- Yields: Up to 18% APY on Stablecoins, 10-55% APY 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 is the most comprehensive dashboard for Liquity protocol with unique automated liquidation protection features. Now, with full support for the newly launched Chicken Bonds bonding protocol as well.
📈 Yield Alpha
Each week we will provide options to earn yield on ETH, WBTC, stablecoins, and other major tokens.
- ETH – 55% APY with pETH/ETH Curve LP staked in Convex via Concentrator
- This yield is accrued in aCRV + trading fees compounded in the LP.
- To participate, one must Deposit into the pETH/ETH Curve LP here(not stake).
- Then, one must stake/deposit the Curve LP under the ETH-pETHvault under aCRV Vaults on Concentrator.
- BTC – 9.81% projected vAPR with the Curve pBTC+sbtcCrv 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 factory pool and then stake the LP here in Convex.
- AVAX – 6.15% APR with AVAX in Vesper Grow Pools
- This yield is issued in 4.39% AVAX + 1.76% 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 – 8.6% APR staking SOL with stSOL by Lido
- This is backed only by Solana staking yield.
- 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 – 14% 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 – 20.9% 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.
- Stablecoins (USD) – 18.32% APR with the LUSD/MAI LP staked in Velodrome on Optimism
- This yield is accrued in VELO.
- To participate, one must deposit and stake in this LUSD+MAI LP.
Leveraged yield farming – Why most users fail
It comes as no surprise that the majority of the highest yields in DeFi come from utilizing leverage or debt. What is surprising however is that many of these high yields have displayed an astonishingly low rate of alpha decay over the past year. Where normally high yields decline over time as more participants enter the position, leveraged yield farming strategies oftentimes maintain their rate of return. Why is that?
Operating a leveraged yield farming strategy requires that users know:
- Which borrowing/lending protocol to use
- Which asset to deposit as collateral
- Which asset to borrow
- How much to borrow
- Which risk parameters to choose for your loan
- Where to deploy your borrowed funds
Furthermore, leveraged strategies require active monitoring and management. A healthy level of collateral must always be maintained in order to avoid liquidation. With so many barriers to entry it’s no wonder that most users don’t utilize leveraged yield farming. That is, until now.
Arkitect is enabling any user to create their own leveraged yield farming strategy all within a few clicks. Each strategy is autonomously maintained and users can deposit funds into pre-built strategies or create their own with custom parameters.
The team behind Arkitect has been building in stealth and is giving DeFi Alpha readers the first ever glimpse into the protocol. Using this exclusive Discord link, DeFi Alpha readers can whitelist their address to be first to get accessto the Arkitect protocol.
- SuperRare Auctions NFT Subscription Passes For More Than $4M
- Magic Eden Launches ‘Fair Mint’ Mechanism
- Weekly volume dips below $100M for the first time this year.
🔗Read the full article at thedefiant.io🔗
👨🎓 Starter Tutorial
Earn Up to 17% APR with wstETH/ETH LP on KyberSwap on Optimism
After another shaky week in the crypto markets, we dug deep for a more basic topic to introduce to beginners. A combination of liquid staked ETH paired in a like-asset liquidity provision (LP) on a DeFi OG automated market-maker feels appropriate in these dark times.
KyberSwap is both a DEX aggregator and an automated market maker (AMM) with a more recently added concentrated liquidity offering called KyberSwap Elastic. Like other AMMs, liquidity providers can add different combinations of tokens as LPs and earn a proportional amount of trading fees.
As Lido continues to grow deeper liquidity for its flagship liquid staked ETH (stETH) on Ethereum Mainnet and L2s, new programs have emerged on both Optimism and Arbitrum. With so much uncertainty and fear in the markets, it seems timely to focus on the most liquid ETH staking derivative ($5.8B of ETH in stETH as of this writing) paired with ETH on a rapidly growing L2 like Arbitrum, with the potential to earn a future Arbitrum token airdrop.
Today, I’ll show how I could earn up 17% net APR by being a wstETH/ETH LP on KyberSwap AMM on Arbitrum.
Before we get started, please be aware of these risks.
- Smart contract risk in KyberSwap + Lido
- Front-end spoof attack on the KyberSwap website
- Exploits in economic design of any protocol
- Slashing risk
- Staked ETH price risk
- DAO key management risk
- Beacon Chain technical risk
- Beacon Chain adoption risk
Step 1: First, I go here to the KyberSwap Earn tab under Pools for Elastic Pools.
Step 2: I connect my Ethereum wallet, making sure the network is set to Arbitrum on the KyberSwap dApp. For the wstETH-ETH LP, I click on the + button for Add Liquidity for the pool with an estimated $1.92M in liquidity as of this writing.
- Using this deposit page for the LP, I have to set the price range so that the real price (white line) is between my Min Price and Max Price. By setting a price range for this stable pair, it ultimately tells me how much of each token I’ll need. In the example below, I’d need about 1 wstETH + ~1.0487 ETH on Arbitrum.
Step 3: If I don’t already have wstETH + ETH on Arbitrum, I can bridge wstETH using the Arbitrum bridge here or alternatively, I can bridge just ETH from Ethereum Mainnet or another chain/L2 using Bungee Exchange to Arbitrum and then trade for wstETH on Arbitrum using KyberSwap.
Step 4: Once I have the estimated ratio of wstETH + ETH on Arbitrum, I can return to the deposit page for this LP, specify the max of either token, and follow the prompts to Approve + Deposit both tokens to form the LP. Then I head over to the Farms tab under Earn, and Approve Farming Contract followed by the + button for the wstETH – ETH LP to deposit/stake my LP and begin to earn added rewards tokens beyond trading fees to get me to the estimated 17% net APR.
Using the SEI Testnet For A Potential Airdrop
Sei is Layer 1 blockchain in development that’s optimized for trading and DeFi applications. In September, it announced a $50M fund to incubate a DeFi ecosystem and is currently running a public testnet.
On Nov. 16, Sei released its first NFT for testnet participants.
Lucky for us, the window of opportunity remains open as one can still complete 10+ transactions on the testnet and claim the NFT. Hopefully, that will make us eligible for any future $SEI airdrops.
As always, completing these testnet missions is completely free.
Let’s get started.
Step 1: Set up a Cosmos wallet if you don’t have one already.
Install the Keplr wallet. You’ll need to generate a new wallet address and record your seed phrase, similar to Metamask. The Chrome extension can be found here.
Once you’ve created your wallet, you can find your new ATOM address on the top-left corner of the dashboard.
Step 2: Connect to the Seinami Testnet
Head over to https://trade.vortexprotocol.io/, a decentralized order book protocol being built on Sei.
Connect your Keplr wallet and you’ll be prompted to add the Seinami test network.
Once added, connect to the testnet by clicking on ‘Cosmos Hub’ and switching networks.
Your Sei address will now be visible. Copy it by clicking on the address.
Step 3: Obtain test tokens
- Join the Sei Discord – https://discord.gg/sei
- Use the faucet in the #atlantic-1-faucet channel.
If you’ve followed all the steps correctly so far, you’ll receive 1 SEI.
Get some test UST2 using !faucet ust2 <sei address> in the same channel.
Step 4: Complete 10+ transactions
Deposit UST2 on Vortex and trade
Send UST2 or SEI to friends’ wallets
Bridge test aUSDC using https://testnet.satellite.money/
Check your transactions using the block explorer here.
Step 5: Mint the Dawn NFT
Go to https://www.seinetwork.io/dawn
Connect your wallet and check eligibility.
Mint the Dawn NFT.
🪂 Airdrop Alpha
In each DeFi Alpha guide, we update a list of DeFi protocols that have yet to announce and/or launch a token.
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
- Lens Protocol – A decentralized composable social graph, underpinning an emerging landscape of Web3 social media dApps including Lenster, Lenstube, and Orb
- 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
- StarkNet mainnet is live! Bridge and swap some tokens for a potential airdrop. Guide here.
- 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!
- 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.