Jan 11, 2021
3 min read
[Weekly] Market Return on StableCoin-based Strategies （11 Jan 2021)
In line with Serenity Fund’s strategy on investment of stablecoins, we provide a weekly update of the returns.
Quick analysis for the past week:
- What happened just now was a 20% price tank for BTC, ETH and most Defi platform tokens. As our returns calculated based the price as of now (assuming you sell your platform tokens once a week, and you take the Monday morning price), some of the yields, like Compound, will be lower. But this is life.
- Still, 6 out of 7 days of last week were insane. Again, if you have purchased BTC, or ETH, or LINK and hedged the full amount in a CEX like Binance or Huobi, your yield is from 80% to over 100%. This week’s champion goes to YFIUSDT, if you use YFI for this strategy, you are hitting 167%.
- Note on the above point: individuals might have to look at this slightly differently: if you only have one asset class, you have to use the Coin-future funding rates, which are lower. We have a portfolio and therefore we have access capital, so in practice we use USDT-future funding rates. In this case, if you used Binance’s BTC-USD coin futures for this strategy, last week’s APY would have been 89%.
- Providing liquidity in Uniswap is a good idea (whether you hedge or not). USDT-ETH is giving out over 60% in yields; it has been a few weeks, so the advice is stay with ETH-stable coin pairs. The logic — we have explained in last week’s letter, and impermanent loss is not scary. It’s about confidence in bitcoin, it’s about mathematical probability.
- Interestingly, there was a challenger, 1inch, last week and some liquidity has shifted to that. The scale of the shift is not comparable to what Sushi had done; but 1inch is also well-established and has its own advantages, such as virtual balance and price impact fees to protect liquidity providers. For details, read our paper: 1Inch, MooniSwap and Chi GasToken — Would the Triple Challenge to Uniswap work?
- Curve’s pools continued to deliver, as CRV price was stable; for some pools, Yearn will be even better, as some Yearn vaults are fully boosted. But — as we shouted out multiple times in twitter, just leave your liquidity in CEX to earn funding rates. Juicy.
- Same thing can be said for Compound Leveraged Strategy. The risks of USDT being targetted by regulators are still looming.
In addition, we have looked at other market opportunities last week (which mostly temporary):
- Alpha Homora: you can lend ETH to Alpha Homora for a 7% yield. Lower than Curve’s ETH-sETH pool, but it’s single currency and no-unpegging risk. Good to see more ETH-denominated products coming out.
- Frax Finance: a new stablecoin, and Frax is providing an incentived Frax-USDC pool, with current yield about 70%-80%.
(Serenity Team, 11 Jan 2021. Twitter https://twitter.com/SerenityFund)
