DeFi Pulse Farmer #43

Catch up on a new week in DeFi as we recap Arbitrum's mainnet launch for developers, and Uniswap's community support to integrate it, 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 rose $2B since this point last week, marking a climb from $59B to $61B. While that’s certainly not a major growth spurt compared to some inter-week TVL movements we’ve seen in the space, it appears the bleeding has stopped after the recent cryptoeconomy selloffs — at least for now! 

So we may not know whether DeFi will first hit a $70B or $50B TVL next, but I will say this over and over again: for anyone watching closely, the ecosystem’s fundamentals have clearly never been more impressive. And importantly, these fundamentals are getting more impressive all the while. 

For example, consider how it might as well have been Arbitrum week in DeFi. Arbitrum is a layer-two Ethereum scaling solution based on optimistic rollup (ORU) technology, which allows Ethereum projects to easily port their code to the L2. Arbitrum is one of many Ethereum L2s being developed right now, and while all of these solutions hold tremendous promise when it comes to making DeFi much faster and easier to use, Arbitrum has an advantage: it’s the first ORU solution to hit the primetime. 

That’s because yesterday, Friday, May 28th, Arbitrum’s mainnet opened to Ethereum devs. That means a rollout to users will come any day now, and just in time for DeFi Summer 2, too! This is huge, because it’ll be the first general-purpose L2 ready to support DeFi apps, and there’s a lot of pent-up demand for that. 

You don’t have to take my word for it, either: this week Uniswap’s UNI voters signaled overwhelming support for the leading DEX to integrate with Arbitrum, even though it’s well known Uniswap’s devs are already well underway in integrating Optimism’s somewhat similar ORU solution. Uniswap’s devs said they accept the community’s decision and have already started working on the Arbitrum integration, so expect the next few weeks to mark the beginning of DeFi’s level-up to L2s. 

And this is just a snapshot of the progress of one solution. So, again, we may be seeing some TVL chop in DeFi lately, but the actual advances on the ground in this ecosystem are compelling and can’t be ignored. 

Zooming out, let’s briefly recap the best-performing DeFi tokens since our last issue of the Farmer. In that span, we saw solid runs from LQTY (+49%), and AMPL (+18%). It was a slightly positive week for the DeFi Pulse Index (DPI), which raised 2.78% to hit $333.47. 

Thank you to our sponsors DEXTF, an asset management protocol that makes managing and investing assets easier, and O3 Swapa cross-chain Aggregation Protocol that integrates fragmented liquidity across blockchains.

Accumulate and bundle yield generating assets with your favorite longs on DEXTF today, and access the best trading prices on a one-step platform with O3 Swap.

Farm +900% yearly via Vesper’s vVSP Pool

Vesper, a suite platform composed of “easy-to-use DeFi products,” caught our attention because its vVSP pool has been fetching great yields recently. Let’s dive in, then! 

So how does the vVSP pool earn yield? It comes courtesy of Vesper’s revenue system, which entails buying VSP, the project’s native token, off the open market with a cut of the interest earned from depositors in Vesper’s yield farming pools and so forth. Then, Vesper distributes this acquired VSP to people who deposit their VSP into the vVSP Pool. 

This makes the vVSP stand in contrast to Vesper’s “Grow Pools,” as it earns all of its yield from Vesper’s VSP buybacks, whereas the Grow Pools — e.g. vETH, vDAI, vUSDC, etc. — earn yields via vault strategies plus a portion of VSP emissions. 

Over the past two weeks, a considerable amount of liquidity left DeFi, and Vesper wasn’t immune to this acute shrinkage. At the same time, the TVL drawdown meant there were more VSP rewards for those who did remain in Vesper’s pools, which is why we’ve seen the vVSP Pool’s yield at +1,000% in recent days. One play, then? Try depositing VSP into the vVSP Pool on the heels of Vesper facing considerable TVL outflows, and then aim to reap juicy VSP rewards after that. 

If you’re interested in farming through the vVSP Pool, the process is very simple. Start by acquiring your desired amount of VSP from a DEX like SushiSwap or Uniswap. Then you can follow these steps:

  • Navigate to Vesper’s vVSP Pool dashboard and connect your wallet.

  • In the Deposit interface, input the amount of VSP you’d like to deposit. Click “Deposit” and confirm the ensuing transaction. 

  • Voila! Now you’ll be earning a pro-rata share of all of Vesper’s VSP buybacks.

So it’s certainly an easy yield farm to enter, but there are a few more things you’ll want to keep in mind before you dive into doing your own research. First is the earning rate. On the vVSP Pool’s Deposit interface, you’ll currently see a spot earning rate of 922% and an average earning rate of 183% — the former annualizes the yield generated from buybacks over the previous 24 hours, while the latter annualizes the pool’s 30-day yield. 

Next, note that the vVSP Pool enforces a 24-hr deposit timelock in order to block the front running of buybacks, i.e. depositing VSP before distributions and selling it immediately thereafter. Lastly, it’s important to remember that vVSP isn’t just a tokenized pool share of the vVSP Pool — it’s also the governance token of Vesper, not VSP. 

Vesper has been audited multiple times and is run by a public team, so this isn’t a project you’d expect any “gotchas” from. At the same time, you have to demonstrate personal responsibility when it comes to using experimental tech because things can go wrong in unforeseen ways. Do your own research, and never invest more money into any dapp than you can afford to lose. 

Farmers can enhance this week’s farms with our sponsor Alpha Finance. Its recently launched Alpha Homora V2 allows farmers to do leveraged yield farming on pools that are on Curve, Balancer, SushiSwap, and Uniswap. Farmers can also lend assets such as ETH, DAI, USDT & USDC.

In Alpha Homora V2 farmers can open leveraged yield farming positions for selected pools and, similar as in Alpha Homora V1, farmers don’t need to have equal value of both tokens to yield farm. Head over to Alpha Homora V2 and start farming or lending today!

  • A Little Dash of Hopium
    TLDR: Synthetix co-founder Kain Warwick proposes splitting up the coming Synthetix V3 upgrade into two separate upgrades. 

  • Expanding Compound Governance
    TLDR: Compound announces that all projects and users building on top of Compound will receive COMP rewards continuously. 

  • Farming with Added Benefits
    TLDR: The Alchemix project unveils new reward systems around its ALCX/ETH SushiSwap and 3Crv LP farms. 

  • DexTF launches the Green Bitcoin Token*
    TLDR: DexTF launched a tokenized carbon-neutral bitcoin consisting of $WBTC + tokenized carbon credits $MCO2 issued by Moss Earth.

  • Decentralizing Ribbon Finance
    TLDR: Ribbon Finance introduces the $RBN token in order to decentralize the governance of the crypto-structured products protocol.

  • Circle Completes $440 Million Finance to Drive Growth
    TLDR: Circle, the creators of the popular USDC stablecoin, raise a $440M war chest to help continue making USDC a token of choice around the world. 

  • RenVM Integrates Polygon
    TLDR: RenVM, the project behind DeFi assets like renBTC, reveals its integration with Ethereum scaling solution Polygon. 

  • Understanding the ETH2x-FLI Premium
    TLDR: Index Coop explains how the ETH2x-FLI price became dislocated from its NAV in the wake of crypto selloffs earlier this month.

    *This is part of our sponsored link series.

Earn between 48-58% Net APYs via Yearn’s BOOST Vaults

Yearn is DeFi’s top yield aggregator, a machine composed of many on-chain money-making machines. 

This week we’d like to turn your attention to two seriously solid options among these money-making machines: the yvBOOST Vault and the yvBOOST-ETH Vault.

First off, yvBOOST grants depositors a “continuous share of Curve’s trading fees,” and these rewards are claimable as Curve’s 3pool liquidity provider (LP) token, 3Crv. This vault, which is fetching 48% APY at the moment, reinvests Curve’s trading fees in perpetuity so your returns compound for as long as you participate, too. To join, simply deposit yveCRV or zap in another token on the Yearn Vaults page

Next, there’s the yvBOOST-ETH Vault, which is more involved. You deposit a token of choice into the vault, at which point the strategy automatically deposits your yvBOOST into SushiSwap’s yvBOOST-ETH pool to earn SUSHI. Then your ensuing SushiSwap LP tokens are automatically deposited into Pickle Finance’s yvBOOST-ETH pJar to earn PICKLE. To complete the yield extravaganza, you’ll need to take your new pJar LP tokens and manually stake them on Pickle’s Farms page

Yearn’s V2 Vaults are some of the best-engineered products in all of DeFi, so if you farm in these pastures you reasonably expect to do so safely and productively. Just make sure to always farm responsibly and never participate in yield farms with more money than you can afford to lose. 

Did you ever want to have more granularity in how transactions are being executed? Then, today’s Plow of the week is for you. Go ahead and check out Eth decoder here!

The Lord of the Rings author J. R. R. Tolkien once wrote, “If we value the freedom of mind and soul, if we're partisans of liberty, then it's our plain duty to escape, and to take as many people with us as we can.” Tolkien wasn’t talking about DeFi here of course, though I think the quote can be powerfully applied to DeFi. We’re here for more than just money, so it’s incumbent on us to share the good news with the world. That’s how we keep making a difference: telling people how DeFi has made a real difference in our lives.

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!