[Weekly] Market Return on StableCoin-based Strategies(26 June 2023): Big Undercurrent

The Serenity Research
3 min readJun 26, 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 26 June. 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 26 June:

Risk Free Rate: 2.73% (last week, 2.65%)

  • Risk free rate continued to climb up as the lending rates on Aave was still above 3% and utilisation rate over 80%. Liquidity remained largely unchanged, collectivelly there’s approximately $1 billion USDC in Aave v2 and Compound V2.

Mainstream Rate (Curve1.5x/Convex): 4.4% (last week, 3.7%)

  • Last week, the CRV price rebounded suddenly, in light with the news of Blackrock ETF being approved and the market again had confidence in DeFi. UNI and CRV led the rebound over the weekend. Regulated ETF would mean new institutional funds at a much larger scale, which has much anticipated over the last few years.
  • On the other hand, some CT influencers had started to watch out the development of crvUSD, the most innovative stablecoin developed by Curve. The mechanism of crvUSD could make the liquidation process into a smooth process and at the same time, generate revenue for the protocol. Riding on the boom of ETH liquid staking, crvUSD is expected to grow exponentially and have impacts in many aspects of DeFi.
  • Uniswap is also comtemplating a much more versatile V4 version, which transforms itself into a service provider and buidling on Uniswap easier. There are a lot of big undercurrents going on recently, and these will have a long term impact on the DeFi industry.

Benchmark Rate (Other Stablecoin Platforms): 7.6% (last week, 8.3%)

  • Conic’s new crvUSD pool topped this week, as the demand for crvUSD is strong.
  • Bella maintained good yield over the past few weeks consistently. Most protocols saw small increases in yields, in line with the market rally last week.

Exotic Strategies (non-Ethereum or quasi stablecoin strategies): 5% to 25% (last week, 3% to 19%)

  • USD+ (by Overnight) pool in Velodrome topped this week. We have been monitoring Overnight Finance for a few month and the protocol has demonstrated consistancy in generating yield and resilient to market volatility.
  • We have adjusted IPOR’s yield from what’s disclosed as Base Yield to the yield where no staking of platform token $IPOR is required. This reduces the yield by a few percent; this would have an impact on earlier reports from 26 Apr onwards.

Delta Neutral Liquidity Providing (Uniswap V2 and GMX):

  • GLP’s estimated yield is back to normal at 15.1% 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 V2 ETH-Stable pools saw its volume declining and consequently the liquidity dropping. As we are expecting more innovations in DeFi to come, maybe V2 will become history soon.

Funding Rate (Binance Coin-Margined):

  • Funding rates were all positive, except for DOT, as the market rallied last week and buy-side demand is back.

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, 26 June 2023, Twitter: https://twitter.com/SerenityFund )



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