⍺ DeFi Alpha: Curve on Optimism + Gearbox Credit Accounts
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...
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! DeFi liquidity has 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 launching. 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:
- prePO is a decentralized trading platform allowing you to gain synthetic exposure to any pre-IPO company or pre-token project. Check us out at prepo.io
- ZetaChain is the first public L1 blockchain that natively connects with any chain and layer including Bitcoin and Dogecoin without wrapping or bridging assets. Dive into the docs to start building the future of multichain.
📈 Yield Alpha
Each week we will provide options to earn yield on ETH, WBTC, stablecoins, and other major tokens.
- Stablecoins - Earn 17.5% APR by providing liquidity to the USDC-sUSD pool on Velodrome, the newly-launched AMM on Optimism.
- This yield is issued in VELO tokens.
- To participate, one must add liquidity on Velodrome.
- ETH - Earn 9.9% APR as a Hop ETH LP for bridging between Optimism and Ethereum
- This yield is accrued purely from trading fees paid in ETH.
- To participate, one must become an hETH/ETH LP here on Optimism.
- To learn more about how to deposit into this LP, watch this tutorial by DeFi Dad from 2021 or check out this guide from Hop.
- BTC - Lend WBTC at 6.3% APY to borrowers on Aurigami Finance on Aurora (NEAR)
- This yield is issued in 0.85% APY in WBTC + 5.45% APY in PLY tokens.
- To participate, one must deposit into the WBTC pool here on Aurigami.
- Caution: The PLY token rewards vest over 48 weeks, and it’s likely the price of PLY will change over that time, meaning the estimated net yield as of this writing, could go up or down.
- AVAX - Lend AVAX on Aave using Yield Yak for leveraged lending at 10.3% APY
- This yield is issued in AVAX, paid by borrowers on Aave.
- To participate, one must deposit into this YieldYak farm.
- SOL - Lend SOL to leveraged farmers on Francium at 13.74% APY
- This yield is backed by interest paid by borrowers on Francium.
- To participate, one must deposit into the SOL option in the Francium lending tab.
- MATIC - stake MATIC via MaticX and LP 50/50 MaticX-WMATIC on MeshSwap for a 41.62% APR
- 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 - mint pATOM and stake the pATOMs on Ethereum to earn more pATOMs on pSTAKE at a rate of 13.5% APR
- 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 - stake with sFTMx by Stader, earning 14.5% APY
- 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 - stake with the first HBAR liquid staking derivative by Stader, earning 44.3% APY
- 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 will not be possible until July 2022 or later.
🪂 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.
Congratulations if you followed our guide betting on a hunch that Optimism would release a token!
$OP is Live! Claim guide here.
Layer-2 rollup Arbitrum will be launching a series of tasks in early June for airdrop seekers. We’ll keep you posted in DeFi Alpha.
Arbitrum @arbitrum📳 𝐼𝑁𝐶𝑂𝑀𝐼𝑁𝐺 𝑇𝑅𝐴𝑁𝑆𝑀𝐼𝑆𝑆𝐼𝑂𝑁 CALLING ALL ARBINAUTS!🚨 The Arbitrum Odyssey will officially be going live mid-June. The space engineers and teams involved are hard at work making sure all systems are in check before launch.1:31 PM ∙ May 19, 20221,768Likes467Retweets
- Arch Finance - a protocol for comprehensive indices that provide access to differentiated sources of market risk.
- 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
- Hop Protocol - Congrats if you earned the HOP airdrop announced recently! Learn more here.
- Jupiter - The leading DEX aggregator by trading volume on Solana
- LI.FI - A cross-chain bridge and DEX aggregator protocol
- 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
- 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 - Layer 2 scaling solution for Ethereum using zero-knowledge (ZK) proofs. Testnet guide here.
- 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
- 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
How to Earn 8.33% vAPY as a Curve 3pool LP on Optimism L2
Curve is an exchange liquidity pool built on Ethereum originally in 2020, designed to enable lower slippage trading on like-asset pairs like stablecoins and pegged assets like renBTC and WBTC.
Today, Curve is one of the most popular automated market-makers (AMMs) in DeFi, having now launched across another 9 EVM-compatible chains, including all the Ethereum L2s in development. Curve has attracted the most liquidity of any AMM or DEX with $8.65B TVL and comes in second in trading volume only to Uniswap.
Today, I’ll show how I can take advantage of the increased trading activity on Optimism, thanks to the recent OP launch, and earn passive yield as a stablecoin LP in the Curve 3pool on Optimism L2.
Step 1: First, I can double-check the current estimated yield for the Curve 3pool on Optimism here, to be sure the yield hasn’t been diluted by too many LPs.
Step 2: Let’s assume I need to move some stablecoins (DAI, USDC, USDT) from Ethereum Mainnet or another L2/L1 to Optimism. I go to Bungee Exchange (by Socket) and find the cheapest, fastest, most secure route for bridging my stablecoins.
Step 3: Once I have my stablecoins on Optimism, I can go to the Curve dApp here under Deposit on Optimism L2 and connect my wallet, making sure the Optimism network is selected.
Step 4: I can specify how much of each stablecoin to deposit. Curve makes it easy to deposit DAI, USDC, and USDT in any ratio so I don’t have to trade to prepare the LP. Once ready, I can click Deposit & stake in gauge and follow the wallet prompts to approve transactions in MetaMask.
This could require up to 6 transactions since each token I deposit will require 1 Approval transaction followed by a final Deposit transaction, followed by an Approval to deposit the LP token and a final Deposit transaction for the LP.
🦍 Defiant Degen Tutorial
Leveraged Farming And Trading With Gearbox Protocol
DeFi offers a wide array of options when it comes to obtaining leverage, whether it’s borrowing on money markets like AAVE, leveraged yield farming on Alpha Homora (or similar), or margin trading on dYdX.
In today’s tutorial, we’re going to explore the Credit Account from Gearbox Protocol, another interesting DeFi lending primitive.
Gearbox is a composable leverage protocol that aims to improve capital efficiency within DeFi by enabling users to take leverage across various approved protocols.
The protocol has two sides: lenders and borrowers. Lenders act as liquidity providers who seek to earn a nominal yield on their assets and have a more conservative risk tolerance, while borrowers are risk-on traders and farmers who wish to leverage their positions by borrowing liquidity from the protocol.
Users can access the Gearbox protocol by activating a Credit Account. A Credit Account is an isolated smart contract that contains both the user’s funds and the borrowed funds. It can be seen as a programmable DeFi wallet that can be used for various DeFi operations such as margin trading on Uniswap or leveraged yield farming on Yearn.
It should be noted that Gearbox is not a trading platform/protocol. It does not execute trades, have its own order books, or control secondary market liquidity. Therefore, there are no funding rates, which makes it an attractive option for leveraged token trades.
Uniswap, Sushiswap, Curve and Yearn are currently supported by Gearbox V1.
Today, we’re going to use Gearbox to open a 3x long position on ETH.
Risk Warning: Using leverage is risky and your position will be liquidated if ETH drops another 30% from your entry price.
Step 1: Head over to Gearbox and open a Credit Account using your asset of choice.
While you can obtain up to 4x leverage, we’re going to go with 3x.
Approve your tokens and confirm your deposit.
Step 2: Once your credit account is created and funded, you’ll be able to trade directly through the UI or connect your credit account to other DeFi protocols. We’re paying 0.79% on our borrowed USDC.
We’re going to swap our USDC for ETH. A full list of supported assets can be found here.
That’s it! You can monitor your position from the ‘Manage’ tab and it can be closed by either liquidating your ETH for USDC, or repaying the outstanding USDC loan and withdrawing the remaining assets.
You’ll want to ensure that your health factor remains above 1.05 at a minimum to avoid the risk of liquidation on a sharp down day.
Claire Gu contributed to this tutorial.
📰 Elsewhere on The Defiant
This week, Robin took a look at DAI, the first DeFi stablecoin whose overcollateralized model remains resilient.
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.