[Weekly] Market Return on StableCoin-based Strategies(1 May 2023): Liquidity Drying

The Serenity Research
4 min readMay 1, 2023

We provide a weekly update of the platforms we track, based on the strategies discussed in Serenity Fund’s Overview of Stablecoin Investments 2022 and the periodical updates.

Note: this is NOT a portfolio. This is an average yield calculation of each risk category, to be used as a benchmark for assessing the risk-return of an investment or a portfolio. Yields derived from mining reward tokens are based on the prices of tokens on 1 May. Yields that are cumulative, e.g. Uniswap and Binance funding rates, and are actual yields over last week, compounded weekly to derive the APY.)

Quick analysis on 1 May:

Risk Free Rate: 2.72%

  • The safe yields from USDC lending yield in Compound and Aave on Ethereum, is higher than last week’s 2.67%.
  • Liquidity in the Aave pool continued to drop.
  • Coupled with the liquidity drop in Curve’s 3Pool, the stablecoin liquidity in major pools continued to drop and there are no signs of a pivot.
  • There’s a 3% drop in the overall fiat-backed stablecoin supply as well.

Mainstream Rate (Curve1.5x/Convex): 4.5%

  • The average yield of top stablecoins in Curve or Convex, is higher than last week’s 3.5%.
  • The yield went up due mainly to the higher yield of TUSD pool. In its latest launchpad rule, Binance allows users to stake TUSD to farm $SUI. This led to a surge in the trading volume of TUSD.

Benchmark Rate (Other Stablecoin Platforms): 9.6%

  • The average yield of 10 selected Ethereum stablecoin protocols, has yields vary from 5% ~ 14%, and averaged 9.6%, higher than last week’s 9.5%.
  • Vesper’s FRAX vault topped this category this week.
  • We have replaced Sturdy Finance with Gearbox Protocol this week. Sturdy is having a mining program now and its token does not have a trading price yet. So the real yield is affected and we have replaced it with Gearbox. Gearbox is also a lending platform that allows users to create sub accounts to borrow and leverage in selected protocols.

Exotic Strategies (non-Ethereum or quasi stablecoin strategies): 7% to 20%

  • The top of this week went to IPOR’s DAI pool again, but IPOR price has been declining and we saw a gradual decline in yields as well.
  • We saw most platforms have declined yields this week.
  • We have published an article on Thena Finance and a few other Solidly forks. We also included a quick snapshot of the stablecoin yields of all major Solidly forks, including previously covered Velodrome, as of last Thursday.

Delta Neutral Liquidity Providing (Uniswap V2 and GMX):

  • Uniswap earnings continued to remain at very low levels to last week, for half stablecoin, half ETH pairs, except for ETH-USDC pairs, in line with the market decline last week.
  • GMX recorded 27.6% earnings before adjustment for impermant loss, hedging cost and traders’ PnL. This is close to that of our estimate last week, and higher than the actual (as our estimate is the extrapolated 5 day revenue).

Funding Rate (Binance Coin-Margined):

  • Funding rates were all positive but low last week, except for BNB, which was again significantly negative due to the Sui Network launchpool activities and related hedging of BNB.

Business Update:

  • We have made a SubStack for premium content, mostly our strategy papers for more complex investments. This is a paid service at $49 per month (free for research clients). You can subscribe to the Free version to get a summary of each strategy paper. However, to support our work, we hope you could subscribe to it for the full article — $49 for four to five papers a month on stablecoin and DeFi strategies. For this, we offer a 70% discount for our Twitter and Medium audience: https://serenityresearch.substack.com/1a082767.

The above summary is a snapshot of what the market looks like over the last week and as of Monday. It is not meant to be a ranking table nor to be exhaustive. There are various other defi protocols and products that can offer different risk and return exposures. Follow our Twitter below to have more timely and detailed information on the DeFi market.

(Serenity Team, 1 May 2023, Twitter: https://twitter.com/SerenityFund )

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The Serenity Research

Zero market risk and stable return - risk neutralised cryptocurrency fund.