📈 State of DeFi Yields

I've been using http://vaults.fyi to check base rates on stables. It's clear there's more leverage at play and yields are rising across the board.

Simple strategies can net 20%+ APY in the current market.

Yearn is definitely leading the field w/ their V3 and Juiced vaults ✌️ 

More 👇

Head of Community @nexusmutual | Safe Governance delegate | Researching risk in DeFi

😀 Leading Accessible Yields

Aave V3 L2 markets present some high yield pportunities on $USDC, $DAI & $sUSD

Ethena has also been much talked about this week, but I don't think that option is accessible to most users.
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DeFiLlama's strategy page highlights opportunities similar to Ethena: https://defillama.com/yields/strategyLongShort?token=ETH

One of the simplest delta-neutral perp strats is the USDpy vault available on Toros, which is built on dHedge: https://toros.finance/vault/0xb9243c495117343981ec9f8aa2abffee54396fc0
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eigenlayer

❤️ ETH Yields

Everyone is looking to the /eigenlayer ecosystem for yield right now. It's been incredible to see other liquid staking protocols build on top of them and leverage EigenLayer's points + their own points programs.

The EtherFi team is responsible for popularizing this "points-on-points" strategy. I have to give them props. They kicked off a massive growth spurt at Pendle, too
👀 People earning ~25% fixed APY on their $eETH on Pendle

This trend has helped diversify staked ETH in liquid staking protocols, as a side effect.

Puffer Finance, Renzo, KelpDAO, etc. are also providing their own points programs on top of EigenLayer, as well.

Speculation on points is driving these yields. Nonetheless, the price discovery process has been fascinating!

📖 Conclusion for the Week

The market is moving toward wider bull sentiment; yields are rising accordingly. We'll still need to see yields rise higher to attract more institutional capital to DeFi like we saw in the last bull run. There's no arguing that on-chain risks are higher than traditional investments.

If the S&P 500 can get me 25% in a year, why move on chain to farm yield if the risk is higher? As TradFi rates diverge from DeFi rates and there's more opportunity to outperform on chain, we'll see more capital flow into DeFi.

The BTC ETF definitely drove more interest in crypto, and the potential ETH ETF will likely have the same impact. Unsure how long it will take people to move more capital into DeFi and on L2s at this point.

Everyone in DeFi is bullish on ETH and the space as a whole. We just need to convince everyone else 💪

We can hedge the risks and use things like @nexusmutual or OpenCover for protection, but the covered yield still needs to be attractive.

I'll keep looking for more yield aggregators like @vaultsfyi to track the base rates on chain. In the meantime, the alpha is always on governance forums 🔥

Until next week 😎