⍺ DeFi Alpha: Earning Yield on ETH with Yearn's stETH Vault
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.
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.
DeFi Alpha will become a part of The Defiant’s premium subscription starting next week.
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🙌 Together with:
Nexo: With Nexo, you can borrow against your crypto at rates starting from 0% APR. Borrow from $50 to $2M in cash or stablecoins and choose one or multiple assets to secure your credit. Get started now!
Hashflow, the first to provide bridgeless cross-chain swaps, lets you trade seamlessly across chains with guaranteed execution, MEV-resistance and the lowest gas fees in DeFi. Try it now!
📈 Yield Alpha
Each week we will provide options to earn yield on ETH, WBTC, stablecoins, and other major tokens.
Stablecoins - Lend USDC at 38.2% APY to borrowers on Aurigami Finance on Aurora (NEAR)
This yield is issued in 1.79% APY in USDC + 36.41% APY in 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.- Lend USDC at 38.2% APY to borrowers on Aurigami Finance on Aurora (NEAR)
ETH - Earn 9.62% APY with Yearn’s vault for the Curve stETH/WETH LP
This yield is accrued from trading fees + LDO and CRV sold for profits and redeposited into the LP.
A step-by-step guide is provided in this week’s tutorial.
BTC - Lend WBTC at 7.31% APY to borrowers on Aurigami Finance on Aurora (NEAR)
This yield is issued in 0.68% APY in WBTC + 6.62% 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 8.6% 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 15.51% 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 Stader’s MaticX at 8.53% APY
The yield is backed by validator rewards using a MATIC liquid staking derivative.
To participate on Polygon, check out the Stader MaticX dApp.
ATOM - mint pATOM and stake the pATOMs on Ethereum to earn more pATOMs on pSTAKE at a rate of 12.02% 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 12.02% APR
FTM - stake with sFTMx by Stader, earning 13.5% 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 47.9% 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.
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 this week! 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.
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 Tutorial
Earn 9.62% APY on ETH with Yearn’s stETH Vault
Staked ETH, or stETH, is a liquid staking token issued by Lido Finance. Each stETH token represents one Ether locked in the Eth2 staking contract.
Lido incentivizes stETH liquidity on Curve by offering LDO incentives.
Yearn’s stETH-WETH vault periodically harvests and sells the LDO rewards for more Curve LP tokens. Using a yield aggregator makes sense here for smaller investors as gas fees on Ethereum are substantial. For bigger players, going directly to Curve could be a better option.
Risk Warning: Note that stETH is trading at a slight discount to ETH and there have been concerns raised about a potential depeg if the bear market deepens. However, even if such a scenario were to unfold, you will be able to exchange stETH for ETH on a 1:1 basis after The Merge.
Lets get started.
Step 1: Wrap your ETH for WETH using your preferred method. If you’re starting with WETH, skip this step.
You can do so easily on Uniswap.
Step 2: Provide liquidity to the stETH-WETH pool on Curve.
https://curve.fi/factory/117/deposit
As the pool mainly consists of stETH, you’ll receive a bonus for depositing WETH.
Click on the ‘Deposit’ button. You’ll be asked to approve spending your WETH.
Confirm the transactions to receive your liquidity provider (LP) tokens.
Do NOT stake your LP tokens in the Curve gauge as we’ll be staking them with Yearn in the next step.
Step 3: Stake your Curve LP tokens in the Yearn vault.
https://yearn.finance/#/vault/0x5faF6a2D186448Dfa667c51CB3D695c7A6E52d8E
That’s it! Your LP balance will start rising over time as the LDO rewards are auto-compounded.
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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.