Poor Market, Bear Market Stable Coin Money Sorting: Where to Get High Yield
Poor Market, Bear Market Stable Coin Money Sorting: Where to Get High Yield
After analyzing five major DeFi protocols and three exchanges' stablecoin financial products, we found the easiest and most effective way to hedge crypto assets.
As the raging crypto frenzy comes to an end, those who have ventured into this new world and made a fortune are beginning to face a new question: How can we avoid the downside risks of the market and achieve sustainable profits without hedging with complex derivatives?
Perhaps you can find many answers from the traditional world, where Bankless co-founder Lucas Campbell has analyzed the utility of asset classes such as cash, bonds, stocks, gold and real estate to balance crypto assets. However, the crypto industry itself has provided a better solution.Stable Coin Money Management.
We combed through the top DeFi protocols in the market in terms of TVL (total locked-in value) (Curve, ,Aave, ,Compound, ,Anchor Protocol . Yearn) and some centralized exchanges (Cryptocurrency, ,OKEX . MEXC) of stable currency financial products, yieldingThe following conclusions: The
- Stablecoin finance offers higher annualized yields than traditional financial finance, with the highest yield we observed being Yearn's DAI vault on FantomYield of 24.96%;.
- A higher yield cap for DeFi Money than for centralized exchange-based financial products, but a higher threshold for DeFi Money with Gas wear and tear.
- There is a trend towards convergence between centralized exchanges and DeFi's financial products, such as OKX acting as a proxy to help users access the Anchor Protocol.
- High Yield DeFi Money is usually distributed inNew public chain or Layer 2 onthat they are generally characterized by a much lower funding scale.
- Except for a small number of fixed-term, fixed-rate financial products offered by exchanges, stable currency finance is usuallyCall and Variable Rates.
Stable Coins: A Safe Haven in the Crypto Wave
Stablecoins are crypto assets that are anchored to fiat currencies and have relatively stable values, with mainstream stablecoins anchored to the US dollar. In the crypto industry, which is known for its volatility and risk, stablecoins are important hedging assets. Investors can lock in the value of assets and avoid losses from market downside by holding stablecoins.
In the emerging DeFi space, stablecoins are also an important tool for value transfer and storage. With the expansion of DeFi and the overall crypto market, stablecoins have also experienced explosive growth, and according to CoinMarketCap data (note: data not specified in the article is taken from the respective project websites), the total market cap of stablecoins has now reached $168 billion.
Not only is the overall market capitalization expanding, but the variety of stablecoins is also growing. Stable coins with higher market capitalization and better liquidity offer better stability and security. In this article, we aim to find lower-risk, more stable ways to manage money, so we limit our observations to the top five stablecoins by market capitalization, which are.USDT, USDC, BUSD, UST and DAI.
- USDT: Issued by Tether, the largest stablecoin with a market cap of $78.3 billion
- USDC: Issued by Circle Corporation, market cap $46 billion
- BUSD: Issued by Cryptocurrency with a market cap of $14.3 billion
- UST: Issued by Terra, market cap $10.8 billion
- DAI: Issued by DeFi protocol MakerDAO, market cap $9.7 billion
There are a variety of stablecoin finance products in all corners of the crypto industry. In this article, we divide the mainstream stablecoin finance products into two camps, DeFi and CeFi, and compare and analyze the current situation of stablecoin finance from the perspective of finance service providers.
When comparing financial products, we use the yield as the main parameter. ButYield is not everything, especially in DeFi finance where you also have to refer to the amount of money in the asset pool and the fee friction of the chain operation.
DeFi Stable Coin Banking
The DeFi wave, which started two years ago, has been a major booster of the current crypto industry explosion, and after two years of development, the DeFi ecosystem is not what it used to be, with a TVL (total locked-in value) of $228 billion. deFi products are also exploring new areas, and trading, lending, and other derivative businesses around stablecoins are flourishing. deFi's new protocols are not as good as the old established protocols like Aave and Curve in terms of funding scale and security. DeFi's new protocols still fall short of established protocols such as Aave and Curve in terms of funding scale and security. Similarly, we selected the marketStable operation and high lock-in valueprotocol as the object of observation.
Curve
Curve was one of the first AMMs (Automated Market Makers), initially focused on providing inter-stable currency exchanges (v2 expanded to include non-stable currency trading) and providing large scale, low slippage trading of stable coins through innovative algorithms. curve's total lockup has reached $23 billion.
Curve currently supports 8 chains, including: Ether, Arbitrum, Avalanche, Fantom, Harmony, Optimism, Polygon and xDai.
Curve's primary stablecoin pool on Ether is 3poolThe maximum return is 2.44% (including 0.28% for the transaction fee, and 2.16% for the CRV token incentive after amplifying 2.5 times through the Boost mechanism, note: the Boost mechanism requires a certain amount of CRV tokens to be held in order to get the revenue boost, if (Without CRV, you can only get the interval minimum gain, both 0.86%).
Curve also offers liquidity pools such as UST/3Crv (LP tokens for 3pool, providing liquidity for 3ppool pools to obtain 3Crv). Although 3Crv is also obtained by USDT, USDC, DAI, there are derivative mechanisms and leverage mechanisms, which are not specifically introduced in this article, and LP token related products are also not discussed later.
It's worth noting that Curve came in later in the DeFi AMM liquidity race.Convex Finance has been instrumental.
Convex, a one-stop platform for CRV pledging and liquidity mining that currently supports only Ether, has contributed more than $17 billion in TVL to Curve. Convex is winning the endgame battle in the CRV war by streamlining the Curve usage process, increasing returns for liquidity providers and CRV pledgers, and leveraging CVX token incentives.Pledging Curve's LP tokens to the Convex platform provides a higher combined return.
Curve's TVL is primarily focused on Ether.Stable coin pools on new public chains and Layer 2 have lower TVLs, but relatively higher yields, some of the high yield pool incentive tokens are more volatile and have a greater impact on the overall yield.
- 2pool on Arbitrum supports USDC, USDT with an annualized yield of 8.58%.
- USD Coin on Avalanche supports USDC.e, USDC, with an annualized return of 5.43%.
- Fantom 2pool pool on Fantom supports DAI, USDC, with an annualized yield of up to 5.18%
- The 3pool pool on Harmony supports DAI, USDC, USDT with an annualized yield of 2.64
- 3pool pool on Optimism supports DAI, USDC, USDT with an annualized yield of 0.7%
- 3pool pool on xDai supports WXDAI, USDC, USDT with an annualized yield of 10% (CRV and GNO tokens incentivized)
- There is no corresponding stablecoin pool on Polygon
Aave
Aave is one of the DeFi lending duos with a current TVL of $24 billion. aave offers five markets, V1, V2, AMM, Polygon and Avalanche, with TVLs primarily focused on Aave V2, Polygon and Avalanche.The highest annualized rate of return is the USDT lending pool on the AMM marketplace with a rate of 7.66%.
Aave V2
The V2 marketplace TVL is $13.7 billion and supports deposit lending operations for DAI, USDC and USDT.
The chart above shows that the annualized deposit rates for DAI, USDC and USDT are 3.27%, 3.20% and 3.03% respectively, with the highest yield being for DAI.
Aave (Polygon)
Aave has a TVL of $5.68 billion on Polygon and supports depository lending operations for DAI, USDC and USDT.
The chart above shows that the combined annualized deposit rates for DAI, USDC and USDT are 4.39%, 4.14% and 7.47% respectively, with the highest yield being for USDT.
Aave (Avalanche)
Aave has a TVL of $490 million on Avalanche, supporting deposit lending operations for DAI, USDC and USDT.
The combined annualized deposit rates for DAI, USDC and USDT are 5.06%, 4.53% and 3.47%, respectively, with the highest yields for DAI.
Observation Aave the remaining two markets: The highest return in the AMM market is USDT with an annualized rate of 7.66%; the highest return in the V1 market is DAI with an annualized rate of 5.15%.
The highest APR for stablecoins on the Aave protocol is 7.66%, a USDT lending pool on the AMM marketplace. In addition to the APR, users need to be concerned about the size of the lending pool funds. The yield of a smaller pool is vulnerable to new liquidity injections. For example, the second highest yielding lending pool in the Aave protocol for stablecoins is the USDT pool on Polygon with $238 million in funding, while the highest yielding AMM marketplace USDT lending pool has only $890,000 in funding.
Compound
Compound is the other of the DeFi lending duo, with a current TVL of $13.2 billion. compound is deployed only on the ethereum network and supports lending operations for DAI, USDC and USDT.
It is easy to see that the annualized deposit yields for DAI, USDC and USDT are 2.84%, 2.97% and 2.52% respectively.The highest yield was USDC's 2.97%.
Yearn
Yearn is a DeFi revenue aggregator with a current TVL of $4.23 billion (DeFi Llama data). yearn maximizes revenue by automating the distribution of funds deposited by users across other protocols. yearn currently supports both ethereum and fantom chains and offers two revenue products, Vaults and Iron Bank, of which Vaults is a revenue aggregation product and Iron Bank is a collateralized lending product.The highest annualized yield is DAI Vaults on Fantom with a rate of 24.96%.
Below is a specific look at the yield of each product separately.
Ether-Vaults: USDT has the highest yield at 7.68%, followed by USDC with a yield of 5.76%.
Ether-Iron Bank: USDT has the highest yield at 0.45%.
Fantom-Vaults: DAI had the highest yield at 24.96%, followed by USDT at 16.45%.
Fantom-Iron Bank: USDC had the highest yield of 8.26%, followed by DAI with a yield of 3.14%.
Comparing the data, Vaults has a yield advantage over Iron Bank, while the Fantom chain, which has less capital locked up, also has a higher yield compared to Ether. The current best stablecoin yield provided by Yearn is the DAI of Vaults on Fantom, which is 24.96%.
Anchor Protocol
Anchor Protocol is Terra Eco's fixed-rate protocol, which Terraform Labs is personally responsible for, providing the eco with a low-risk fixed-rate income vehicle with a TVL of $11.3 billion as of today. anchor has publicly committed to offering a savings product with an annualized yield of 20% and currentlyUST-enabled demand deposits with a current annualized rate of 19.39%The interest rate has remained around 20% for a long time.
CeFi Stable Coin Money Management
Although DeFi is growing rapidly, it is still a long way from being unified, and CeFi is still an indispensable area for crypto finance. As far as stablecoin finance is concerned, service providers in the CeFi space are mainly concentrated in exchanges, which have a large user base and abundant capital reserves, creating unique conditions for their finance business.
The exchange's stablecoin wealth management products are closer to traditional bank wealth management, and have been expanded with new products that incorporate the features of the blockchain itself. They mainly include: demand finance, term finance, DeFi mining, liquidity mining, etc. Below are the stable coin wealth management products offered by three exchanges, namely Coin On, OKEX (formerly OKEx) and MEXC.
Cryptocurrency
Cryptocurrencyis one of the largest cryptocurrency exchanges, with a near 24-hour spot trading volume of $12.5 billion, according to Cingecko data. Cryptocurrency provides users with stable coin financial products such as CoinAid, Liquidity Mining and Dual Coin Money. Dual Coin Money can be participated in using USDT, but it is essentially an option and a high-risk investment product, which is not specifically discussed in this article.
Coinabank
Cryptocurrency offers both demand and fixed term stable coin finance.
Current interest rates are 7% for BUSD and USDT, 1.2% for USDC and 2.2% for DAI.
Note: The annualized interest rate for BUSD and USDT is a graded rate up to 7%, which decreases when the principal amount exceeds a certain amount.
Term Banking supports fixed rate banking with a fixed deposit term and currently only offers USDT with a 30-day term and an annualized interest rate of 6%.
Liquidity Mining
Liquidity Mining is a product modeled after DeFi Automator, where users can earn revenue by injecting liquidity into a pool of stable coins. The source of revenue is a share of transaction fees and platform incentives.
Coinan offers four stablecoin trading pools, namely BUSD/USDT, BUSD/DAI, USDT/DAI and USDC/USDT, with annualized yields of 2.94%, 3.27%, 3.62% and 2.71% respectively. the highest yield is USDT/DAI at 3.62%.
OKEX
OKEX is a well-established cryptocurrency exchange and has a significant presence in the market, OKX offers a stable coin finance product called Earncoin, which provides users with finance services in the form of demand, term, lending and DeFi mining. Earncoin products support USDT, USDC, DAI and UST.
The highest USDT rates are available for lending finance, which offers 7.3% APR. Lending finance is matching orders in the lending market for a fixed term and interest rate.
USDC currently has the highest interest rate on Compound's DeFi, OKX's unified allocation of user funds to the Compound agreement to earn revenue.
DAI's current highest yield is also Compound's DeFi Money.
UST Money is connected to the Terra Eco Anchor Protocol, which is designed to provide UST depositors with a stable annualized return of around 20%. Through OKX participation, users can earn an annualized return of 19%.
Summary
Let's start with a summary of a familiar topic.CeFi and DeFi Money, how to chooseWhat's the point? Considered from a financial perspective only, the simple conclusion is that the flexibility of DeFi allows for higher yields, but the operational threshold, transaction wear and tear (on-chain fees); the advantage of CeFi is the low threshold and almost no transaction wear and tear.
The next question is which product has the highest yield? Of the products analyzed above, theThe highest DeFi Stablecoin yield is Fantom Machine Gun Pool's DAI with an APR of 24.96%The second is the Fixed Income Agreement Anchor Protocol offering UST deposits at an annualized rate of 19.39%. The highest yield in CeFi is the UST deposit offered by OKEX, with an annualized yield of 19% through the indirect use of Anchor Protocol;.
While yield is a very important reference factor when choosing a financial product, it is important to note thatYields can change dramatically in a short period of timeTherefore, it is also necessary to consider factors that affect the movement of yields, such as the size of the funds, high yields and low funding size of the pool may attract liquidity in a short period of time while diluting yields.
And a final reminderRisksThe main risk of CeFi finance comes from the trust risk of centralized institutions. deFi has more diverse sources of risk, such as smart contract attack risk, illiquidity risk, and Gas fees. Both also share common risk factors, such as yield volatility, and stablecoin de-anchoring. Nevertheless, this article has shown you the most reliable insurance guide for the crypto world.
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