[Weekly] Market Return on StableCoin-based Strategies（16 Jan 2023): A Long-waited Bull?

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 in assessing the risk-return of an investment or a portfolio. Yields derived from mining reward tokens are based on the prices of tokens on 16 Jan. 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 16 Jan:

• Risk Free Rate: 1.72%. Risk free rate, representing the safe yields from USDC lending yield in Compound, Aave and Euler, on Ethereum, is higher than last week’s 1.37%. The market had a miniscale bull-run last week, after months of depressing decline and finally showing some hope. ETH was up 20% last week and is still hovering at a high level now.
• Mainstream Rate (Curve/Yearn/Convex): 2.6%, same as last week’s 2.6%. Rising CRV and CVX prices had a positive impact on the yield, but was largely offset by a lowered LUSD pool yield. Liquidity did not flood in, and this led to the view that this bull-run is not a sustained one. There will be more clarity over the next few weeks.
• Benchmark Rate (Other Stablecoin Platforms): the yields vary from 2% ~ 10%, and averaged 5.6%, higher than last week’s 4.9%. Pendle Finance continued to top this category with a 10% yield, and Convex’s MIM pool is catching up as well. Most of the platforms saw yield improving to some extent, causing the overall yield to go higher by 0.7% As this is the rate we use as a benchmark to measure the yield of other investments, we expect the equilibrium yield of all investments similar to this category will inch up 0.5% to 1% as well.
• Exotic Strategies (Other non-USD stablecoin or non-Ethereum platforms: Exotic strategy yields’ are from 4% to 16% now. Velodrome’s alUSD vault topped this category and globally this week, despite it being a very small pool. EUR continued to appreciate against the USD and this led to some confidence of EUR investors. Other than this, bLUSD (which we switched to Convex pool instead of Curve pool), Mai pool in Akkaris, YUSD pool in Vector Finance all delivered over 10% yield.
• Delta Neutral Liquidity Providing (Uniswap V2): Uniswap earnings bounced back marginally, for half stablecoin, half ETH pairs. This echoed the view that in this mini-bull run, the volume is at scale and therefore it might not be sustainable.
• Funding Rate (Binance Coin-Margined): funding rates were all positive for the week past, with LINK and DOT over 10%, a positive signal that the market confidence is back.

Business Update:

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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, 16 Jan 2022, Twitter: https://twitter.com/SerenityFund )