DeFi Alpha: Earn Up To 130% APR On ETH Pairs With DefiEdge On Optimism
Earn Up to 19% vAPR with XAI by Silo Finance on Convex’s Frax Booster
- Featured Yields: Up to 32% APY on Stablecoins, 12-28% 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.
DeFi Alpha Call
The DeFi Alpha call is held every Monday at 2pm ET in Discord.
If 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: 28.4% 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: 12.9% 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: 14.3% APY with 50/50 MaticX-WMATIC LP on MeshSwap
- The yield is backed by validator rewards using the MaticX liquid staking derivative + MeshSwap trading fees + MESH rewards + SD rewards.
- To participate on Polygon, one may use the Stader MaticX dApp to mint MaticX.
- One can 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: 20.67% APY with 50/50 BNB/BNBx ApeSwap LP in a Beefy Finance vault
- AVAX: 7.27% 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: 32.2% APR with the jEUR/sEUR LP staked in Velodrome on Optimism
- This yield is accrued in VELO.
- To participate, one must deposit and stake in this jEUR + sEUR 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
Earn Up to 19% vAPR with XAI by Silo Finance on Convex’s Frax Booster
Launched in summer 2022 with a more recent genesis of their flagship XAI stablecoin, Silo Finance is building permissionless, risk-isolated lending markets on Ethereum.
When you lend or borrow on Aave or Compound, you’re exposed to the risk of all assets being lent and borrowed, but with Silo, any token can have its own lending and borrowing market (aka silo).
Imagine there’s a market (silo) for USDC, ETH, and XAI vs another silo for cbETH, ETH, and XAI. If cbETH somehow was exploited, the lenders in the market for USDC-ETH-XAI are not affected by the risk isolated to the cbETH-ETH-XAI silo.
Silo uses an isolated-pool approach where every token asset has its own lending market and is paired against the bridge asset (ETH) only.
With only $18M in total value deposited, here are the more liquid silos/markets.
XAI is Silo’s over-collateralized stablecoin with a soft peg to the US Dollar. XAI serves as the second bridge asset in the lending protocol. Users can collateralize XAI to borrow any token asset in the protocol.
As of today, there is just over 15M XAI, and it is successfully holding $1. However, for anyone looking to expose themselves to more XAI or Silo Finance markets, you can learn more about the XAI stablecoin in Silo’s documentation here.
Today, I’ll cover how I can take advantage of the demand for XAI by stablecoin borrowers and lenders using the Curve USDC/FRAX/XAI LP staked in the Convex Frax booster, earning 15.28%-19.11% vAPR.
Before we get started, please be aware of these risks.
- Smart contract risk in Silo Finance, Curve, Convex, and Frax Finance
- Front-end spoof attack on the Convex Frax booster app
- XAI is a newer overcollateralized stablecoin and capable of going to $0
- Admin key compromise
- Systemic risk in DeFi composability
Step 1: First, let’s assume I hold some USDC, FRAX, or XAI. I only need one to deposit into this Curve factory pool here to obtain the Curve LP. I follow the usual prompts to specify 1-3 of the tokens and Approve/Deposit each to get the Curve LP token.
Step 2: Then, I go to the Convex Frax booster app here and search XAI to find the Convex: XAI/FRAXBP. I proceed to “Create a personal vault.”
Step 3: Lastly, I select a lock duration of 1-52 weeks (the longer, the more yield I earn), and follow the prompts to Deposit & Stake.
Degen Tutorial
Earn Up To 130% APR On ETH Pairs With DefiEdge On Optimism
DefiEdge is a liquidity management protocol that aims to optimize Uniswap V3 yields through active rebalancing.
On Jan. 20, the project kicked off a liquidity mining program on Optimism that plans to distribute 25,000 $OP tokens over three weeks.
Users can deposit assets in pools that are overseen by fund managers who deploy liquidity on Uniswap in ranges where they expect the assets to trade, maximizing trading fees.
While fund managers have the ability to rebalance strategies, they do not maintain custody of any user funds. Management and performance fees are currently set to zero but may change in the future.
DefiEdge Overview
As an added bonus, the DefiEdge documentation confirms that a token is planned for the future, so one would likely qualify for any future airdrops by interacting with the protocol now.
Things to note before we get started:
- Smart contract risk – While DefiEdge has been audited, there’s always a chance of an exploit.
- Manager risk – Fund managers can rebalance the portfolio at will, or choose to hold a single asset instead of providing liquidity. Adverse market movements could result in underperformance
Step 1: Bridge ETH to Optimism (if needed)
Since DefiEdge is running this LM program on Optimism, a Layer 2 network, you’ll need to bridge some ETH.
Head to bungee.exchange to find the most cost-efficient bridge to use.
Step 2: Add Liquidity
https://app.defiedge.io/farm?network=optimism
There are multiple strategies available:
- wstETH/WETH yielding 24% (Minimal impermanent loss)
- WETH/DAI yielding 132% (Higher risk of IL given current market volatility)
- USDC/DAI yielding 20% (Stablecoin pool)
Today, we’ll add liquidity to the WETH/DAI strategy.
Note that you’ll need to wrap your ETH into WETH, which you can do on Uniswap.
DefiEdge supports single-sided liquidity for WETH/DAI and USDC/DAI, but you’ll need to swap some WETH for wstETH on Uniswap to participate in wstETH/WETH.
Click on the ‘Deposit’ button.
Proceed with token approvals for WETH and your LP tokens so that they can be staked to earn $OP rewards.
Once approved, click on ‘Deposit and Stake’ after entering the amount you wish to deposit. You will need to confirm two transactions.
That’s it! You’re now earning $OP tokens that you can claim anytime.
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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