The Defiant

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⍺ DeFi Alpha: Trade NFTs Royalty-Free On Sudoswap

  • Yields: Up to 35% APR on Stablecoins, 12-21% on ETH and BTC

  • Starter Tutorial: Up to 35% APR on Stablecoins with Hermes Protocol on Metis

  • Degen Tutorial: Trade NFTs Without Creator Fees On Sudoswap

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 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 the only automatic liquidation protection and leverage management options on Optimism. Automate your Aave v3 position management now with drastically lower tx fees.

📈 Yield Alpha

Each week we will provide options to earn yield on ETH, WBTC, stablecoins, and other major tokens.

  • ETH – 21.59% APR with the ETH/rETH LP in Uniswap v3 

    • This yield is all from trading fees.

    • To participate, one must click Add Liquidity here.

    • Caution: The yield is likely to decrease with a drop in daily trading volume.

  • WBTC – 12.05% 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.

  • Stablecoins – 35% APR with the m.DAI/m.USDC LP staked in Hermes on Metis

    • This yield is accrued in trading fees and HERMES tokens.

    • To participate, one must first deposit m.DAI and m.USDC into this Hermes LP and then stake the LP here under the StableV1 AMM – m.USDT/m.USDC staking option. See the beginner tutorial for more details!

  • AVAX – 10.2% 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 – 7.31% APY lending stSOL on Tulip Protocol + 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 – stake MATIC with MaticX and LP MaticX-MATIC on QuickSwap for 22.7% APY

    • The yield is backed by validator rewards using the MaticX liquid staking derivative + trading fees on QuickSwap + dQUICK rewards + SD rewards.

    • To participate on Polygon, I use the Stader MaticX dApp to mint MaticX.

    • Then, I deposit into the 50/50 MaticX-MATIC pool on QuickSwap and stake the LP here.

  • 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 – 31.7% APY staking with HBARX liquid staking derivative by Stader

    • The yield is issued in HBAR rewards, as HBARX is earning validator rewards.

    • To participate, deposit HBAR to receive HBARX here on Stader.

    • Caution: This is in beta and withdrawals may not be possible until July 2022 or later.

Premium Subscribers get: Defiant Starter Tutorial, Defiant Degen Tutorial, Airdrop Alpha, Alpha Call Recording with Market Overview, NFT Roundup and much more.

🪂 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.

Arbitrum Odyssey

Layer-2 rollup Arbitrum kicked off a two-month-long program on June 21.

Participants will be able to claim NFTs based on completing various tasks over the summer.

Week 1 was Bridge Week and we walked you through it in a previous issue of DeFi Alpha.

Participants can now claim their Week 1 NFTs.

Week 2 involved the GMX derivatives protocol but was paused after heavy traffic on Arbitrum caused gas fees to spike.

https://twitter.com/arbitrum/status/1542159105946787840

We’ll be watching for the Odyssey to resume.

Optimism Airdrop

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 Up to 35% APR on Stablecoins with Hermes Protocol on Metis

Last week, we covered a newer AMM called Velodrome, built on Optimism, based on the foundational work of Andre Cronje’s Solidly on Fantom. Another fork of Solidly similar to Velodrome is called Hermes Finance.

Hermes directs weekly emissions of its own token HERMES to liquidity providers (LPs) and meanwhile those who lock up HERMES can earn voting power with their veHERMES, which they can use to vote on future emissions and hence which pools where they’ll claim a proportion of the trading fees and bribes.

Every time we make a trade on Hermes Protocol paying 0.01% in trading fees, liquidity providers get HERMES from emissions and fees instead are redirected proportionally to HERMES stakers (veHERMES holders) that voted for that pool. Like Velodrome, Hermes has natively built both stable pools and variable pools with unpegged assets.

However, one risk to consider is that Hermes Protocol are built on a newer Ethereum L2 using optimistic rollup technology called Metis and it still remains to be seen whether or not this will last long term.

Today, I’ll show how I can earn an estimated 35% APR in HERMES rewards as a stablecoin LP on this Maia DAO app built with Hermes, on Metis.

Before we get started, please be aware of these risks.

  • Smart contract risk in Hermes Protocol and Maia DAO

  • Front-end spoof attack on the website hermes.maiadao.io

  • Exploits in economic design

  • Governance attacks or admin key compromise

  • Systemic risk in DeFi composability

  • Pegged assets such as stablecoins can potentially depeg

  • Withdrawals from Metis back to Ethereum Mainnet require a wait time of one week

  • Metis is high risk in the landscape of L2 rollups, given how much less battle-tested it is

Step 1: First, let’s assume I need to pick a pool to earn with stablecoins or pegged assets I already hold like DAI. I go to the listing of farming options under the Stake tab and pick out a pool that suits my preferences (ie stablecoins + higher APR).

Step 2: Let’s assume I want exposure to the near 50/50 LP for m.DAI/m.USDC so first, I go here by clicking Buy LP under the option for m.DAI/m.USDC.

I specify how much m.DAI or m.USDC and look for what the other value auto-fills. Now, I know exactly how much of either token I need and so I may need to then bridge some DAI and/or USDC from Ethereum Mainnet to Metis using this Metis Bridge. 

Tethys Finance operates a faucet in their Discord from which you can obtain some free METIS for gas fees if needed.

Step 3: Once I have m.USDC and m.DAI on Metis, I can go here to the LP, specify depositing either token, and then follow the prompts to Approve and then Deposit into the LP.

Step 4: Lastly, I return to this tab under the Stake tab and I choose the LP I just created and Stake which should require 2 transactions.

🦍 Defiant Degen Tutorial

Trade NFTs Without Creator Fees On Sudoswap

Sudoswap is a recently launched NFT marketplace that functions more like Uniswap than OpenSea.

It uses liquidity pools of NFTs paired with ETH to facilitate instant, low-fee trading. Sudoswap charges a 0.5% trading fee, far lower than OpenSea (2.5%) and LooksRare (2%).

Trades on Sudoswap do not incur creator royalties, as the AMM is fully decentralized and royalties are not currently enforceable on-chain. Instead, marketplaces like OpenSea collect and forward the royalty fees specified by NFT creators. So, by selling your NFT on Sudoswap, you could potentially save anywhere from 2-10%, depending on the collection.

Let’s dive in.

Buying and Selling

Trading NFTs is quite straightforward. Head over to the collection’s page on Sudoswap and buy or sell your NFTs at the currently quoted price.

Note that collections with deeper liquidity will have narrower bid-ask spreads.

Robin did an excellent walkthrough in this week’s Tuesday Tutorial.

Adding Liquidity

You can add liquidity in 3 ways by creating your own pool:

  • ETH only – Limit buy orders. You deposit ETH and receive NFTs as people swap through your pool.

  • NFTs only – Limit sell orders. You deposit NFTs and receive ETH as people swap through your pool.

  • ETH and NFTs – Earn trading fees, similar to providing liquidity on DEXs like Uniswap.

When creating a pool with multiple NFTs, there are multiple options to set prices:

  • Flat price – All NFTs bought/sold at the same price.

  • Linear curve – Price increases by a fixed amount after each trade.

  • Exponential curve – Price increases by a fixed percentage after each trade.

For example, selling 10 NFTs starting at 1 ETH and increasing by 5% after each sale would net 12.57 ETH.

Make sure you review the Sudoswap docs before using the protocol.

After setting your desired prices, the final step is choosing the NFTs to be added to the pool.

You’ll be asked to approve your NFTs and then submit a second transaction to create the pool.

That’s it! You can monitor your positions from the ‘Your Pools’ page.

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.

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