[Weekly] Market Return on StableCoin-based Strategies（9 May 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 9 May. 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 9 May:

• Risk Free Rate: 1.73%. Risk free rate, representing the safe yield from Compound, Aave and Curve, was lower than last week’s 1.57%. Market continued to drop and last week, major coins have declined over 10% again. There was a massive sell-down of UST by one unknown investor, temporarily causing UST to unpeg for a few cents. This sell-down also caused trading volume in some pools, e.g. 3pool or Aave pool to have a higher than usual trading income. This distorted the earning profiles by 1% to 2% for these pools and their related calculations, e.g. Cross-chain penalties.
• Curve/Yearn/Convex: The Curve/Yearn Large-Cap Benchmark Rate is now 4.4%, lower than last week’s 4.7%. This is in line with the market dip, which had an impact on CRV and CVX prices. We also note the TVL of 3pool has been shrinking continuesly about several percent for the 3rd consecutive week.
• Other Stablecoin Platforms: the yields vary from 4% ~ 18%, and averaged 9%, lower than last week’s 14% (but same as last week if adjusted for Fei Protocol). Fei Protocol topped this category this week, as investors had not recovered fully from the Rari hack and liquidity was still low. We are still of the opinion that despite the hack affecting Fei Protocol’s PCV (Protocol Controlled Value), FEI is still well collateralised. Other than Fei Protocol, there was only 2 protocols with over 10% yield this week, namely Truefi and Gro. Funds are risk-adverse now and the low yields might last for a while.
• Other (non-USD stablecoin or non-Ethereum) platforms, aka Exotic Strategies: Exotic strategy yields’ are from 6% to 34% now. Mirror Prorocol’s USO (oil) vault continued to top this category, even though it’s still declining gradually. The cross-chain penalties are affected by the UST sell-down, as our Ethereum bench marks, 3pools and Aave pools, had unusual trading volumes. Nonetheless, we do see the absolute yields shrinking on these relative safe protocols on these established EVMs. Higher yields are only available in other higher risk chains or protocols.
• Uniswap/Alpha: Uniswap earnings were average last week as well, for half stablecoin, half ETH pairs, as the market declined did trigger some sell-down of ETH and liquidations as well, pushing trading volume to be marginally higher.
• Binance Coin-Margined Funding Rate: funding rates were a mix of positive and negative, with BTC and ETH less affected by a declining market and DOT and BNB being negative. Funds continued to concentrate into large coins for safety and liquidity reasons.

In view of the changing landscape of the DeFi industry and increasingly complex product offerings in the space, we are now publishing premium strategy papers to cover these “degen” type of protocols. For more information, please refer to our article “Launch of Premium Strategy Paper” in Medium on 9 May.

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, 9 May 2022, Twitter: https://twitter.com/SerenityFund )