⍺ DeFi Alpha: Fixed Yields on ETH with Sense Protocol + Zerion's New DeFi Wallet

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...

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! 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 - Lend USDC at 27.6% APY to borrowers on Aurigami Finance on Aurora (NEAR)
- This yield is issued iin USDC + PLY tokens.
- To participate, one must deposit into the USDC pool here on Aurigami. Step-by-step guide here.
- 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.
ETH - Earn a Fixed 8% APY on staked ETH using Sense Protocol
- This yield is paid in WETH.
- A step-by-step guide is provided in this week’s Degen tutorial.
BTC - Lend WBTC at 7.08% APY to borrowers on Aurigami Finance on Aurora (NEAR)
- This yield is issued in WBTC + 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 9.7% 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 16.96% 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 with MaticX and LP MaticX-MATIC on Balancer for a net 64% APY
- The yield is backed by validator rewards using the MaticX liquid staking derivative + trading fees on Balancer + BAL 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 Balancer and stake the LP.
ATOM - mint pATOM and stake the pATOMs on Ethereum to earn more pATOMs on pSTAKE at a rate of 11% 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 Deposit
- Then, deposit/stake pATOMs to get stkATOMs and earn 11% 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 45.7% 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.

Arbitrum Odyssey

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
Optimism - Congrats if you followed our guide betting on a hunch that Optimism would release a token! On Apr 26th, they announced their OP token coming in May with the 1st of 4 retroactive airdrops. Learn more here. The OP token launch may be imminent.
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 Get Started with Zerion’s New Non-Custodial Wallet and Claim Zerion DNA

Zerion is a smart and social Web3 wallet that makes it easy to stay on top of your DeFi and NFT portfolio, supporting thousands of protocols across 10+ blockchains and L2s. Zerion makes it easy to watch wallet addresses owned by DeFi leaders and investment professionals.

While you’ve always been able to trade on the Zerion mobile app, this week Zerion released a new non-custodial wallet feature to allow anyone to import their seed phrase and actually sign transactions using your Zerion-native mobile app, thanks to WalletConnect.

Along with this new ability to use Zerion as your all-in-one non-custodial wallet, the team unveiled their new Zerion DNA. Every wallet action will change your Zerion DNA “so it reflects the value of the assets you own, the amount of gas you’ve spent, and the networks you use.” Anyone with the Zerion Wallet can mint their DNA at no cost beyond standard network fees.

Zerion DNA is composed of six attributes that together form your on-chain footprint and each represents a layer in your NFT. Specifically, we use the following attributes to generate and evolve your Zerion DNA:

Today, I’ll show how I can download and set up Zerion’s mobile app to start tracking my DeFi and NFT portfolios, and if I’m already a Zerion user, I can skip to Step 4 about how to claim my Zerion DNA.

Step 1: First, I download the Zerion mobile app from the iOS or Android app store.

Step 2: To add a wallet to my Watchlist and begin tracking my portfolio, I can add the address or ENS handle. This feature is available for any wallet across the 10 networks Zerion currently supports: Ethereum, Solana, Polygon, BNB, Gnosis Chain, Avalanche, Arbitrum, Optimism, Aurora and Loopring. I’ll also be able to dig into the assets and NFTs in both my own wallets and any wallet addresses I track to give myself ideas about where others are allocating their cryptoassets.

Step 3: I can set notification preferences for each wallet so I’m notified in real time when they make a trade by hitting the Manage button in the top left corner of the app and pressing the bell icon for all the wallets I’d like to mute notifications from. Notifications are turned on by default.

Step 4: To set up the new non-custodial wallet within Zerion, I can create a new wallet or import an existing wallet such as MetaMask, Ledger or Trust Wallet using my private keys or seed phrase. Don’t forget to back up your wallet seed phrase!

Step 5: Once your wallet is topped up with ETH (which Zerion supports MoonPay, Ramp, and Mercuryo as fiat-to-crypto on-ramps), I’m able to mint my DNA NFT. I go to the NFTs tab in my wallet and click on the Claim Zerion DNA button. Once I complete the claiming process, I’ll be able to see my DNA NFT in my Zerion Wallet. My NFT will be customized based on all the on-chain transactions I’ve made and the assets I hold.

Step 6: If I have only 1 Zerion DNA held in my wallet in which it was minted, it will be active by default. However, if I hold multiple DNA NFTs in the same wallet, I’ll need to set one as Active. Only my active NFT will evolve as I use my Zerion wallet. The others will simply reflect the attributes from the moment they were minted.

To set a DNA NFT as Active, I can open it in my Zerion Wallet and select "Set as active.”

🦍 Defiant Degen Tutorial

Earn Fixed Yield on ETH Or Bet On Future Yields With Sense Protocol

Yield farming can be unpredictable. Attractive yields are often quickly diluted and prices of the DeFi tokens earned by liquidity providers continue to crater as the bear market rages on.

With ETH trading in the $1700s, holders may also prefer not to expose themselves to impermanent loss in the usual ETH-stablecoin LP pairs.

This week, we’re going to show you how to earn a fixed 9% APY on staked ETH for 6/12 months using Sense Protocol. The yield is paid in WETH (Wrapped Ether), so there’s no claiming and selling of volatile reward tokens involved.

How does it work? Let’s dive in.

Sense Protocol splits yield-bearing assets into Principal Tokens (PTs) and Yield Tokens (YTs) in a process called yield-stripping. This is a common practice in traditional finance where the principal and interest cash flows of fixed-income instruments like bonds or mortgages are packaged into separate securities and sold to different investors.

In essence, this allows investors a greater degree of control over their risk exposure. Conservative investors can purchase PTs at a discount, locking in a fixed yield as PTs are redeemable 1:1 for the underlying asset at maturity.

Let’s use staked ETH (stETH) as an example since it’s the only asset currently supported. Note that Sense is currently under a guarded launch, meaning that there are caps on the amount of PTs and YTs issued while the team ensures that everything works as advertised. Additional yield bearing assets are expected to be supported in the future.

At the time of writing, 1 ETH can buy 1.044 stETH Principal Tokens.

On maturity in 6 months, these PTs can be redeemed for 1.044 stETH, which in turn can be exchanged 1:1 for ETH post-Merge. That’s a fixed return of 4.4% in six months. Various tenors ranging from a few days to five years are available. The PT position is liquid and can be sold before expiry for a profit if the yield drops below the rate at which it was opened.

On the flipside, speculators may wish to bet on yields rising, which they can do by purchasing Yield Tokens (YTs).

Let’s get started.

Step 1: Head over to Sense Protocol.

https://app.sense.finance/eth-mainnet/fixed

Choose and click on a maturity from the available options.

Step 2: Buy wstETH Principal Tokens.

Note that liquidity is currently limited due to the guarded launch but should improve as caps are raised.

Review the position before confirming the transaction. You’ll be asked to approve spending your tokens before proceeding with the purchase.

That’s it! On maturity, you’ll be able to redeem your PTs for the underlying asset.

Sense Finance 🌌 (is hiring) @senseprotocol The Web3 Yield Curve is Live As a public good, Sense has launched zero issuance fee contracts to create fixed rates on wstETH and generate a yield curve 2mo, 6mo, 1yr, 5yr What does that mean, and what should you do about it? app.sense.finance/eth-mainnet 1/xapp.sense.financePortfolio 5:04 PM ∙ May 19, 202276Likes20Retweets

Risk Warning: Make sure you review the project’s documentation before depositing assets. Sense has posted multiple audits and is backed by reputable VCs, but as always, DeFi carries risks so ape responsibly.

📰 Elsewhere on The Defiant

In Part 1 of a series on how to research stablecoins, we take a look at institutionally issued stablecoins.

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 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.