Trevor, Midas CEO here. After several months of planning and strategizing, we have a lot of exciting updates, and I am thrilled to present these changes.
Over the last eight months, Midas.Investments has exhibited exponential growth following our pivot toward CeDeFi yield generation. Given our success within the DeFi space, we’ve been able to sustainably produce yields that are, on average, four times higher than what the traditional CeFi market offers.
This was made possible following a diversified approach across multiple blockchains and verified protocols. As we’re now operating with 10x the amount of deposits from late last year, we’ve had to tailor our investment approach, further adapting it based on market constraints. We’ve become a noticeable force within the market, which has reduced our possibilities for selecting protocols and strategies.
In this post, I will cover revised APRs, new sources of yield generation, further integration of the “Midas boost” (and how it affects the Midas market), insurance and audit plans, and our CeDeFi vision.
Updated Yield Rates for BTC, ETH, and Stablecoins
On May 9th, we will update our yield rates concurrent with our new investment strategies, which will allow Midas to scale our platform’s TVL without exposing funds to incremental risk. This scaling will ultimately allow Midas to sustainably provide 9.4% APY on BTC, 10.1% APY on ETH, and 18.1% APY on stablecoins (excluding the impact of the Midas boost). The Midas boost will continue to provide for an additional 3% to 4% APY on top of the revised APYs. These new yields will give us more space for capital growth as we head toward $1 billion in assets under management (AUM). Despite these changes, Midas will continue to offer the best yields in the CeFi space.
- BTC = 9.0% APR || 9.4% APY || 12.1% APY with Midas boost
- ETH = 9.5% APR || 10.1% APY || 13.4% APY with Midas boost
- Stablecoins = 16.6% APR || 18.05% APY || 22.0% APY with Midas boost
Introduction to the “Base Yield” Strategy
Over the last three months, our investment team has worked on creating yield generating mechanisms that can sustain yields through at least $1 billion in AUM while continuing to provide the highest yields in the market. We refer to our primary strategy as the “Base Yield” strategy.
The “Base Yield” strategy is tailored to a bearish market and revolves around stablecoin yield generation. We have witnessed a rising trend in protocols competing for efficiency and liquidity for their stablecoins. Given current market conditions, Midas has concluded these are the optimal protocols where Midas should focus its strategy. Further, stablecoins have the deepest liquidity with no exposure to volatile assets.
The “Base Yield” on BTC and ETH is produced through borrowing stablecoins from the native asset and using those stables to reinvest profits back into the native asset. We are 200% over-collateralized on our borrowings and monitor these borrowings within each block through our infrastructure. Additionally, we are nearly finished with our algorithmic automated solution that will monitor and manage the health factor of our positions. This solution will prevent any occurrence that would otherwise lead to a loss of funds.
Ninety percent (90%) of assets shall be deployed toward these base yield strategies, allowing for Midas to continue offering market-leading APYs. We plan to adjust yields based on the efficiency of our base yield strategies.
This simple and effective system around stablecoins allows for it to sustainably generate yields in any market condition, while retaining exposure on the native asset. Over the next, we will automate these strategies and reveal how funds are transferred.
Trend Allocations & Midas Boost
WIth 90% of assets deployed toward our base yield strategy, the remaining 10% will be used to obtain and manage exposure in strong, fundamental DeFi assets and protocols (gradually increasing this position and managing it according to the overall trend health).
This 10% position helps to create upside on our inner DeFi research, increasing portfolio returns by a few percentage points. These extra yields, in turn, will be returned to investors via the Midas boost.
The Midas boost allows investors to increase returns on all assets (including BTC, ETH, and stablecoins) if opting to earn payouts in Midas’ token. When investors choose to earn their yields in Midas, this contributes to the liquidity of Midas’ token and steadily increases the health of the coin.
The first DeFi strategy to which we’ve allocated some of this tranche (and plan to gradually increase our exposure) is what we refer to as “Liquidity for Hire.” These are protocols and tokenomics that are built around accumulating liquidity or voting power of other protocols and renting it to other protocols. We feel that Midas’ liquidity should be positioned in such a spot, which has the highest demand from the biggest market players, such as other DeFi protocols, which “hire” our liquidity through bribing.
Examples of “Liquidity for Hire” trend protocols are Convex, Curve, and Tokemak. Gradually building our position in those protocols allows for the accumulation of additional yield from bribes, which is a much healthier way to produce yield.
Additionally, Midas plans to use the allocation in this trend to increase the health of Midas’ tokens. For example, Midas can use its CVX tokens to vote for our liquidity pair and stimulate the liquidity inflow toward the Midas market. Similar what we do with inSpirit tokens.
Those medium-risk positions are managed through our trending algorithms (giving us buy and sell signals) and monitored by onchain liquidity inflow/outflow, allowing our team to observe market behavior within this group of protocols.
The combination of the “Base Yield” and “Liquidity for Hire” strategies creates an antifragile investment infrastructure with limited and manageable risks, providing for steady returns (with upside).
This strategy is scaled through Midas boost, sharing yields with users, and transferring the value of the platform back to the coin.
Insurance & Audit Plans for 2022
Insurance is one of the most demanded features on our platform. While it’s nearly impossible to insure everything that we do, we have found an insurance combination that could cover us from all potential black swan events.
Our first step is to obtain custodial insurance through Fireblocks, our wallet infrastructure. This insurance will cover the risks of us hosting your assets.
Regarding DeFi investment risks, our investment portfolio consists of over 50 positions (this diversification gives us limited exposure to each position). We plan to establish a Midas insurance fund that will cover the average allocation of a single DeFi position. If one of our positions were to be adversely impacted by the DeFi landscape, the insurance fund would work as a “stabilizer.”
Additionally, after finalizing our licensing in Dubai, we plan to arrange a manual audit with Armanino, the leading financial and crypto transparency service. The audit is planned for the first part of this Summer.
We are working hard toward bridging the CeFi and DeFi worlds. We are entering this space as innovators, and I’m really excited about the emerging opportunities that are now starting to appear, helping to shape the true CeDeFi landscape.
Trevor, Midas CEO.