[Weekly] Market Return on StableCoin-based Strategies(22 May 2023): crvUSD Inaugural

The Serenity Research
3 min readMay 22, 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 22 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 22 May:

Risk Free Rate: 2.58% (last week, 2.63%)

  • USDC Liquidity in the Aave V2 pool rebounded slightly but remained below $600m. The risk free rate further declined, indicating slowly weakening borrowing demand.

Mainstream Rate (Curve1.5x/Convex): 3.9% (last week, 4.0%)

  • There was little change in the liquidity or the yield from this category, as the market was quiet.

Benchmark Rate (Other Stablecoin Platforms): 8.6% (last week, 8.2%)

  • We have replaced Gearbox’s DAI pool with Curve’s crvUSD-TUSD pool, which topped this category with 16.2% yield. This pushed the overall yield for this category higher this week.
  • There are altogether 4 pools of crvUSD hosted by Curve and the liquidity so far has been in the low millions each. We expect a slow but steady growth of crvUSD, as more users adopt the new stablecoin. Given Curve’s popularity and credit in the DeFi space, we foresee more derivatives built on crvUSD in the coming months as well.

Exotic Strategies (non-Ethereum or quasi stablecoin strategies): 5% to 15% (last week, 7% to 15%)

  • We noticed a systematic yield drop across most EVM chains. Most old protocols, especially Solidly forks, saw their platform tokens dropping and therefore yields declining consequentially. Innovation is required to attract more liquidity into this space.

Delta Neutral Liquidity Providing (Uniswap V2 and GMX):

  • There’s no Uniswap V2 pools update as currently Uniswap V2 subgraph is down.
  • GMX’s estimated yield will come down this week, with our 5-day estimate suggesting only 5.1% APR this week (earnings before adjustment for impermant loss, hedging cost and traders’ PnL), a record low level probably since the launch of GMX.

Funding Rate (Binance Coin-Margined):

  • Funding rates were all positive, and DeFi tokens have over 10% funding rate earning, meaning that if you purchase the token, use it as collateral and short the same amount in Binance, the net yield is a delta neutral 10%.

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, 22 May 2023, Twitter: https://twitter.com/SerenityFund )

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The Serenity Research

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