DeFi Pulse Farmer #39

Catch up on a new week in DeFi as we recap JP Morgan's ETH investor note, the European Investment Bank work to issue a bond on Ethereum, the Farm of the Week, the Conservative Farmer, 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.

The total value locked (TVL) in DeFi apps is at a new all-time high of $67.9B! Putting this in the context of mainstream finance giants, Square’s market cap is currently $112B, PayPal’s is $308B, MasterCard’s is $380B, and VISA’s is $499B. 

Of course, contrasting TVL against market caps is an apples and oranges comparison. Even still, the rapid ascension of DeFi’s TVL toward $100B and the sheer amount of value involved shows that decentralized finance is itself becoming a global institution that’s increasingly closing in on the lunches of the world’s most prolific centralized financial entities. 

That said, there are now over 15 dapps with TVLs over $1B respectively, which is incredible considering the TVL of the entire DeFi space only crossed over the $1B mark for the first time in early 2020. Zooming in, it was a week of growth across the board for the dapps at the top of the ecosystem:

  • Maker ($8.78B 📈 $10.51B)

  • Aave ($5.65B 📈 $9.64B) 

  • Compound ($8.40B) 📈 $9.20B)

  • Uniswap ($5.96B 📈 $6.22B)

  • Curve ($5.27B 📈 $6.00B)

As for notable headlines, in recent days we saw some high-profile DeFi developments where big institutions are concerned:

  • Earlier this week multinational banking powerhouse JP Morgan published an investor note titled “Why Is ETH Outpeforming?” — Therein, three of the financial giant’s analysts highlighted how “ETH is the backbone of the crypto-native economy and therefore functions more as a medium of exchange. To the extent owning a share of this potential activity is more valuable, the theory goes, ETH should outperform BTC over the long run.”

  • The European Investment Bank is working on a digital bond sale atop Ethereum — According to a new Bloomberg report, the EIB has tapped banking titans Banco Santander, Goldman Sachs, and Societe Generale to help it issue the €100M digital bond offering. That’s one small step for these banks, and one giant leap for the future of DeFi. 

Lastly, let’s look at the best-performing DeFi tokens from this week. In that span, we saw strong runs from QUICK (+606.8%), CREAM (+62.9%), AAVE (+40%), KEEP (+34.6%), WNXM (+31%), and COMP (+27.5%). The DeFi Pulse Index (DPI) accordingly rose 8.49% to reach $559.20.

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Farm Triple-Digit APRs on Polygon’s Quickswap DEX

It’s going to take a village to scale Ethereum, and when I say village, I mean a variety of scaling solutions like layer two (L2) rollups, sidechains, and sharding all working in concert.

Polygon, formerly Matic Network, bills itself as “Ethereum’s Internet of Blockchains” and embraces this suite approach to scaling, offering a range of scaling tools like a Plasma implementation, the Polygon PoS sidechain, and eventually Optimistic Rollups, ZK-Rollups, and beyond. 

Lately Polygon’s captured the limelight because its PoS sidechain is turning into an increasingly bustling release valve for Ethereum L1 activity. As of this week, this sidechain is powering +1M daily transactions as users have been flocking to cheap and rapid transactions on dapps like Aave, which recently added support for Polygon. 

Yet not all projects on Polygon’s sidechain have to be bridged from Ethereum — some were, in fact, natively born on the sidechain. An interesting example of such a protocol is QuickSwap. More interesting yet is QuickSwap’s yield farms right now. 

Launched last October, QuickSwap is a Uniswap fork built on Polygon that’s allocating 90% of the 1M max supply of its QUICK governance token to liquidity mining rewards. So QuickSwap allows for permissionless trading and listing like Uniswap, though its advantage, in contrast, is extremely affordable and near-instant base layer transactions. 

So this all brings us to the farms at hand. Before we go any further, keep in mind that if you plan to participate in these pools you’ll first need to set up Polygon (or “Matic” as is still archaically used in many places) on your MetaMask. 

Fortunately, that’s a really simple process and essentially entails pressing one button. After that, you can easily bridge your desired Ethereum tokens over to Polygon using something like the Bridge hub of DeFi dashboard Zapper, and then you’ll be ready to start farming on QuickSwap. 

Which pools to pick, though? It’s up to your personal asset preferences, to be sure, but you’ve got plenty of options. Some of the more interesting QuickSwap farms at the moment are as follows:

  • MATIC/QUICK~122% APR currently

  • ETH/MATIC~91% APR currently

  • ETH/QUICK~114% APR currently

  • USDC/QUICK~126% APR currently

  • ETH/DAI~73% APR currently

As for joining in, the flow is very straightforward. First, navigate to QuickSwap’s Pool dashboard and add liquidity to your trading pair of choice. 

Then take your newly received liquidity provider (LP) tokens over to the QuickSwap Rewards hub. Find your pool, click “Deposit,” then input the amount of LP tokens you want to stake and confirm your deposit transaction. Once that’s done, you’ll be farming QUICK and can claim your rewards through this same deposit interface. 

QuickSwap is Polygon’s reigning DEX right now, but it takes some steps to get started with using the protocol. Take your time, do your research, and never deposit more money into any protocol than you can afford to lose.

Farm Up to 9% APR with Aave V2 Liquidity Mining

Aave is one of DeFi’s most popular and respected lending protocols, though interestingly the project has been able to reach its current success predominantly through word of mouth interest. 

Now it’s time to kick things up a notch, then, as the Aave community just approved a governance proposal that launched a liquidity mining program for the Aave V2 system — the Aave project’s first yield farms!

The idea? Lend or borrow approved assets like DAI, USDC, or ETH in Aave V2 to earn staked Aave (stkAAVE) rewards, it’s as simple as that. In terms of these rewards, the best-performing of these opportunities right now is borrowing USDT, which is currently fetching borrowers roughly 9% APR in stkAAVE. 

What’s really attractive with these yield farms is that Aave’s battle-tested, so they’re safer than many farms you’ll find, and they allow you to farm a consensus blue-chip DeFi token in stkAAVE, i.e. AAVE. 

If these are the kinds of harvests you’re looking for, you can proceed to the Aave Markets dashboard and connect your wallet. Click on your token of choice, input the amount you’d like to deposit, and confirm the transaction. At this point you’ll start racking stkAAVE rewards, and if you want you can go further and earn even more stkAAVE by heading over to Aave’s Borrow hub and borrowing tokens against your aforementioned deposit!

This is one of the safer and more solid liquidity mining programs you’ll find in DeFi, so you mainly need to be focused on making sure you understand how Aave works. Beyond that just remember to never deposit more than you can afford to lose anywhere in DeFi, even Aave. 

Do you want to stay on top of how much liquidity is allocated to different pools across different DeFi Protocols? What if you could also check out Impermanent Loss fees and forecasts to help you do some quick math? If this sounds interesting to you, fellow farmer, go ahead and check out the Pools section on today’s Plow of the week, Liquidityfolio!

Up only for DeFi from here? Of course not, like with any market there will be ups and downs along the way. But there’s a tangible feeling in this ecosystem that the rest of the world is only just beginning to wake up to the great possibilities of DeFi. This is why yield farming isn’t just lucrative right now, it’s also downright exciting. We’re at the forefront of change and we’re watching the mainstream come around in real-time. 

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!