- Yields: Up to 26% APY on Stablecoins, 5-39% 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.
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 is an all-one management app with unique automation options for top DeFi lending protocols. The app is now available directly within the Compound app for Compound v3 users.
📱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.
📈 Yield Alpha
Each week we will provide options to earn yield on ETH, WBTC, stablecoins, and other major tokens.
- ETH: 39% 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-pETH vault under aCRV Vaults on Concentrator.
- Caution: pETH is an ETH derivative minted when a user borrows against their NFT and burned when they decide to repay their loan. pETH has a risk of depegging.
- BTC: 5.38% projected vAPR with the Curve HBTC+WBTC LP staked in Convex
- This yield is accrued in CRV, CVX, and trading fees.
- To participate, one must first deposit HBTC and/or WBTC into this Curve factory pool and then stake the LP here in Convex.
- MATIC: 19.9% APR with the MATIC-stMATIC Elastic LP on KyberSwap
- ATOM: 21.3% 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.
- AVAX: 7% 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.
- Depending on the pool’s coverage ratio there may be a deposit or withdrawal fee.
- SOL: 8.81% APY staking SOL with stSOL by Lido
- This is backed only by Solana staking yield.
- To participate, one must deposit SOL here or buy it on a Solana DEX.
- 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: 9.6% 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.
- Stablecoins (USD): 26.36% projected vAPR with the DOLA+FRAXBP LP on Convex
- This yield is accrued in CVX, CRV, and trading fees.
- To participate, one must deposit USDC, DOLA, and/or FRAX into this Curve LP and stake the LP here on Convex.
Please be aware we intentionally do not report the highest yield rates because often, those yields are less sustainable and in some instances, artificially elevated due to high inflation tokens or fewer LPs participating.
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🎓 Starter Tutorial
Earn Up to 54% APR as a Staked ETH LP on Balancer
As crypto markets continue to experience turmoil from the fallout of FTX, we remain committed to uncovering and teaching DeFi beginners about the more reliable and battle-tested yields in DeFi.
This week, a new pool was created on Balancer, a decentralized protocol for liquidity, similar to other automated market-makers (AMMs) but with even more versatile and configurable pools. Unlike AMMs such as Uniswap which provide 50/50 weightings of tokens, Balancer Weighted Pools allow you to create different token counts and weightings, such as pools with 80/20 or 60/20/20 token ratios.
Another popular product of Balancer is their Stable Pools, designed for assets that are expected to consistently trade at near parity or at a known exchange rate. Composable Stable Pools are based on StableSwaps, popularized by Curve, which allows for trades of significant size before encountering substantial price impact.
Balancer Stable Pools are especially ideal for pegged tokens like stablecoins or correlated tokens that trade near 1:1 like wstETH, wETH, and the new liquid staked ETH token by Coinbase cbETH.
This week, a new Stable Pool for wstETH-cbETH launched, which is currently netting 22-54% APR in total yield for LPs. The yield is backed by Balancer trading fees (0.04% per swap), ETH staking yield, and BAL rewards (depending how much veBAL one holds). For anyone who wants exposure to 100% staked ETH, with relatively little fluctuation in the near 1:1 pricing of wstETH and cbETH, this is an ideal LP.
The 2 risks to consider are i) holding cbETH, which exposes LPs to underlying staked ETH in the custody of Coinbase and ii) price risk in ETH liquid staking derivatives, which tend to trade near parity with ETH but can trade at larger discounts. For example, stETH famously dropped to a 6-7% discount in June 2022 due to immense selling pressure following the contagion from the collapse of Terra UST.
Today, I’ll show how I can earn up to 54% APR as a wstETH-cbETH LP on Balancer.
Before we get started, please be aware of these risks.
- Smart contract risk in Balancer, Lido, and smart contracts associated with cbETH
- Front-end spoof attack on the Balancer 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 Stable Pool page for wstETH-cbETH and click the purple button Add liquidity.
Step 2: Assuming I already have cbETH, wstETH, or have acquired it from a DEX like 1inch, I can specify any ratio of these tokens (or just a single token) before clicking Preview and following the prompts to Approve spending, followed by a final deposit transaction. This could require up to 3 transactions if depositing 2 tokens.
Step 3: Lastly, I go back to the pool page under Staking incentives and click Stake to deposit the LP token. It will require 2 transactions (Approve + Deposit/Stake).
Bonus: If I happen to hold veBAL from being a 80/20 BAL/ETH LP, I can boost liquidity mining yields up to 2.5x. If interested to become a BAL/ETH LP and lock it to get veBAL, go here.
🦍Degen Tutorial
Using ZetaChain For A Potential Airdrop
ZetaChain is a smart contract platform being developed for omnichain interoperability, meaning that it will enable DeFi apps to seamlessly access liquidity across all connected networks.
It uses ZETA as an intermediary token when transferring value across blockchains. ZETA is issued natively on all supported networks and transfers are one-way – ZETA is burned on the source chain and minted on the destination chain.
ZetaChain has been running a testnet since the summer and launched a community guild in October. Its mainnet launch is expected in Q1 2023.
In this tutorial, we’re going to interact with the testnet and try out some omnichain dapps.
Step 1: Claim the Zeta Supporter NFT
https://galxe.com/ZetaChain/campaign/GCcGZUtnHZ
You’ll need to follow ZetaChain on Twitter and join the project’s Discord in order to claim the NFT.
Step 2: Get some testnet ZETA
https://labs.zetachain.com/swap
Connect your Metamask wallet. You’ll be prompted to switch to the Goerli testnet.
Click the ‘Get ZETA’ button in the navigation bar and confirm your Twitter account.
You can also request test tokens using the Discord faucet here.
Step 3: Swap ZETA for USDT and Claim Another NFT
Connect to the Polygon Mumbai testnet and swap ZETA for USDT on the BSC testnet.
You’ll be asked to approve spending your test tokens. Do so and confirm the swap.
Once completed, claim the NFT at the link below.
https://galxe.com/ZetaChain/campaign/GCPoUUwyyC
Step 4: Confirm that your participation has been recorded on the Guild page.
Complete the other tasks and monitor the Discord for new quests and forthcoming apps.
You can also collect ‘Zeta Points’ for inviting friends to participate in the testnet.
🪂 Airdrop Alpha
In each DeFi Alpha guide, we update a list of DeFi protocols that have yet to announce and/or launch a token.
Blur Airdrop 3
Blur has announced that its third airdrop round will be geared towards users to place bids on the marketplace. You can find our step-by-step tutorial from last month here.
ACX Airdrop
Cross-chain bridge Across Protocol has launched its ACX token.
If you followed our guide and participated in the referral and bridging program, you can claim your tokens here.
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 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.