The DeFi analytics team has prepared a summary of the DeFi market, events, and important news that happened last week. More smart DeFi ideas and memes (of course) – Discord channel and t.me/defimr. Stay tuned!
Disclaimer: This post is for informational purposes only and should not be relied upon as a basis for investment decisions. Please do not follow any opinion as a specific strategy.
- AAVE brought up the issue of managing and voting on DAO proposals through various networks.
- Biweekly report on decentralized autonomous organizations from Paradigm vol.7, 21st August — 4th September
- Solana extends rally with another new high — Why is SOL price up by 70% in one week?
- SEC reportedly investigates decentralized exchange Uniswap
- Balancer Protocol Live on Arbitrum to Scale DeFi Liquidity
- Aave, Curve, PoolTogether, and Sushi Among Leading Ethereum DeFi Projects Joining Celo on DeFi for the People Collaboration
- Cream Finance will integrate with Polkadot blockchain using Moonbeam
- Polkadot, Kusama Jump Ahead of Next Parachain Auction
- Polkadot Officially on Schedule for Next Parachain Auctions on Kusama
- Metamask revealed there are now up to 10 million monthly users employing the world’s most popular web wallet, a massive jump from just 1 million in October 2020. It’s one of the strongest indications yet that the popularity of crypto, DeFi, and NFTs are surging and will increasingly make their way into mainstream consciousness as time goes on.
- Solana Sail
- NFT marketplace – Solsea
- 1Sol is a cross-chain DEX aggregator for decentralized protocols on Solana, enbling the most seamless, efficient and protected operations in DeFi. – 1Sol
- Sunny is a composable DeFi yield aggregator powered by Solana. The Sunny Protocol is designed with composability as a core feature, enabling other applications and protocols to easily build on top of it. – Sunny
Avalanche Opportunity (from Bankless). Avalanche Opportunity #1: BenQi. ROI estimate: 2-12% APY. Given Aave has yet to launch on Avalanche, BenQi is the current king of the network’s money market sector. The protocol has experienced incredible growth, attracting over $1.21 billion in TVL in the two weeks since its launch. This emerging money market protocol has been a key driver in catalyzing the infusion of capital into the Avalanche ecosystem. BenQi currently features a $3 million liquidity mining program, where depositors and borrowers are incentivized to participate in the system through earning QI and AVAX rewards.
The protocol currently supports deposits and borrows for AVAX, wETH, wBTC, LINK, DAI, USDC, and USDT. It’s important to recognize that depositor yields range between 2.20-11.76% depending on the asset, with the yield consisting of a combination of interest and token rewards. On the other side of the market, borrowers can earn a net APY (rewards – interest) anywhere from 0.24% to 6.80%. This means that farmers can be paid to borrow, and enables a variety of different strategies.
For example, a wBTC holder can employ a strategy in which they deposit their tokens to earn 3.78% APY, which they can then use as collateral to borrow and earn 5.30% APY on their outstanding debt. This allows a farmer to earn a yield on their assets while minimizing liquidation risk, as the value of their debt will move in tandem with that of their collateral. (The more degenerate among us can recursively repeat this process.)
- Avalanche Opportunity #2: Trader Joe. ROI estimate: 20-85% APY. Trader Joe is the largest decentralized exchange on Avalanche, holding over $455 million in liquidity and facilitating between $100-200 million in daily volume since August 23, notably surpassing the first-mover Pangolin in both metrics.. The protocol is currently incentivizing 23 different tokens pairs where liquidity providers can stake their LP tokens to earn JOE rewards, the DEX’s native governance token, along with a trading fee of 0.25% on every swap. These pairs vary dramatically in terms of asset composition, yield, and of course, risk, allowing farmers to express a variety of different viewpoints.
For instance, risk-averse farmers who do not want price or impermanent loss exposure can enter the USDC/DAI and USDT/DAI pools to earn a yield currently sitting between 23-24% APR.
Additionally, farmers who believe the market will be rangebound and are willing to take on some risk can earn between 29-86% APR in the wETH/USDT, wBTC/USDT, and AVAX/USDT pools. Finally, a farmer who’s willing to take on maximum price and impermanent loss exposure can earn upwards of triple-digit yields in some of the protocol’s riskier pools. Bonus Yield Opportunity. JOE Staking—29% APR —Stake JOE to receive 0.05% of every swap in the form of xJOE tokens.
- Solana Yield Opportunities. Solana is another ecosystem that has experienced strong growth over the past several months. Spurred by a rise in the price of SOL, new protocols launching on the network, a mini-NFT mania, and the adoption of Phantom Wallet, Solana has seen its TVL rise nearly 6x to $3.6 billion since July. Even though it’s still in its early stages, with 500ms confirmations and sub $0.01 fees, there are several noteworthy opportunities for farmers to put capital to work. Solana’s value locked. Source.
- Solana Opportunity #1: Raydium. ROI estimate: 17-154% APY. Raydium is the largest AMM on Solana, with over $1.35 billion in value locked and daily volumes north of $220 million dollars. Raydium is unique as it provides liquidity to Serum, a Solana-based central limit order book (CLOB) DEX. This means that traders can access liquidity in either protocol to get the lowest slippage for their trade, and LPs can boost their returns through Serum volumes.
Raydium provides two types of opportunities for yield farmers.
The first are “Raydium Farms” where liquidity providers for the RAY-SRM, RAY-ETH, RAY-SOL, and RAY-USDC, RAY-USDT pairs can stake their LP tokens to earn RAY rewards, to go along with a 0.22% fee on every swap.
These yields currently range between 66-117% APY depending on the pair, with RAY-USDC and RAY-USDT at the higher end of this spectrum, likely due to farmers pricing in the increased risk of impermanent loss these pools may incur in a trending market.
Raydium farmers can also enter “Fusion Pools,” which are incentivized trading pairs of other projects within the Solana ecosystem. There are currently 13 Fusion Pools, with prominent protocols such as Mango Markets, Mercurial Finance, and Cope incentivizing the MNGO-USDC, MER-USDC, and COPE-USDC pairs with their native governance token respectively. These pools are currently yielding between 17-154% depending on the token, but of course, come with increased risk of impermeant loss.
Bonus Yield Opportunity. RAY Staking—20% APR—Stake RAY to earn 0.03% of every trade made on the platform in the form of additional RAY tokens.
- Solana Opportunity #2: Saber. ROI estimate: 28-34% APY. Saber is a decentralized exchange that’s optimized for trading between like assets, as well as for facilitating cross-chain swaps by routing liquidity across token bridges. The protocol has attracted over $897 million in liquidity, which like its EVM-based competitor Curve, provides LPs with a way to earn a yield while minimizing the risk of incurring impermanent loss.
Saber is currently incentivizing 18 different pairs with SBR rewards, which depositors can earn in addition to a 0.04% swap fee on trades made within the pool. While each differs in its exact composition, they can largely be placed into three distinct groups: stablecoins, Bitcoin, and non-Bitcoin assets.
The highest yielding in each category are the MAI-USDC, pBTC-renBTC, and wLUNA-renLUNA, which are earning liquidity providers 34%, 28%, and 29%, respectively.
An important factor to keep in mind with Saber are that some pools have withdrawal fees. For instance, the USDC-USDT pool charges liquidity providers wishing to exit 0.5% to remove their capital, meaning that farmers are operating at a loss until they recoup that fee!
Terra Yield Opportunities
Terra is yet another smart contract ecosystem that has experienced incredible growth. Fueled by a rise in the price of LUNA, adoption of UST, the network’s native stablecoin, and the strong product-market-fit of its applications, Terra is now home to crypto’s third largest DeFi ecosystem.
With over $7.53 billion in value locked, the chain places behind only Ethereum and Binance Smart Chain. While there are fewer prominent applications on the network than Avalanche, there are still several stellar opportunities for farmers.
- DeFi Pulse (Farmer). Yield farm +2,050% via CompliFi’s Polygon pastures! CompliFi is a synthetic risk factory for DeFi. That’s the technical way of explaining the protocol, but you can more simply understand the project as offering a Uniswap-like UX to traders and liquidity providers of decentralized derivatives tokens.
Toward this end, CompliFi relies on a bespoke automated market maker system to complement its synthetic derivatives issuance system. The result is a dualistic protocol whose derivatives are fully collateralized and whose users don’t have to worry about defaults, margin calls, or liquidations because as we explained in our recent Alpha Tractor on CompliFi:
- Your winnings are always covered
- Your buy-in price is the limit of your exposure
And no margin calls = no possibility of liquidations
Today, CompliFi is live on two chains — Ethereum plus the Polygon sidechain — and has two types of products currently available: x5 leverage tokens and covered call options.
- The leverage tokens come as “long-short” token pairs and are presently offered around AAVE, COMP, LINK, MATIC, UNI, WBTC, and WETH.
- The covered call options let LPs earn money + trading fees when the calls succeed “in the money” or keep their collateral + earned trading fees if their calls conclude “out of the money.”
How to earn COMFI rewards & CompliFi fees
CompliFi recently launched the second wave of its “derivatives farming” program centered around distributing COMFI, the project’s governance token.
That’s it for this week. Thank you for your time. Stay tuned!