- Yields: Up to 32% APR on Stablecoins, 9-15% on ETH and BTC
- Starter Tutorial: Earn Sustainable Fixed Interest with BarnBridge V2
- Degen Tutorial: Earn 32% APR on Stablecoins With Saddle Finance On Optimism
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.
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 and old yield earning 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.
- Stablecoins – 32% APR with the FRAX-USDC pool on Saddle Finance
- This yield is in the form of SDL tokens
- Step-by-step guide in this week’s Degen Tutorial
- ETH – 14.67% APR with the 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 – 8.74% projected vAPR with the 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.
- AVAX – 19.9% APR lending AVAX to the 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 – 7.48% 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 – 22.39% APY with LP MaticX-MATIC on Balancer
- The yield is backed by validator rewards using the MaticX liquid staking derivative + trading fees on Balancer + BAL rewards + SD rewards.
- To participate on Polygon, one can use the Stader MaticX dApp to mint MaticX.
- Then, I deposit into the 50/50 MaticX-MATIC pool on Balancer and stake the LP.
- ATOM – 13.5% APR staking pATOMs on pSTAKE on Ethereum
- The yield earned is issued and claimable in pATOM.
- To participate, one must first mint a 1:1 representation of ATOM as pATOM on Ethereum by using the pSTAKE dApp under Stake
- Then, deposit/stake pATOMs to get stkATOMs and earn 13.5% APR
- FTM – 13% APY staking with 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 – 25.42% 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.
🪂 Airdrop Alpha
In each DeFi Alpha guide, we update a list of the most obvious DeFi protocols that have yet to announce and/or launch a token.
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!🎉
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 last week’s Degen Tutorial, we covered a series of on-chain quests.
We’ll be watching for the Odyssey to resume, now that Nitro is live.
Congratulations if you followed our guide betting on a hunch that Optimism would release a token!
$OP is Live! Claim guide here.
- Arch Finance – a protocol for comprehensive indices that provide access to differentiated sources of market risk.
- Concentrator – Congrats if you used Concentrator! They’re currently running an Initial Farming Offering (IFO) and are expected to distribute CTR tokens to early users of Concentrator.
- 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.
👨🎓 Defiant Starter Tutorial
Earn Sustainable Fixed Interest with BarnBridge V2
During bull markets, we enjoy higher variable rates as lenders, especially stablecoins which are often borrowed to trade and farm with. In bear markets, those lending yields normally drop due to decreased borrowing demand.
In contrast, fixed interest rates offer predictable returns which can be ideal for retail investors, DAO treasuries, and funds who are keen to capture guaranteed returns during uncertain times in a bear market.
Previously, we’ve covered the emerging niche in DeFi including 88mph, Element, Notional, Sense, and BarnBridge v1. All of these protocols have provided promising developments for DeFi fixed income but debatably, all of them suffer from i) sustainable fixed rates, ii) a secondary market to borrow against fixed income positions, and iii) marketing timing, where fixed rates pale in comparison to higher variable rates during bull markets that favor the most risk-on investments.
What’s changed most over the last year and is now favorable for these DeFi fixed income innovators is market conditions. A bear market is exactly the time where investors are more risk averse and seeking guaranteed returns.
Another recent product development is leverage/liquidity for fixed income assets. FiatDAO launched back in May to enable Element, Yield, and Notional lenders to be able to borrow up to 95 cents of every dollar lent with DeFi fixed income positions. Now, lenders can enjoy the guaranteed returns of DeFi fixed income with instant access to liquidity prior to loans maturing.
BarnBridge V2 aims to solve the final challenge, bringing about true fixed rates that are sustainable, as well as fixed positions that are borrowable on Aave and FiatDAO to get secondary liquidity and leverage your position.
V2 of the protocol recently introduced a novel approach to fixed income in DeFi that places the Barnbridge DAO in the LP position of a pool, meaning BarnBridge acts as the counterparty to the yield being generated.
Here’s how BarnBridge fixed interest rates are completely market-driven.
- Barnbridge v2 implements an epoch-based approach, where an epoch in BarnBridge v2 is a fixed period of time for which a user locks their assets to earn a fixed interest rate (ie. 1 month).
- Users participating in a given epoch will receive a fixed yield based entirely on the yield earned during the preceding epoch, meaning the yield to be paid out is already fully earned by the mechanism before the epoch begins.
- Before the start of the epoch, there is a Subscription period that enables deposits into the upcoming epoch.
- The day before the epoch starts, deposits are halted.
- Users are then able to withdraw their funds if they are not satisfied with the fixed rate they are getting.
- Once the epoch starts, withdrawals are halted and the yield earning period begins until that epoch ends.
- After a deposit, users receive proof of liquidity tokens, which they can further borrow against at the originator (e.g. Aave) or FiatDAO. This increases capital efficiency and helps ensure users can borrow against their capital.
BarnBridge V2 is built to be a flexible protocol for fixed income. The mechanism above can turn any variable rate into a fixed stream of income so long as the DAO or someone else (stablecoin or someone with protocol owned liquidity) is willing to act as the LP. It can also be plugged into other yield-generating sources, such as lending markets, yield aggregators, or yield farms.
Today, I’ll show how I committed to earn 5.79% APR in DAI for 1 month already, and how I might earn fixed interest with DAI (and other assets) in the next BarnBridge V2 epoch to begin October 10th.
Before we get started, please be aware of these risks.
- Smart contract risk in BarnBridge V2 and Aave V2 Ethereum
- Front-end spoof attack on the app.barnbridge.com
- Exploits in economic design
- Governance attacks or admin key compromise
- Systemic risk in DeFi composability
- Pegged assets such as stablecoins can potentially depeg
Step 1: To back up, this past week prior to Epoch 1 beginning for the DAI (Aave) pool on BarnBridge V2, we were in a Subscriptions period where I can deposit as much DAI as I want into the pool.
At the time, I went to the Fixed Yield tab here on the BarnBridge dApp on Ethereum Mainnet, and checked out Epoch 1 for DAI (Aave). Based on DAI yield already earned, to be distributed to us as lenders for Sept 8 – Oct 8, I was quoted a fixed rate of 21.45% APR.
Knowing that for every deposit during the Subscription period, this yield gets further diluted, I deposited the maximum amount I might lend and planned to return for the 48-hr Withdrawal period after deposits were halted around Sept 8th. It only required 2 transactions (Approval + Deposit of DAI).
Step 2: By Sept 8th, Withdrawals began and now I planned to reconsider “is this fixed rate of 5.3% APR high enough for me to lock up my DAI for 1 month?”
- If Yes, I do nothing and wait for the Epoch to begin and allow my DAI to earn the fixed rate.
- If No, I can immediately withdraw my DAI, with no fee or penalty by finding the Withdraw option next to my DAI position in the Portfolio tab.
- If unsure, I can watch to see who else might withdraw during the 48-hour Withdrawal period, knowing that every withdrawal will raise the Fixed APR rate, with fewer lenders competing to earn a portion of the yield.
Step 3: Another consideration is I could have opted to borrow USDC against my Fixed Yield position if I needed the liquidity by going to the Portfolio tab -> Your deposits -> Borrow at Originator. For me, I’m not looking to borrow with Aave’s Stable Rate for USDC currently at 9.53% APY, but nice to know I have the option to borrow before my DAI unlocks October 8th.
Step 4: As we progress through Epoch 1, the yield being earned in real-time by lending all of the DAI deposited in Aave, will be rewarded to those who lock up DAI in Epoch 2. That is the yield that will provide a guaranteed return in Epoch 2. Given we’re 29 days out from Epoch 2 beginning on October 10th, if I’m keen to rollover my DAI to Epoch 2 and wait to see how high the fixed rate will be, I can go to the Portfolio tab -> Your deposits -> Signal Rollover and click Rollover (1 transaction).
Step 5: Finally, if I’m new to BarnBridge V2, and looking to earn a fixed rate in Epoch 2 during Oct 10 – Nov 9th, it’s as simple as depositing DAI into Epoch 2 here as we get closer to Oct 10th, which is currently in the Subscription period. As DAI lending yield accrues during the next month, I’ll see a more accurate estimate of the fixed rate to be earned in Epoch 2, based on how much yield will be distributed, considering how many lenders have rolled over from Epoch 1 combined with net new DAI depositors for Epoch 2.
🦍 Defiant Degen Tutorial
Earn 32% APR on Stablecoins With Saddle Finance On Optimism
Saddle Finance is an automated market maker (AMM) focused on soft-pegged assets like stablecoins and synthetic versions of Bitcoin and Ether.
Launched on Ethereum in early 2021, it uses an implementation of the StableSwap mechanism pioneered by Curve Finance.
Saddle was exploited for $10M in April due to a faulty library implementation. That vulnerability has been fixed and a remuneration plan was announced in May. Total value locked in the protocol, which peaked above $300M, has since fallen to $45M.
Despite the exploit, the protocol’s SDL token is up 300% since going live in June. The spike yesterday is due to a listing on KuCoin.
With a market cap of just under $20M, there’s potential for SDL to move higher assuming the team keeps building.
Today, we’re interested in the FRAX-USDC pool on Optimism that’s currently yielding 32% APR in SDL tokens.
Let’s get started.
Step 1: Bridge assets to Optimism. Note that you’ll need some ETH for gas fees.
Bungee is a convenient tool to find the cheapest bridge based on current market conditions.
Step 2: Head over to Saddle Finance and add liquidity.
You’ll be asked to approve spending your assets. Confirm the transactions to add liquidity and receive your LP tokens.
Step 3: Stake your LP tokens.
Once you have added liquidity, stake your tokens on the same page.
Note that you will not earn any token rewards if you miss this step.
That’s it! You’re now earning SDL tokens that you can claim at your convenience on Ethereum mainnet.
📱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.
📰 Elsewhere on The Defiant
Tuesday Tutorial on The Defiant YouTube: This week, Robin covered a few ways you can potentially profit from Ethereum’s upcoming Merge. 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.