[Weekly] Market Return on StableCoin-based Strategies（16 May 2022)

We provide a weekly update of the platforms we track, based on the strategies discussed in Serenity Fund’s Overview of Stablecoin Investments and the periodical updates.

(Note: Yields derived from mining reward tokens are based on the prices of tokens on 16 May. Yields that are cumulative, e.g. Uniswap and Compound’s basic earnings and Binance funding rates, and are actual yields over last week, compounded weekly to derive the APY.)

Quick analysis on 16 May:

• Risk Free Rate: 1.44%. Risk free rate, representing the safe yield from Compound, Aave and Curve, was marginally higher than last week’s 1.37%. Last week, UST seriously depegged and now the entire Terra blockchain was in a mess. The sheer size of UST and LUNA have caused significant market turbulence and the market dipped for more than 20% on average. In addition, in its wake, there’s fear on USDT un-collateralisation as well as other algo-coins, like FRAX. Stablecoin investment market was in panic. As a result, funds fled out of the market, with Curve’s 3pool being sold to mostly USDT and reduce to half of its size last week.
• Curve/Yearn/Convex: The Curve/Yearn Large-Cap Benchmark Rate is now 6.6%, much higher than last week’s 4.4%. The outflow of funds from pools like sUSD or Iron Bank made the yields higher. Trading volume surged significantly, contributing to the higher returns as well.
• Other Stablecoin Platforms: the yields vary from 4% ~ 22%, and averaged 11%, higher than last week’s 9%. mStable topped this week, as its trading volume over the last few days were much higher than normal, due to the market turbulence. There’s mixed performance from different platforms. Frax’s yield was drastically lowered, as FXS dropped significantly from the fear of FRAX depeg. In addition, Vesper had added a new FRAX pool. TrueFi and Maple remained less affected; other protocols seemed to benefitted from the outflow of liquidity, pushing the yiels higher.
• Other (non-USD stablecoin or non-Ethereum) platforms, aka Exotic Strategies: Exotic strategy yields’ are from 1% to 95% now. We have removed Mirror Protocol, as a result of UST depeg. Convex’s ibEUR pool topped this week, as trading volume was high; but FixedForex has stopped incentives for most of its pools, including ibEUR from this week onwards. EVM chains have mixed results, as trading volumes affected some pools but not all.
• Uniswap/Alpha: Uniswap earnings were average last week as well, for half stablecoin, half ETH pairs, generally benefitting from the higher trading volume in a down market.
• Binance Coin-Margined Funding Rate: funding rates were severely negative, except for ETH. Market participants were in a rush to sell down assets cross board and most of the coins were affected.

In view of the changing landscape of the DeFi industry and increasingly complex product offerings in the space, we are now publishing premium strategy papers to cover these “degen” type of protocols. For more information, please refer to our article “Launch of Premium Strategy Paper” in Medium on 9 May.

The above summary is a snapshot of what the market looks like over the last week and as of Monday. This is by no means the portfolio of any of Serenity Fund. Neither is the above table meant to be a ranking table nor to be exhaustive. There are various other defi protocols and products that can offer different risk and return exposures. Follow our Twitter below to have more timely and detailed information on the defi market.

(Serenity Team, 16 May 2022, Twitter: https://twitter.com/SerenityFund )