[Weekly] Market Return on StableCoin-based Strategies（3 Apr 2023): Wen crvUSD?
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 3 Apr. 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 3 Apr:
Risk Free Rate: 2.14%
- The safe yields from USDC lending yield in Compound and Aave on Ethereum, is lower than last week’s 2.32%.
- The lending rates from Aave and Compound are much closer now compared to last two weeks. Liquidity also flew from Aave to Compound.
Mainstream Rate (Curve1.5x/Convex): 2.6%
- The average yield of top stablecoins in Curve or Convex, is lower than last week’s 2.9%.
- Most pools have yield declined due to a dropping CRV and CVX price. Liquidity in 3pool did not recover as expected, remaining at a lower point despite the USDT portion being balanced. Curve needs some innovation to maintain its edge in the stablecoin trading sector. Wen crvUSD?
Benchmark Rate (Other Stablecoin Platforms): 12.5%
- The average yield of 10 selected Ethereum stablecoin protocols, has yields vary from 4% ~ 36%, and averaged 12.5%, lower than last week’s 10.3%.
- This is due to the expiry of Pendle’s Frax-USDC pool and its launch of the new Stargate USDT pool. With 36% yield, the pool topped this category this week. Stargate is a bridge by Layerzero, and this Stargate USDT is the liquidity pool between Stargate’s cross-chain functions. Pendle, as discussed earlier in our premium paper, builds on Stargate to separate the Stargate USDT’s yield and principal. This is pool is the liquidity pool for Stargate USDT and Pendle’s principal version of Stargate USDT (yield stripped).
Exotic Strategies (non-Ethereum or quasi stablecoin strategies): 4% to 43%
- As the hacker returned most funds back to Euler, the platform and other affected protocols are getting back to business again. Angle Protocol, the issuer of agEUR, is expected to continue operating. AgEUR returned to its normal price level and the yield is back.
- Ipor saw prices decline but maintained good yield above 20%.
- We published an article last week on DOLA by Inverse Finance, but we consider DOLA to have outstanding issues before assessing investments.
Delta Neutral Liquidity Providing (Uniswap V2 and GMX):
- Uniswap earnings went down a bit compared to last week, for half stablecoin, half ETH pairs, as the market was generally quiet last week.
- GMX recorded 41.9% earnings before adjustment for impermant loss, hedging cost and traders’ PnL. Again, this is based on the revised GMX yield calculation of using the 5 days accumulative fees (from last Wednesday to Monday as reported by the official website) to estimate the APR. .
- We published an article last week on Vela Exchange, a competitor of GMX for derivatives trading.
Funding Rate (Binance Coin-Margined):
- funding rates were all single-digital positive last week, except for BNB, which was still negative but to a much lesser extent.
- 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, 3 Apr 2023, Twitter: https://twitter.com/SerenityFund )