⍺ DeFi Alpha: Gasless Trades on CowSwap; ETH, WBTC, LUNA, SOL Yields and More
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.
Motivation
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.
📈 Yield Alpha
Each week we will provide options to earn yield on ETH, WBTC, stablecoins, and other major tokens.
ETH - staking ETH in Tokemak for a total annualized return = 5% APR
This yield is issued in TOKE rewards so it could rise as TOKE price rises
To participate, deposit WETH into the ETH Genesis Pool
WBTC - stake Curve ibBTC / crvsBTC LP in Convex Finance for 15.32% vAPR
This yield is backed by trading fees, plus CRV and CVX rewards.
To participate, deposit wibBTC, renBTC, wBTC , and/or sBTC into this Curve factory pool on Ethereum and then stake the Curve LP token here on Convex Finance into the ibBTC staking option.
SOL - lend SOL with Tulip Protocol on Solana to earn 8.42% APY
This yield is backed by borrowing interest paid by leveraged yield farmers on Tulip.
To participate, go to the Tulip dApp under Lend and deposit SOL.
LUNA - stake LUNA in Stader liquid staking dApp for 11% APY
This yield is backed by auto-compounding LUNA staking rewards.
Unlike bLUNA, you’re also eligible for airdrops.
To participate on Terra, deposit LUNA into LunaX (which can also be paired with a LUNA<>LunaX LP to earn additional SD rewards) or deposit into one of the 3 Stake Pools
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.
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 UST to earn 19.4% APY with the Anchor Rate on Terra
If starting on Ethereum, I need some UST which I can trade for using any DEX aggregator like 1inch.exchange.
Once I have UST, I use this bridge to transfer UST to my Terra wallet.
The Anchor Rate is a stable rate that’s held between 19-20% APY since launching in the spring. The rate is expected to hold for years if Anchor is successful.
The UST yield is backed by borrowers paying interest and underlying PoS collateral earning rewards, all of which auto-compounds as you earn UST.
To participate, deposit UST into the Earn tab on the Anchor dApp (2 transactions).
🪂 Airdrop Alpha
Each week, we’ll do our best to update a list of the most obvious DeFi protocols that have yet to announce and/or launch a token. In most cases, we believe these projects are likely to airdrop a token in the future. By participating in these DeFi applications, there’s a chance but not a guarantee one can earn a substantial amount of tokens for relatively less effort.
(New!) 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 expected to launch in late January
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
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
Goldfinch Finance - lend permissionlessly to institutional borrowers without collateral
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.
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
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 Do Gasless Trades with CowSwap–the Meta DEX Aggregator
Opportunity: Find the best rates across all DEX aggregators (ie 1inch, ParaSwap, 0x) and do gasless trades while being protected from different sorts of MEV such as front/back running or sandwich attacks
Time to Complete: 5 minutes if paying the recommended HIGH gas price on the Etherscan gas tracker.
Estimated Length of Rewards Program: There’s no end date to using CowSwap.
Gas + Protocol Fees: Based on gas prices under 100 Gwei on Ethereum, it should cost $15-$20 of ETH to deposit.
Fees: Traders still pay underlying protocol fees depending on where liquidity is sourced and due to the gasless trading, a portion of your token being traded is used to cover network transaction fees, which CowSwap shows you under Fees before swapping.
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 Gnosis Protocol, which is powering CowSwap
Systemic risk in DeFi
Pegged assets such as WBTC or stablecoins may de-peg
Tutorial:
First, I go to the CowSwap dApp and connect my Ethereum wallet (or xDAI).
I specify which tokens I want to swap (example above showed swapping CRV to wNXM).
If I wish to trade with ETH, I’ll need to wrap ETH to WETH first, which CowSwap’s UI will prompt me to do.
When I’m ready to trade, I can see the projected Fees (see red below), which will be paid in this example with my starting tokens (CRV) instead of ETH. CowSwap even warns me if I’m about to eat up a larger % of my tokens with fees.
When I’m ready to trade, I’ll just click the Swap button and be prompted to Approve the ERC20 token first, costing me some ETH for gas. However, the second transaction is just a signature, so it costs me no ETH in gas and I’ll pay any network/protocol fees with the token I’m trading from (CRV). That’s it!
📰 Elsewhere on The Defiant
Tuesday Tutorial on The Defiant YouTube: This week, Robin covered how to collateralize your NFTs and borrow against them on NFTfi.com. 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.
So instead of paying ETH for gas, you get a bit less tokens, right? Aren't you still paying then?
Gas fees with extra steps?