[Weekly] Market Return on StableCoin-based Strategies（29 August 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 29 August. 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 29 August:
- Risk Free Rate: 0.68%. Risk free rate, representing the safe yields from Compound (USDC), Aave (USDC) and Curve (3-pool), was marginally lower than last week’s 0.72%. Last week, the market continued to decline with BTC and ETH dropping about 10%. This is the result of looming fear on further interest rate hikes and tightening of liquidity, after a strong statement from Powell on Fed’s stance towards controlling inflation.
- Curve/Yearn/Convex: 3.8%. The Curve/Yearn Large-Cap Benchmark Rate is slightly lower than last week’s 3.9%. The price of CRV remained bumpy but performed better than other major coins, and as a result, the yields from Convex and Curve were not too affected. TVL remained stable as well across major pools.
- Other Stablecoin Platforms: the yields vary from 3% ~ 11%, and averaged 7.0%, higher than last week’s 6.4%, due to some adjustments we made this week. TrueFi’s USDC Pool continued to top this week, but both TrueFi and Maple Finance had temporarily resolved their liquidity issue. This week, we have replaced Frax’s FRAX-USDC base pool on Curve with Aura Finance’s yield-boosted Aave pool on Balancer. Confusing as it sounds, Aura Finance is a Convex Finance-alike platform but focusing on boosting Balance pool yields. The selected pool is a pool of Aave stablecoins (USDT, aUSDT, USDC, aUSDC, DAI, aDAI) on Balancer.
- Other (non-USD stablecoin or non-Ethereum) platforms, aka Exotic Strategies: Exotic strategy yields’ are from 3% to 13% now. ibEUR continued to deliver good yields for its pairs with agEUR and sEUR, and remained a global top this week. None of other pools in this category delivered more than 10% yield, but most EVM chains actually have yield in the band of 8% to 10%. We have the view that the long-term risk premium of these stablecoin products we have selected is about 8% (over risk free rate above). We do observe this trend of most platforms having yields converging to this rate, especially in quiet markets.
- Uniswap/Alpha: Uniswap earnings remained average, for half stablecoin, half ETH pairs. After impermanent loss cost, its yield was not comparable to just holding stablecoins.
- Binance Coin-Margined Funding Rate: funding rates were all negative for the second consecutive week.
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, 29 August 2022, Twitter: https://twitter.com/SerenityFund )