[Weekly] Market Return on StableCoin-based Strategies（10 Jul 2023): Multichain Falling Down

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 10 July. 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 10 July:

Risk Free Rate: 2.99% (last week, 2.96%)

• Risk free rate is up marginally as the market was quiet in general.
• Multichain was hacked last week for over $163m and its bridging services were paused.

Mainstream Rate (Curve1.5x/Convex): 5.4% (last week, 4.7%)

• Mainstream rate is higher due to higher earnings from LUSD and Compound pool, offset by a small decline in the TUSD pool.

Benchmark Rate (Other Stablecoin Platforms): 9.1% (last week, 7.7%）

• Vesper’s FRAX Aggressive Vault topped this week, as the vault rebalances from last week’s positions. Vesper pools FRAX and invests into FRAXLend, and a few aggressive stablecoin-FRAX pools in Convex such as DOLA and eUSD. The yield fluctuates from time to time due to the prices of those aggressive stablecoins.
• We have replaced StakeDAO’s FRAX-USDC pool with USDT lending vault from Paraspace, the lending market for NFTs.

Exotic Strategies (non-Ethereum or quasi stablecoin strategies): 5% to 15% (last week, 5% to 27%）

• Velodrome V2’s migration was almost to an end and the yields are back to normal.
• This week’s top went to the new Mai-USDC pool on Quickswap. Having said this, we would like to remind readers that there’s a small depeg concern on MAI, due to Multichian hack. About 3% of the MAI were minted by collaterals on Fantom, and the hack of Multichain made these assets depreciate greatly. Due to the invisibility of the Multichain hack aftermath, the market has concerns over bad debt in the qiDAO system, and thus Mai is trading at a discount of 2% to 3%.
• Due to the same reason above, we have temporarily removed Fantom from this category.
• For Arbitrum, we have replaced Compound Finance’s USDC pool with Yama Finance’s USDT lending pool, a lending protocol dedicated to GLP leveragers.

Delta Neutral Liquidity Providing (Uniswap V2 and GMX):

• GLP’s estimated yield dropped significantly to 7.5% APR this week (earnings before adjustment for impermant loss, hedging cost and traders’ PnL, 5 days estimate of the current week), in line with its historical trading fee yield range.
• Uniswap fees were low in the middle of a quiet market.

Funding Rate (Binance Coin-Margined):

• Funding rates were all positive, except for BNB, in line with a quiet market. Funding rates were also low compared to 2 weeks ago when ETH was on the rise.

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, 10 July 2023, Twitter: https://twitter.com/SerenityFund )