DeFi Pulse Farmer #28
Catch up on a new week in DeFi as we recap the Farm of the Week, the Conservative Farmer, the Governance Watcher, and more!
Welcome to DeFi Pulse Farmer - your guide to staying up on the latest and best trends in yield farming and beyond.
In this newsletter, we break down top stories, developments, and trends from the past week in tandem with two key farming opportunities to keep an eye on.
If you want to access the full DeFi Pulse Farmer experience to receive emerging Yield Farming opportunities sent to you throughout the week as part of our Alpha Tractor Series, or the DeFi Pulse Farmer Protocol Express, which consists of a weekly recap of APYs and new pools on major protocols and a highlight of an emerging opportunity, subscribe today.
After climbing $7B from $28B to $35B last week, DeFi’s total value locked (TVL) surged another $4.9B in recent days to its current reigning all-time high of $39.91B. The pace of growth lately has just been incredible!
We’re amid the first true DeFi boom, then, and that’s no surprise considering both mainstream investors and the wider cryptoeconomy are seemingly waking up to DeFi’s already impressive and still blooming possibilities.
On the one hand, you have Mastercard opening up direct support for crypto payments and billionaire entrepreneur Mark Cuban saying, “a big part of [America 2.0] is going to be DeFi.” On the other, you have more people in crypto recommending the BED strategy -- i.e. buying BTC, ETH, and the DeFi Pulse Index (DPI) to get solid exposure to DeFi -- than ever before, too.
So things are heating up, to say the least, and that’s been translating to growth in DeFi projects’ TVLs.
Indeed, it wasn’t long ago that there weren’t any dapps that had yet reached the $3B TVL milestone. Now? The top 5 dapps are all above $4B, and the largest dapp Maker is knocking on the door of $7B!
There was no shortage of impressive DeFi token performances in recent days, either. Some of the best-performing assets on the week included APY (+312%), GRT (+151%), RGT (+120%), TRU (+68%), and COVER (+44.2%). The DeFi Pulse Index (DPI) also rose another 7.3% to $468.26.
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Farm +170% APR by Staking sTSLA-LP Tokens
For years electric car and clean energy company Tesla has captivated investors around the world. Now it’s about to really start captivating DeFi investors.
That’s because popular DeFi derivatives protocol Synthetix just launched a tokenized version of Tesla stock, sTSLA, as approved by the project’s Spartan Council. Made possible by Chainlink’s new $TSLA/USD price feed, sTSLA gives DeFi traders the ability to permissionlessly take on-chain positions in Tesla stock on a fractional and 24/7 basis. Behold the future of finance!
Where things really get interesting, though, is Synthetix’s new TSLA staking opportunity for yield farmers that’s centered around an 80/20 sUSD/sTSLA Balancer pool (sUSD is Synthetix’s flagship stablecoin).
The idea here? Stake this pool’s liquidity provider (LP) tokens on Synthetix to earn Balancer trading fees and SNX rewards, which are generating 173% APR for stakers right now. The best part? You do all this while maintaining exposure to the potential upside of TSLA and with little risk of impermanent loss (IL). Now that’s how you DeFi!
If this farm sounds like music to your ears, you’ll first need to pick up your desired amount of sUSD. You’ll need some both to buy your initial sTSLA allocation and for joining the 80/20 sUSD/sTSLA Balancer pool, so head over to the sUSD/ETH pair on a DEX like Uniswap or Sushiswap and stock up.
At this point, you’re ready to buy sTSLA (remember the 80/20 ratio you’re aiming for, e.g. 800 sUSD to $200 worth of sTSLA). For this, head over to the sTSLA exchange interface on Kwenta, easy-to-use derivatives trading app built atop Synthetix, and make your buy with sUSD.
Now everything’s downhill from here. Head over to Balancer’s 80/20 sUSD/sTSLA pool, click “Add Liquidity,” and deposit the amount of liquidity you’d like. Take your ensuing LP tokens over to Synthetix’s staking dashboard and select the sTSLA-LP pool. You can stake these LP tokens through this interface (and, of course, unstake them) as you please!
This farm is certainly a fun and safer one relatively speaking, but never throw caution to the wind in DeFi … especially not just because there’s fun to be had! Do your own research, make sure you understand how TSLA trades in the mainstream, and never farm with more money than you can afford to lose.
Degenerative Finance Presents “uSTONKS”
TLDR: The Yam Finance-backed Degenerative Finance Platform launched uSTONKs, a series of major tokenized assets that users can go long or short on or even put to use in liquidity mining campaigns.
1inch’s joint liquidity program with Tornado
TLDR: DEX aggregator 1inch joined forces with privacy protocol Tornado.Cash to offer joint liquidity mining rewards around 1inch’s ETH/TORN pool.
Bancor Progress Update (February 2021)
TLDR: The Bancor team details recent advancements around the protocol, like the project’s 2,000% TVL surge since the launch of Bancor v2.1.
UMA KPI Options and Airdrop
TLDR: The UMA Protocol team unveils a new incentivization mechanism dubbed KPI options, which are options on DeFi projects’ TVLs and thus incentivize holders to grow those TVLs.
Decentralized Finance: On Blockchain- and Smart Contract-Based Financial Markets
TLDR: The St. Louis branch of the U.S. Federal Reserve released a research report exploring the possibilities of the nascent DeFi ecosystem.
Partnering to Build Best-in-Class BTC Vaults
TLDR: Badger DAO has partnered with Yearn in a collaboration that will see Yearn-developed BTC vaults directly within the Badger app and beyond.
Three Arrows and DeFiance Capital join $12M Balancer Series
TLDR: The Balancer team’s Series A funding round has risen to $12M thanks to a newly combined investment of $5M from prominent crypto VC firms Three Arrows Capital and DeFiance Capital.
Farm +300% APR via Tornado.Cash Anonymity Mining
Let’s say you’ve been meaning to rotate into a new Ethereum address, and you want to do so privately. Well, you’re in luck, because privacy protocol Tornado.Cash is currently running an anonymity mining campaign that’s offering considerable risk-free yield for such rotations. Alpha Tractor subscribers can also revisit our early January Protocol Express covering Tornado.
The gist? You deposit ETH into Tornado, wait, and that’s it! Then you can later redeem the “Anonymity Points” (AP) generated by your deposit for the protocol’s governance token, TORN.
As for how the AP system works these points are earned by depositors every block, e.g. 20 AP/block for 1 ETH, 50 AP/block for 10 ETH, and 400 AP/block for 100 ETH. Here, you’ll want to note that:
When you claim your farmed AP through Tornado’s mining dashboard, a relayer actually makes the claim for you to protect your anonymity. You pay a small AP fee to the relayer for this service.
When you go to exchange your AP for TORN, once again a relayer takes care of this process and is compensated in AP for the sake of privacy.
We explored the AP system when ETH gas prices were ~250 gwei. To give you an idea, at that rate it cost about 1M AP to claim your points and another 1M AP to finally convert your points to TORN.
The good news is that Tornado depositors rack up lots of AP in short order since there are ~6.5k Ethereum blocks a day, ~195k a month, etc. So for example let’s do some napkin math on how a month-long 10 ETH deposit might fare. We’d multiply 50 AP per block by 195k blocks, which would give us 9.75M AP.
Subtracting 2M from this total for paying relayers brings us to 7.75M AP, so if you divide that sum by the current AP/TORN exchange rate of 580,626 you end up with 13.34 TORN tokens on the month.
Not bad! At the time of writing the TORN price was $410, so multiplying that figure by 13.34 brings us to $5.47k. From an initial deposit of 10 ETH (~$18k presently), this performance on the month stretches out to +300% APR.
Zooming out, then, this farm requires you to pay high network fees to deposit ETH, high AP fees to convert your AP into TORN, and a withdrawal fee, too. Yet if you keep your deposit in long enough, your earnings should easily make up for those expenses if the price of TORN remains at this price level.
We love this farm because it essentially has low risk. The only real vulnerability you’d face besides potential exploits is the possibility of losing your deposit note, but with some basic precautions, that’s a non-issue. Just keep in mind that you can only claim AP for redeemed Tornado.Cash notes (i.e. withdrawn ETH) and that you can save a lot of money by jumping into this farm when the Ethereum network isn’t congested.
Did you ape in so many protocols during the DeFi summer that you don't even remember which ones? Wanna know if you're Pleb, Ape, Chad, or Degen? Check out this week's tool of the week: Degen Score. What's your score, degentlemen?
With DeFi’s rapid growth lately, it wouldn’t be surprising to see the ecosystem’s TVL hit the $50B mark around this time next week. Then again, no one has any idea what exactly will happen next! So strap in and keep your head on tight because DeFi’s now definitively in unprecedented territory.