⍺ DeFi Alpha: Farming the Fantom Mania with Yearn Vaults
DeFi Alpha is a weekly newsletter published 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 decentrali...
DeFi Alpha is a weekly newsletter published 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. It is meant to be highly actionable and shareable.
Two years ago, DeFi investors could easily name every yield farming opportunity without much effort. It was a simpler time, where 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 over $250B on Ethereum alone, with $171B in new burgeoning DeFi economies on EVM-compatible chains such as Polygon and Avalanche and non-EVM chains such as Terra 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 with all you need to know to keep up with new and old yield earning opportunities.
This is DeFi Alpha by The Defiant.
We are sending this issue to all Defiant subscribers. If you want to keep receiving this newsletter going forward please subscribe here:
📈 Yield Alpha
Each week we will provide options to earn yield on ETH, WBTC, stablecoins, and other major tokens.
- ETH - lending ETH on Beta Finance for 27.9% APY or borrowing/shorting WETH and getting paid to borrow/short at 91.01% APY
- This yield is issued in BETA rewards along with some lending interest
- To participate, Deposit WETH.e (ETH on Avalanche) into the Beta dApp or Borrow/Short WETH against WBTC or AVAX collateral to earn higher APY.
- Caution: If one borrows/shorts WETH, there is a risk of liquidation.
- WBTC - Also on Beta Finance, lending WBTC for 12.61% APY or borrowing/shorting WBTC and getting paid to borrow/short at 91.85% APY
- This yield is issued in BETA rewards along with some lending interest
- To participate, Deposit WBTC.e (WBTC on Avalanche) into the Beta dApp or optional to Borrow/Short WBTC against WETH or AVAX collateral to earn higher APY.
- Caution: If one borrows/shorts WBTC, there is a risk of liquidation.
- AVAX - On Beta, lending AVAX for 23.55% APY or borrowing/shorting AVAX and getting paid to borrow/short for 84.78% APY
- This yield is issued in BETA rewards along with some lending interest
- To participate, Deposit WBTC.e (WBTC on Avalanche) into the Beta dApp or optional to Borrow/Short AVAX against WETH or WBTC collateral to earn higher APY.
- Caution: If one borrows/shorts AVAX, there is a risk of liquidation.
- SOL - lend stSOL with Francium on Solana to earn 10.28% APY (from Francium) + 5.2% APR from the underlying SOL staking rewards
- This yield is backed by borrowing interest paid by leveraged yield farmers on Francium as well as the 5.2% APR in staking rewards thanks to the liquid staking derivative stSOL by Lido.
- To participate, go to the Francium dApp under Lendand deposit stSOL (by Lido).
- LUNA - LP with LUNA-LunaX in TerraSwap to earn 33.32% APY
- This yield is backed by auto-compounding LUNA staking rewards thanks to LunaX, trading fees on TerraSwap, and SD token rewards by Stader..
- To participate on Terra, deposit 50% of LUNA into LunaX and then go here to TerraSwap to pair 50/50 LUNA<>LunaX as an LP and sit back to passively collect rewards
- ATOM - mint pATOM and stake the pATOMs on Ethereum to earn more pATOMs on pSTAKE at a rate of 7% APR
- The yield earned is issued and claimable in pATOM and this yield is expected to hold steady for weeks/months unless pSTAKE changes their liquid staking model.
- To participate, one must first mint a 1:1 representation of ATOM as pATOM on Ethereum by using the pSTAKE dApp under Deposit
- Then, deposit/stake pATOMs to get stkATOMs and earn 7% APR
- Stablecoins - deposit USDC, DAI, or MIM to earn with 0xDAO on Fantom to earn 1500-4000% APR
- The yield is backed by the new 0XD token.
- To participate, I go to 0xDAO Farm dApp on the Fantom network, deposit USDC, DAI, and/or MIM.
- This is high risk! It’s a new dApp specifically launched to vampire attack veDAO, which was also launched in true degen style to accrue TVL for earning upcoming tokens in a new Fantom project by Andre Cronje and Daniele Sesta.The APYs are going to be high short term, and they assume the price of the reward token doesn’t crash (which they probably will). Check for a better tutorial on using Yearn to farm these tokens later in the DeFi Alpha guide.
🪂 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 - one of the leading L2 solutions for Ethereum with live dApps such as Uniswap, SushiSwap, Hop, and more, we expect a token to eventually launch so by depositing assets or transacting, one might earn a future airdrop
- Stader Labs - by depositing LUNA into LunaX (a liquid staking equivalent of LUNA) and pairing LUNA<>LunaX as an LP here on TerraSwap, one can farm SD rewards, the Stader protocol token that’s yet to be generated but is launching any day now, following its upcoming CoinList auction
- Ronin Blockchain - by depositing assets on the Ronin blockchain or playing Axie on this Ethereum sidechain built specifically for blockchain games, we speculate you’ll earn the future RON token. RON will be used to pay gas fees and secure the network for both Axie Infinity and future games/products hosted on the chain.
- Katana DEX - Farm/stake the AXS/WETH LP or SLP/WETH LP on this forked AMM on Ronin to earn WRON (wrapped RON), so this is a guaranteed reward but for a token not yet trading
- Element Finance - stake/lend to earn fixed interest with fixed terms on Ethereum
- Euler Finance - a non-custodial protocol on Ethereum that allows users to lend and borrow almost any crypto asset, just launched but has yet to launch a token.
- DeFi Saver - a one-stop dashboard for creating, managing and tracking DeFi positions across Aave, Compound, Maker, Liquity, and Reflexer
- 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
- Hop Protocol - become an LP to enable bridging instantly between Ethereum Mainnet, Polygon, Arbitrum, or Optimsm without waiting for long delays in withdrawals; DeFi Dad has a full blown video tutorial on how to become a Hop LP and potentially earn a future HOP airdrop.
- 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.
- Optimism - one of the leading L2 solutions for Ethereum with live dApps such as Uniswap, Hop, Synthetix and more, we expect a token to eventually launch so by depositing assets or transacting, one might earn a future airdrop
- 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
- 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.
🧑💻 Defiant Starter Tutorial
How to Automate Yield Farming the Fantom Mania with Yearn Vaults
Opportunity: Because Andre Cronje and Daniele Sesta are preparing to launch an anticipated new project on Fantom, there’s a war among market participants and DAOs to capture as much TVL on Fantom to earn more tokens in this upcoming project. Instead of trying to identify and move tokens to the best yield earning farms between veDAO, 0xDAO, and elsewhere on Fantom, I can just automate the work by depositing into Yearn Finance and allowing the vault to move my tokens around (ie WETH, WFTM, stablecoins), earning between 10-30% APY depending on the token. The current APYs on 0xDAO show as 1000-6000% APY but that assumes one can harvest rewards and sell the token before 0XD token price goes down. If you assume these are fleeting, short term APYs, then using Yearn makes a lot of sense to automate farming.
Here’s what you need to know:
- When one deposits into any Yearn vault, there’s risk in being exposed to both Yearn smart contracts and whichever contracts Yearn is using to farm in (ie veDAO or 0xDAO) so it’s possible to lose money on a protocol exploit–like any dApp used in DeFi.
- The yVaults are performing strategies which automate harvesting yield and selling the yield token(s) for whatever you deposited. This is a huge advantage to using yearn–earn yield denominated in the token you deposit!
- There is a 20% performance fee on all yield you earn, and 2% “management fee” based on a flat rate taken from vault deposits over a year. The fee is extracted by minting new shares of the vault, thereby diluting vault participants.
Time to Complete: 5 minutes if paying the recommended HIGH gas price on the FTMScan Gas Tracker.
Estimated Length of Rewards Program: There’s no end date to these vaults but some of the yields are higher on Fantom because of the “Fantom wars” happening for TVL.
Gas + Protocol Fees: Based on gas prices fluctuating between 200-4000 Gwei on Fantom, it could cost as little as $1 or much higher.
Fees: 20% performance fee on yield, and the “2% management fee” found here on Yearn
Risks: As always, this is not financial advice and you should do your own research. The following are risks I incur when participating in this opportunity.
- Smart contract risk, oracle failure, and governance attacks in Yearn, veDAO, 0xDAO and any other protocol yVaults use on Fantom
- Systemic risk in DeFi
- Pegged assets such as stablecoins may de-peg
- First, assuming I have tokens on Fantom in a wallet like MetaMask, I can go to the Yearn Finance dApp for Fantom to connect my wallet.
- After reviewing the potential yields under Vaults, I choose to deposit by WETH and click on the WETH option (not Deposit) to see what the underlying strategy is to earn 9.58% APY.
- The strategy indicates farming with WETH on veDAO, harvesting WEVE, selling for more WETH, and redepositing the WETH. If I’m willing to take on this exposure, I can specify how much WETH to deposit and click Approve followed by Deposit (2 MetaMask transactions).
Lastly, I can return to the Home tab to track the net value of my Vaults!
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🦍 Defiant Degen Tutorial
Bridging to Optimism and Yield Farming on ZipSwap
Optimism is a Layer-2 scaling protocol for Ethereum that uses Optimistic Rollups and Total Value Locked in its ecosystem has been growing steadily, albeit slowly.
Optimism doesn’t have a token yet, so using the network early could lead to a retroactive airdrop in the future. Of course, there is no guarantee that Optimism will issue a token.
yyctrader is going to show you how to bridge assets to Optimism and do some yield farming on ZipSwap, a decentralized exchange that launched on Jan. 11.
We’ll be looking at ETH-DAI which is currently yielding 48% APR. ETH-WBTC yields 40%.
Step 1: Add the Optimism network to MetaMask. I used Chainlist, a handy tool for connecting to EVM-compatible chains.
Step 2: Head to the Optimism Bridge and connect your MetaMask wallet to the Ethereum network. Enter the asset and amount you wish to transfer and confirm the transaction.
Gas fees on Optimism are paid in ETH, so you’ll need to transfer some over.
You are now ready to DeFi on Optimism.
Step 3: Navigate to ZipSwap:
You’ll need equal amounts of ETH and DAI to provide liquidity, so you can swap some ETH for DAI on ZipSwap or bridge both assets separately.
Step 4: Once you have your ETH and DAI, add liquidity to ETH-DAI
You’ll be asked to approve spending your assets. Confirm the transactions to receive your Liquidity Provider (LP) tokens.
Step 5: Stake your LP tokens in the farm to earn $ZIP tokens.
Note that you will not earn any token rewards if you miss this step.
📰 Elsewhere on The Defiant
Tuesday Tutorial on The Defiant YouTube: This week, Robin covered how to use the DEX SpookySwap on the Fantom network. Learn how and subscribe to The Defiant on YouTube!
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 are 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.