[Weekly] Market Return on StableCoin-based Strategies (21 June 2021)

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 21 June. 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 21 June:

  • Overview: Market was lukewarm, and is getting more bearish as it seems. Cross the board, the yields have declined quite a lot. Generally, as sector beta for yield farming might be going down, we believe it’s a time to shift to more large platforms to reduce protocol risks, and seek alpha return in these large protocols. Alternatively, moving to other chains like Polygon (still following the large protocols) seems to be another option.
  • Curve/Yearn: The Curve/Yearn Large-Cap Benchmark Rate is now 13%, vs 17% last week, partially due to a declining CRV. As Convex is still giving out $CVX incentives, the yields are slightly higher than Yearn. However, this also squeezed independent farmers who do not have sufficient evCRV, as we see the yields of Curve (self-serviced pools with 1.5x boost) declining further. We expect in less than 1 month’s time, Convex’s yield will stabilize and be on par with those from Yearn.
  • Other Stablecoin Platforms: the yields vary from 6% ~ 30%, and averaged 15%, a further decline from 21% last week. Washbi Finance still topped this category. Generally the yield farming business is quiet, meaning that funds will be moving to buying yield or taking more risks like Uniswap liquidity providing.
  • Other (non-USD stablecoin) platforms, aka Exotic Strategies: Exotic strategies are delivering 20% to 50% yields now. Mirror Protocol’s mSLV pair echoed the silver price dip in the global finance market, but the yield from Mirror were still strong.
  • Uniswap/Alpha: Uniswap earnings were moderate last week. Leveraged Alpha Homora (which we mean borrow 1x ETH and short it in Binance), the yield on USDC-ETH pair is now 74%, topping this week’s chart. (Note: there’s an error in our previous calculations, and is amended here. We have double counted the hedging cost. Since the ETH is borrowed from Alpha Homora, you do not have to hedge it by shorting again. To adjust our spreadsheet in previous weeks, simply ignore the column Hedging cost and sum up the four figures to get the APR; the compound weekly to get APY.)
  • Compound Leveraged Yield: at 70% leverage, the total return from this strategy is about 10% plus last week. Note that this strategy can also be used to hedge USDT exposure.
  • Binance Coin-Margined Funding Rate: refunding rates varied across coins with a mix of positive and negative rates. Gas fee prices were mostly below 10 now.

(Serenity Team, 21 June 2021, Twitter: https://twitter.com/SerenityFund)