The last two weeks in the crypto economy have been two of the most intense in this cycle for every crypto user. We’ve witnessed a $50 billion capital outflow from crypto and billions in liquidations across retail, businesses, and institutions.
The DeFi market responded accordingly, with major panic and volatility for all non overcollateralized stablecoins. This subsequently led to multiple de-peg events for stablecoins. Midas’ investment team immediately responded by exiting 80% of our stablecoin positions, even temporarily closing any exposure on USDT.
As our investors are aware, DeFi yields are our primary source of yield. Over the last two months, we have substantially decreased our investment risks in the portfolio by restructuring our products to accompany larger amounts of liquidity. While this has allowed Midas to perfectly respond to the market crash, this has also lessened our opportunities to produce yields as we have in the past.
Based on current market conditions, it’s simply not sustainable to offer 16.6% APR on stablecoins without exposing your assets to major risk in an already bearish market. This is why we have decided to reduce rates on stablecoins to 13.54% APR (14.5% APY and 17.6% with the Midas boost).
Following the UST collapse and our exit of stablecoins positions which applied systematic risk of de-peg, our returns on the portfolio have subsequently reduced. Our investment team has scanned the DeFi market and has created new strategies with different mechanisms than we’ve used in previous months. We’ve created two new strategies for Ethereum, the results of which are allowing us to increase ETH’s APR from 9.6% to 10.1%. Midas strongly believes in Ethereum and its future, post-merge.
Why We’re Adapting Rates and Our Investment Plans
I understand that our immediate reaction to the market may upset some investors given the frequency at which they’ve changed. However, Midas’ primary goal is to provide the highest possible rates while at the same time maintaining robust and safe asset management policies. Yield systems that do not adapt to the market will eventually get exposed by the market. This is how UST ultimately “died” as its yield was not based on reality or a sustainable business model.
Midas has not and will not make the same kinds of mistakes as we will continue to adapt to the current market to ensure our investors’ wealth is protected while continuing to grow their wealth during all market cycles. This is so much more important than simply providing unsustainably high yields over a long period of time. This is why we’ve de-risked our portfolio by revamping it in a new way for our investors.
Midas is in a situation where we’ve had to exit a lot of our amazing strategies as they no longer pass our risk-policy filters. Some of these prior strategies included: (i) Uniswap V3 automatic LP, (ii) liquidity pools (due to elevated impermanent loss risk), (iii) high upside altcoin strategies on hyped crypto trends, and so on. This has subsequently impacted our ability to sustain previously offered rates. However, we are optimistic that market conditions will eventually change course (thus allowing us to again raise rates).
Behind the curtains, we continue to develop a new type of platform that crypto has never seen before. Our vision of true CeDeFi lies where efficient strategies meet diversified risk. We plan to revolutionize the yield process for CeFi platforms and democratize the wealth generation of crypto. The era of black-box enterprise interest rate products will soon end.
In June, we will launch one of the many investment products that will give investors yield opportunities utilizing our DeFi expertise. This product can be a great portfolio fit for those seeking a varying tradeoff between risk and return.
The Future of MIDAS token
Midas’ token continues to flirt with its all-time high. Given the clever balance of its tokenomics, our coin has bucked market trends because of the various asset inflows via our buyback systems.
This week, we’re reducing Midas’ APR by 2.2% (from 26.5% to 24.3%) following our scheduled emission reduction audit (which occurs every six months). This reduction protects Midas from becoming inflationary, thereby allowing it to become more valuable over time.
Additionally, we’ve reverted all Midas boosts back to the original 1.2 multiplier to all token APRs. This will lead to increased asset purchases for Midas liquidity pools. We plan to keep this multiplier at no less than 1.2, with possible increases based on market conditions.
Our primary goal for this season is to boost Midas liquidity. We’ll start this process by creating a new Midas-USDC liquidity pool with over $2 million dollars in liquidity.
This is only our first step in assuring the stability of Midas’ growth. The second step will be major partnerships with the most trusted Fantom protocols to build further yield opportunities. The third step will be the launch of Midas’ staking contract and bridging it to the Ethereum network. Following the launch of Midas token on Ethereum, we’ll better recognize all of the emerging features of CeDeFi. We’ll let you know more about our progress in future announcements.
If you have any questions, let me know in our Discord channel.
Trevor, CEO of Midas.Investments