Dashboard with options to choose from Cosmos Hub validators. I rank the validators by APR and consider how much Commission they’re collecting.
When I choose a validator to stake with, I can click Manage -> Delegate -> Specify how much ATOM to stake -> click Delegate and follow the prompts to approve the transaction.
🎭NFT Roundup
Hoodie Ape CryptoPunk Sells for $4.4M
Tyler Hobbs’ QQL Raises $17M in 30 Minutes
CloneX Up 16%
🔗Read the full article at thedefiant.io🔗
🦍Degen Tutorial
Boosted Stablecoin Yield With Liquity Chicken Bonds
Liquity is a lending protocol whose LUSD stablecoin is overcollateralized purely by ETH and has a few major advantages when it comes to decentralization and censorship resistance.
Overcollaterized – Liquidations ensure that the protocol remains solvent and maintains the LUSD peg.
100% ETH collateral – No risk of being frozen.
Interest-Free Loans – No interest is charged apart from a 0.50% borrow fee when the debt is created.
Capital Efficiency – Borrow up to 90% LTV against ETH
Decentralized – No governance. All parameters are preset or controlled algorithmically by the protocol. Even the frontends are run by incentivized external parties.
Immutable – Smart contracts have no administrator that can halt or modify the protocol.
Liquity’s founder Robert Lauko recently appeared on The Defiant Podcast and explained why the protocol chose to prioritize decentralization over growth. It turned out to be a prescient move, now that we’ve seen the impact of U.S. sanctions on Tornado Cash.
Staking LUSD in Liquity’s stability pool lets you earn ETH from liquidations as well as LQTY tokens. This is a popular yield farming strategy and I covered it last month in DeFi Alpha.
Chicken Bonds
Chicken Bonds are a new offering from Liquity and are expected to launch on October 4.
Risk Warning: This is an experimental product and hasn’t been tested in real-world DeFi conditions. Ape accordingly!
Instead of simply staking LUSD in the Stability Pool, users will have the option to bond their LUSD in exchange for discounted bLUSD (bonded LUSD) and earn a higher yield.
From the protocol’s perspective, having a new source of protocol-owned LUSD will allow it to deepen liquidity on Curve.
bLUSD is an auto-compounding token that is minted when users ‘Chicken In’, or exchange bonded LUSD for their accrued bLUSD balance.
bLUSD can be redeemed for LUSD at any time. This is called a ‘Chicken Out’ and results in the forfeiture of any accrued yield, which is a source of additional yield to the remaining bLUSD holders
The amplified (boosted) yield comes from a reorganization and auto-compounding rather than increased inflation. An in-depth explanation can be found here.
Gamification With NFTs
As an added twist, participants in the bonding program will be able to earn NFTs that will evolve based on the actions they take (bonding, Chicken in, Chicken out).
Various bonding strategies can be used to maximize yields and/or obtain rare NFTs. I’ll discuss them in Monday’s Alpha call.
Testnet Tutorial
In preparation for next week’s launch on mainnet, Liquity has released a turbo version of Chicken Bonds on the Goerli testnet.
Each hour is the equivalent of a day and the game is intended to help users understand how bonds will work. More detailed information can be found in the documentation.
Let’s get started.
Step 1: Connect your Metamask to Goerli and get some Goerli ETH from this faucet if you don’t have any.
Step 2: Head over to Liquity’s testnet implementation.
https://devui.liquity.org/next/#/bonds
Click the ‘Get 10K LUSD’ button to obtain some test tokens.
Step 3: Create a bond with your desired amount of LUSD.
Once you confirm the transaction, you’ll be able to see the bond start to accrue bLUSD at an accelerated rate (recall that an hour is equivalent to a day in real time).
That’s it! You can test claiming and cancelling bonds as well as adding liquidity to the bLUSD/LUSD pool to earn trading fees.
🪂 Airdrop Alpha
In each DeFi Alpha guide, we update a list of DeFi protocols that have yet to announce and/or launch a token.
SUDO Airdrop
NFT AMM SudoSwap has released details about its SUDO token and airdrop.
🎉If you followed our guide from August 12 and created some trading pools, you should be eligible!🎉
Arbitrum Odyssey
Layer-2 rollup Arbitrum kicked off a months-long program on June 21.
Participants will be able to claim NFTs based on completing various tasks.
Week 1 was Bridge Week and we walked you through it in a previous issue of DeFi Alpha.
In a previous Degen Tutorial, we covered a series of on-chain quests.
We’ll be watching for the Odyssey to resume, now that Nitro is live.
Optimism Airdrop
Congratulations if you followed our guide betting on a hunch that Optimism would release a token!
In last week’s DeFi Alpha, we covered a series of on-chain quests that could make you eligible for the next round of $OP airdrops.
$OP is Live! Claim guide here.
Arch Finance – a protocol for comprehensive indices that provide access to differentiated sources of market risk.
Aztec – an open source L2 bringing scalability and privacy to Ethereum, with zkSNARK proofs, having launched a private DeFi yield aggregator zk.money.
DeFi Saver – a one-stop dashboard for creating, managing and tracking DeFi positions across Aave, Compound, Maker, Liquity, and Reflexer
Francium – leveraged yield farming similar to Alpha Homora but on Solana, one can choose to simply lend single assets or hold leveraged LPs to potentially earn an airdrop here
Jupiter – The leading DEX aggregator by trading volume on Solana
LI.FI – A cross-chain bridge and DEX aggregator protocol
Liquality – A cross-chain, non-custodial browser extension wallet, similar to MetaMask but with more integrations for swapping cross-chain.
Magic Eden – The leading NFT marketplace by trading volume on Solana
Nested – a crypto social trading platform built on Ethereum and other chains
Opyn – one of the OG decentralized options protocols on Ethereum, with major investors that signal a token has to be in their future. Buy/sell puts or call options to earn a possible future airdrop.
Polymarket – one of the strongest players in the DeFi prediction market vertical, bet on an outcome related to crypto, politics, sports and more or add liquidity
Polynomial – A newer DeFi derivatives vault creator, built on Optimism
Sense Protocol – A decentralized fixed-income protocol on Ethereum, allowing users to manage risk through fixed rates and future yield trading on existing yield bearing-assets
Set Protocol – one of the earliest DeFi protocols yet to launch a token for DeFi asset management, popular for TokenSets and known for powering IndexCoop indexes
Socket (formerly Movr) – their bridge aggregator Bungee moves assets between chains, finding the cheapest, fastest route
Volmex – Volmex is a tokenized volatility protocol, similar to the VIX but ETHV
Wormhole – a cross-chain messaging protocol known for bridging between Solana, Terra, Polygon, BSC, Avalanche, Fantom, and Oasis
Yield Protocol – a newer protocol for fixed-term, fixed-rate lending in DeFi, backed by Paradigm, one might earn a future airdrop by lending DAI or USDC
Zapper – participate in Zapper trading, lending, providing liquidity, or yield farming; given the Zapper Quests and NFT Rewards program, it can be surmised that if Zapper ever releases a token, this is one way they might do a retro airdrop
Zerion – same can be said speculated about Zerion; if they ever release a token, they’re likely to reward those who interacted with their smart contracts swapping, lending, providing liquidity, or borrowing
ZigZag – a DEX on zkSync that’s announced an upcoming airdrop.
zkSync is a Layer 2 scaling solution for Ethereum that uses zero-knowledge proofs to enable scalable low-cost payments. Bridge some assets and do some swaps for a potential airdrop. Guide here.
📰 Elsewhere on The Defiant
Tuesday Tutorial on The Defiant YouTube: This week, Robin took a look at DropMagnet, the Tinder for NFTs.
Learn how and subscribe to The Defiant on YouTube!
The information contained in this newsletter is not intended as, and shall not be understood or construed as, financial advice. The authors are not financial advisors and the information contained here is not a substitute for financial advice from a professional who is aware of the facts and circumstances of your individual situation. We have done our best to ensure that the information provided is accurate but neither The Defiant nor any of its contributors shall be held liable or responsible for any errors or omissions or for any damage readers may suffer as a result of failing to seek financial advice from a professional.