[Weekly] Market Return on StableCoin-based Strategies（19 September 2022)

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

(Note: Yields derived from mining reward tokens are based on the prices of tokens on 19 September. Yields that are cumulative, e.g. Uniswap and Compound’s basic earnings and Binance funding rates, and are actual yields over last week, compounded weekly to derive the APY.)

Quick analysis on 19 September:

• Risk Free Rate: 0.72%. Risk free rate, representing the safe yields from Compound (USDC), Aave (USDC) and Curve (3-pool), was higher than last week’s 0.58%. The market declined in the wake of ETH’s successful merger, as arbitraging activities stopped post merger. There’s less liquidity in the market, thus driving the borrowing costs higher.
• Curve/Yearn/Convex: 2.5%. The Curve/Yearn Large-Cap Benchmark Rate is slightly lower than last week’s 3.5%. Compared to last week, TVLs of 3pool continued to decline, but sUSD pool saw a coming back of its TVL. Yields were lower due to the lower prices of rewards tokens.
• Other Stablecoin Platforms: the yields vary from 2% ~ 9%, and averaged 5.7%, lower than last week’s 6.5%. The overall yield of this category came down in line with the market decline. This is probably the first time we saw in this year all the yields in this category (and also in the exotics category) are lower than 10%. Market is not panicking because of any event, but rather the market sentiment is pessimistic or at least not excited about anything. We tend to think this might last a while, till more funds exit the market.
• Other (non-USD stablecoin or non-Ethereum) platforms, aka Exotic Strategies: Exotic strategy yields’ are from 3% to 8% now. EURs yields came down to normal levels with the war continuing, EUR and gold remained weak and this affected their crypto derivatives as well. EVM protocols have comparable returns of their Ethereum peers.
• Uniswap V2: Uniswap earnings were severely negative, for half stablecoin, half ETH pairs, due to the sharp decline in ETH price, causing the impermanent loss to be a lot higher. This is coupled with the extremely negative fund costing on ETH last week, making the yields in this category negative.
• Binance Coin-Margined Funding Rate: funding rates were a mix and positive and negative last week. ETH in particular has a negative yield of over 50%, wiping out the windfall from ETHPoW, which started at about 1% and got lower by the hour. As we believe that the overall crypto market is efficient, such arbitraging opportunities eventually may only lead to very narrow profit margins.

The above summary is a snapshot of what the market looks like over the last week and as of Monday. This is by no means the portfolio of any of Serenity Fund. Neither is the above table 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, 19 September 2022, Twitter: @SerenityFund )