Yields: Up to 22% APR on Stablecoins, 16-51% 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.
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 – 51% APR with wstETH/WETH LP staked in KyberSwap on Optimism
This yield is accrued in LDO and KNC tokens.
A step-by-step guide is provided in this week’s Degen Tutorial.
Stablecoins (USD) – 21.79% APR with sUSD/LUSD LP staked in Velodrome on Optimism
This yield is accrued in VELO.
To participate, one must deposit and stake in the Stable pool for sUSD + LUSD.
WBTC – 16.45% projected vAPR with the Curve pBTC LP staked in Convex
This yield is accrued in CRV, CVX, and trading fees.
To participate, one must first deposit pBTC, renBTC, sBTC and/or WBTC into this Curve pBTC pool and then stake the LP here in Convex.
AVAX – 9.52% APR with AVAX in Vesper Grow Pools
This yield is issued in 8.14% AVAX + 1.38% VSP.
To participate, one must deposit into the AVAX pool here in Vesper
There is a 0.6% fee on withdrawal from Vesper Grow pools and a 15% platform fee on yield generated by the deposited assets.
SOL – 7.09% 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 – 19.48% 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 – 18.9% 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 specify how many ATOMs and follow the prompts to Delegate.
FTM – 4.7% 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 – 10.81% 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
Earn An Enhanced ETH Staking Rate of 10.7% APY with icETH by Index Coop
The Index Coop is a DAO focused on a mission to launch, grow, and maintain the most trustworthy crypto indices on the market. Created in October 2020 by the Set Protocol CoFounder and CEO Felix Feng, the Index Coop is widely known for the DeFi Pulse Index (DPI) which became the earliest and most popular DeFi-native index providing exposure to a diversified basket of DeFi protocol tokens.
Since then, the Index Coop has launched over 15 index products based on different strategies incorporating yield, leverage, and investor themes such as DeFi, Metaverse (MVI), and the Web3 data economy (DATA).
Today, the Index Coop boasts just over $64M in index liquidity with an ongoing mission “to introduce and expand adoption of index products to a broad audience beyond those already in DeFi today.”
One of the indexes which has seen increased demand this year is the Interest Compounding ETH Index (icETH). icETH enhances staking returns using a leveraged liquid staking strategy that effectively amplifies staking returns 2-2.5x.
Powered by Set’s leverage token infrastructure, icETH allows token holders to maintain spot exposure to ETH while multiplying the staking rate for stETH by continually collateralizing stETH in Aave, borrowing WETH, swapping for more stETH, and redepositing the stETH, while minimizing transaction costs and risk associated with maintaining overcollateralized debt in Aave.
While icETH still has risk inherent to most DeFi products such as smart contract bugs, icETH does allow token holders to enjoy a higher effective ETH staking return, low fees, and a managed levered loan 24/7 with “emergency incentivized deleveraging during Black Swan events for additional safety.”
Today, we’ll show how I might earn amplified ETH staking returns with icETH!
Before we get started, please be aware of these risks.
Smart contract risk in Set Protocol and Index Coop
Front-end spoof attack on the indexcoop.com website
Exploits in economic design
Governance attacks or admin key compromise
Systemic risk in DeFi composability
stETH can potentially trade at a larger discount, putting the levered strategy of borrowing WETH against stETH at risk
icETH yield can go negative if the borrowing rate of WETH skyrockets like it did leading up to The Merge
Step 1: To get started, I go to a DEX aggregator like 1inch and connect my Ethereum wallet such as MetaMask, and specify swapping any token such as ETH for icETH.
Step 2: Then, I follow the prompts to swap and confirm my transaction in MetaMask. By just holding icETH, I’m now earning an effective staking rate of 10.7% APY, as of this writing.
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Earn Up To 93% APR On stETH With KyberSwap On Optimism
Lido’s stETH is the largest liquid staking derivative of Ether with a market cap of just under $6B. The protocol recently expanded to Layer 2 networks Optimism and Arbitrum and has just launched a liquidity mining program to attract stETH liquidity on those chains.
KyberSwap is a multichain DEX and aggregator that operates on 12 blockchains. It’s partnered with Lido to offer additional KNC incentives to users who provide wstETH liquidity on Arbitrum and Optimism.
The farms on Optimism offer higher yields at the time of writing.
51% APR on wstETH/WETH – This is a good option for users looking for yield on ETH with minimal impermanent loss since both assets are soft-pegged.
93% APR on wstETH/USDC – If you think ETH will trade sideways (remain rangebound), this option provides a higher yield.
Let’s get started.
Step 1: Acquire wstETH tokens on Optimism.
If you hold stETH on mainnet, you can wrap it here and use the official Optimism bridge.
Alternatively, you can bridge ETH to Optimism and swap half for wstETH on KyberSwap.
Step 2: Add liquidity on KyberSwap.
KyberSwap offers concentrated liquidity similar to Uniswap V3, so you’ll need to pick a range. As long as the position stays in range, you’ll earn trading fees.
Once you confirm the transaction, your position will be recorded as an NFT.
Step 3: Stake your LP NFT on the farm page to earn LDO + KNC tokens.
Click the ‘Approve Farming Contract’ button to grant access to your LP NFT.
Once approved, stake your NFT using the Deposit button.
That’s it! You’re now earning LDO and KNC rewards that you can claim at your convenience.
🪂 Airdrop Alpha
In each DeFi Alpha guide, we update a list of 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 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.
Congratulations if you followed our guide betting on a hunch that Optimism would release a token!
In a previous 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.
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.