DeFi Alpha: Reserve Your Free TreasureTag on Arbitrum
Open an Instant Loan backed by NFTs with DeFrag
- Featured Yields: Up to 22% APY on Stablecoins, 8-35% 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 farm without much effort. It was a simpler time, where only a handful of protocols presented limited options to trade, lend, borrow, stake, and provide liquidity.
But times have changed! From 2019 through the end of 2021, DeFi TVL grew a staggering 250X, and although DeFi liquidity contracted in 2022, we see this sector gearing up to expand again in 2023 and beyond.
In order to keep up with the latest and greatest DeFi yields, we bring you this weekly guide.
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.
Yield Alpha
Each week we will provide options to earn yield on ETH, WBTC, stablecoins, and other major tokens.
- ETH: 35.6% 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 the Curve LP under the ETH-pETH vault under aCRV Vaults on Concentrator.
- BTC: 8% projected vAPR with the Curve multiBTC+sbtc2Crv LP staked in Convex
- This yield is accrued in CRV, CVX, and trading fees.
- To participate, one must first deposit into this Curve factory pool and then stake the LP here in Convex.
- MATIC: 17.18% APY with 50/50 MaticX-WMATIC LP on MeshSwap
- The yield is backed by validator rewards using the MaticX LSD (5.76% APY) + MeshSwap trading fees + MESH rewards + SD rewards.
- To participate on Polygon, one may use the Stader MaticX dApp to mint MaticX.
- Then, deposit into the MaticX-WMATIC pool on MeshSwap and stake the LP.
- ATOM: 21% 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.
- BNB: 17% APY with 50/50 BNB/BNBx ApeSwap LP in a Beefy Finance vault
- AVAX: 7% APY staking AVAX with ankrAVAX by Ankr
- This yield is issued in AVAX.
- To participate, one must deposit AVAX for ankrAVAX here on Ankr.
- SOL: 7.5% 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 for sFTMX here on Stader.
- Stablecoins: 22% APR with the USDC/DOLA LP staked in Velodrome on Optimism
- This yield is accrued in VELO.
- To participate, one must deposit and stake in this USDC + DOLA LP.
Please be aware we do not always report the highest yield rates because some high yields may be less sustainable due to high inflation token rewards or fewer LPs participating.
Starter Tutorial
Open an Instant Loan backed by NFTs with DeFrag on Arbitrum
Disclosure: DeFi Dad and his team at 4RC invested in the seed round for DeFrag.
The adoption of DeFi began with decentralized exchange (DEX) trading. This was then followed by a rapid growth in lending and borrowing, driven in part by innovations in money market protocols like Compound and Aave. These protocols employed a peer-to-pool design, enabling lenders to pool their liquidity for others to instantly borrow against collateral such as ETH.
Protocols to enable instant loans backed by NFTs have been in development for years, and one of the very first in this vertical just launched! Built by Eldari Janashia, Alex Hint, Igor Yuzo, and Nodar Janashia, the creator of DeFiZaps in 2019, which would later rebrand as Zapper, DeFrag is a lending protocol where borrowers can use NFT assets as collateral to get an instant loan.
To receive a loan in USDC against your deposited NFTs, the DeFrag protocol uses put options to automatically insure your NFT assets. This design allows borrowers to enjoy instant liquidity (like on Aave), without waiting for another user to accept the terms of your loan.
The maximum amount you can borrow is based on a 50% LTV ratio depending on the value of NFT assets deposited and the available liquidity. Meanwhile, the underwriters’ liquidity pool earns premium fees from the sale of put options without having to negotiate terms such as strike price, or expiration with a counterparty.
While established NFT borrowing platforms like nftfi match lenders and borrowers with more expensive 1/1 pfp-style NFTs, DeFrag aims to serve the rapidly growing Treasure gaming ecosystem of NFTs on Arbitrum.
The mission is to make it possible for more NFT holders of common gaming assets to be able to access instant liquidity. DeFrag may eventually expand to support more NFT collections on Arbitrum outside the Treasureverse and potentially other L2s with this p2pool model using put options.
Since its launch on January 24th, DeFrag has seen 156 NFTs collateralized to borrow $88k USDC against $421k in NFT collateral value. DeFrag currently supports 3 collections of NFTs on Arbitrum:
- Legion Genesis Commons
- Legion Genesis Specials
- Smol Brains
Today, I’ll cover how I can instantly open a USDC loan backed by my NFT collateral on DeFrag!
Before we get started, please be aware of these risks.
- Smart contract risk in DeFrag Finance
- Front-end spoof attack on the DeFrag app
- Admin key compromise
- Liquidation if I don’t maintain my loan
- Systemic risk in DeFi composability
Step 1: First, I connect my Arbitrum wallet here on the DeFrag app.
Step 2: I have a Smol Brain, so I click Borrow and end up on this screen below where I click Approve Collection (1 transaction) or if I have multiple NFTs in the collection, I can Approve specific ones individually.
Step 3: Lastly, I click on my approved Smol Brain on the left (to signal I’ll deposit it as collateral–it should be outlined in green), specify how much USDC to borrow based on my risk tolerance for liquidation at 83% LTV and a max borrow LTV of 50%, and click Borrow (confirming 1 transaction) and I’m done! I can return to this same dashboard in the future to Payback my USDC loan + interest and withdraw my NFT collateral.
Degen Tutorial
Reserve Your Free TreasureTag on Arbitrum
Treasure is a gaming-focused NFT ecosystem on Arbitrum that’s been around for a while but is gaining traction after the success of the Beacon game (discussed on a previous Alpha call).
The MAGIC token serves as a common resource for all Treasure-based projects including the Trove NFT marketplace, where one can buy and sell in-game items denominated in the token.
According to the project, Treasure is the top gaming destination on Arbitrum with over $250M in trading volume and 20+ games.
On Jan. 26, the project unveiled TreasureTags, which are player profiles that can be claimed for free. You can currently reserve your name, with minting to take place at a later date. Profiles are represented by NFTs (similar to Lens).
Why claim a profile? It’s free, and will be required to participate in future activities.
With Arbitrum’s token launch rumoured to be imminent, we’ll likely see a surge of interest in projects on the network, and it’s possible that Tag holders could be included in an airdrop.
To claim your TreasureTag, head over to https://trove.treasure.lol/treasuretag.
Connect your wallet and sign a message to prove ownership.
You’ll be asked to enter and verify your email address. Once done, you can reserve your TreasureTag. Note that connecting your Twitter and Discord accounts is optional.
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.
- 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.
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