[Weekly] Market Return on StableCoin-based Strategies（31 Jul 2023): King Curve Hacked

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 31 July. 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 31 July:

Due to the Curve hack, some of the DeFi basic protocols are affected and this week’s rates might not be a good reference point.

• Curve is hacked for some of its ETH pools as well as its CRV-ETH pool. The root cause is vyperlang, one of the Ethereum programming languages, has errors.
• As a result, there’s currently little liquidity of CRV on Ethereum. Users who use CRV as collaterals to borrow assets are causing some fear. In the event of a massive CRV price fall, vaults will be liquidated and cause cascading effects. Amongst the CRV lenders, Curve founder Michael Egorov has massive borrowings in Aava V2, Abracadabra and Fraxlend.

Risk Free Rate: No Update (last week, 2.86%)

• As Aave is affected, its lending rate is not a good reference point. Liquidity in Aave V2 shrank about $50 or more.

Mainstream Rate (Curve1.5x/Convex): 4.0% (last week, 3.1%)

• The rate increase was due to trading in the market after knowing the Curve hack.

Benchmark Rate (Other Stablecoin Platforms): 7.0% (last week, 7.7%）

• Bella is still doing good whilst other protocols generally saw yields coming down slightly.

Exotic Strategies (non-Ethereum or quasi stablecoin strategies): 3% to 19% (last week, 4% to 20%）

• Velodrome has topped this week, with a rising VELO price and increased TVL/trading volume in the platform.

Delta Neutral Liquidity Providing (Uniswap V2 and GMX):

• GLP’s estimated yield dipped again to 3.9% 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. Gains gDAI (Arbitrum) is at 6.4%.
• Uniswap fees remained low as market was quiet.

Funding Rate (Binance Coin-Margined):

• Funding rates were all positive except for DOT and were very low. BNB turned positive, however, as the criticism of Binance on Twitter has subdued recently.

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, 31 July 2023, Twitter: https://twitter.com/SerenityFund )