DeFi Pulse Farmer #3
Catch up on the latest farming trends as we recap yEarn, Nexus Mutual, and much more.
Welcome to the third edition of DeFi Pulse Farmer - your guide to staying up on the latest and best trends in yield farming and beyond.
In this newsletter, we’ll give you a rundown on the top stories, developments, and trends of the past week as well as shining light on two key farming opportunities to keep an eye on.
Looking to catch up on the past month? We’ve got you covered!
Farm Whisperer
“We’re experiencing a Cambrian explosion of new financial primitives in DeFi. Don’t get stuck on the temporary fads, but study the infrastructure that makes this innovation possible. Farm the memecoins, never market buy.” - ChainLinkGod
DeFi Recap
In the past week, DeFi added $760M of new Total Value Locked (TVL), driven primarily by Aave and Curve which together attracted more than $450M. This brings TVL to another ATH of $6.6B. The 10 billy club is not far off!
dYdX partnered with Starkware, making them the third exchange after DeversiFi and Immutable (Gods Unchained) to integrate StarkEx’s privacy-preserving scaling solution. More on StarkEX here.
YAM hosted it’s migration from V1 to V2, marking the next step towards the new, improved and secure YAM V3.
More than 45K BTC, or $500M, now live on DeFi protocols, led by the wBTC and renBTC.
Nexus Mutual - an insurance platform for smart contract cover - saw it’s token NXM jump by over 130%. While NXM is only tradable by those who complete KYC to join the mutual, a wrapped version - WNXM - is tradable on DEXs like Uniswap and Balancer.
Finally, yEarn hit it’s yFlippening milestone, signifying that the price of 1 YFI is now worth more than 1 BTC. (Good for memes)
Fair Launch as a Value Proposition
Token distributions have become the value proposition for degen farmers. What once felt like a small piece of the puzzle is now the entire reason infant projects are drawing attention.
The notion of ‘fair launch’ cites no premine, no VC funding, no BS as the way obscure tokens are distributed. While the premise of giving early adopters the most upside checks out on paper, we’d be wise to realize that for many new projects - this is literally their only value.
From BASED to PASTA to MEME and beyond, teams are teetering on the edge of how degen yield farming can get. While these experiments have certainly tested what an equitable distribution *should* be, let’s not lose sight of the bigger picture.
For those that pass the sniff test and aggregate meaningful value, be aware that Andre and yEarn yVaults are ready to wreak havoc.
Stories of the Week
yEarn adds yInsurance for KYC-less yVault coverage
TLDR: yEarn unveils a new primitive for pooled tokenized insurance.YAM Migrates to YAMV2
TLDR: YAM shares details of their Peckshield audit and kicks off their V2 migration. YAM holders have until 4:20 PM UTC today to migrate their holdings.Synthetic Futures Primer
TLDR: Synthetix announces the upcoming launch of synthetic futures.Opyn Releases YFI and WETH Puts
TLDR: Opyn is back in business following an exploit with two new put options.ANT liquidity rewards now on Balancer
TLDR: Aragon launches 80% ANT/ 20% ETH pool on Balancer to provide farming rewards.A storm is coming
TLDR: Zapper.fi teases Zapper Protocol.
Governance Watcher
Synthetix changed the Target collateralization ratio from 700% to 600%.
yEarn looks to transition multisig signers to an Operational Council.
MonteCarloDEX unveils MCB governance with liquidity mining proposals.
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Farm of the Week
Harvest 98% on an interest-earning stablecoin using yEarn yVaults
The double dip is real. Liquidity providers of Curve’s Y pool stand to earn interest on top of Curve’s lending interest by depositing their yCRV tokens into the yEarn yVault.
yEarn yVaults allow farmers to deposit a token which aggregates yield from top lending protocols. In the case of yCRV, tokens are deposited into the Curve DAO to farm CRV. Any and all rewards are immediately liquidated and used to purchase more yCRV, essentially allowing farmers to milk farming rewards without having to incur any transaction fees.
Here’s a simple example of how a strategy works:
Image source: https://twitter.com/oli_vdb/status/1288970901237661700
Averaging around 100% APY since inception, the yCRV Vault is premier opportunity to capture an attractive yield without having to worry about price volatility. Given the recent runup of DeFi tokens, we expect yCRV to be one of the best performing strategies as major tokens cool off this week. Track the yCRV returns at any given time here.
To enter the yCRV yVault, farmers should:
Deposit DAI, USDC, TUST, USDT or any mix of each to the Curve Y Pool.
Deposit that newly minted yCRV tokens to the yCRV yVault.
Note: yCRV captures all yield automatically. Simply deposit and whenever you withdraw, you’ll have more yCRV then when you started. Oh, and did we mention yCRV is constantly earning a return (historically 10% APY) as well? That’s showbiz baby.
The Conservative Farmer
Harvest 60% on your stablecoins with Balancer DAI/USDC pool
Balancer is an automated asset management protocol allowing anyone to create or add liquidity to customizable pools and earn trading fees. One of their pools, DAI/USDC, allows farmers to earn a 60% Return on Liquidity for providing capital to the pool.
Image source: predictions.exchange/balancer
Balancer pools offer BAL governance tokens to those who provide liquidity to the protocol. Farmers simply need to remain in the pool and they will receive a weekly allocation of BAL. This BAL can either be sold on the market or deposited into a BAL-based pool to earn an extra multiplier on BAL rewards.
Given the 1:1 peg of DAI/USDC, this pool does suffer from the soft-peg penalty, but still offers one of the best ways to earn an attractive return on two stable currencies which mitigate price volatility.
Note: The return on this strategy will vary relative to the price of BAL.
How to invest in Balancer’s DAI/USDC pool
Navigate to the DAI/USDC pool, connect your wallet and “Add liquidity” using the button in the top right.
If you’ve never provided liquidity on Balancer, you will need to set up a proxy contract. Please be advised that this set up can cost up to $30 at current gas prices.
Image source: balancer.exchange
Unlock each of the assets, costing around $6 in total for both tokens.
Note: With Balancer, farmers can enter pools with one or multiple tokens. This means you can enter the pool using a single asset if you want to deposit ONLY Dai or USDC.
Image source: balancer.exchange
Add the amount they wish, validate the transaction, and receive Balancer Pool Tokens (BPT) in exchange, which represents their ownership of the pool.
Be on the lookout for freshly airdropped BAL rewards right to your wallet every Tuesday! Plus, you’ll earn a pro-rata share of the pools 0.05% trading fees - don’t spend it all in one place!
Plow of the Week
Oh my…
Looking to keep up with the rapidly growing yEarn ecosystem?
One anonymous Kirby (or Kirbys?) has taken the liberty of recapping all the most important elements of the project via a cleverly branded site - learn2yearn.finance
In this extensive guide, users can learn about the yEarn revenue model, read up on the yEarn blog or view detailed explainers on everything from yVaults to governance, yInsurance, and more.
The site even keeps tabs on the ecosystems’ top resources like the yFlippening and the yCosystem.
For even more commentary, follow learn2earn on Twitter.
Few understand…
Alpha Leaker of the Week
Closing Thoughts
It seems like yield farmers can finally take a break this weekend.
In an ecosystem as rapidly moving as this - please take time to consider your mental health.
Until next week, keep up the honest sleep!
All info in this newsletter is purely educational and should only be used to inform your own research. We're not offering investment advice, endorsement of any project or approach, or promise of any outcome. This is prepared using public information and couldn't possibly account for anyone's specific goals or financial situation. Be careful and keep up the honest work!