The World Beyond Ethereum: A Guide to Multi-Chain Yield Farming Profits
Dear Bankless community:
We live in a multi-chain world.
But then again, we always do.
Coinbase , Gemini, Binance, Kraken– the center side chains only, using Ethernet Square and bit credits and other assets registration and settlement chain.
The new thing is the number of non-Ethereum “DeFi” chains with applications, revenue, and users. I put “DeFi” in quotes for a reason. I very much doubt whether these chains are sufficiently decentralized to guarantee this title. Once again, open finance may be a better term.
Is their anti-corruption ability enough to become the basic layer of the world currency system?
No, not yet… from my point of view not yet.
I also don’t think the world financial system will be based on Binance or Robinhood or Flow. But this does not mean that they have no role in cryptocurrency and DeFi. Fintech and cryptocurrency will merge together in 1,000 new ways in this decade.
So, what role do these non-Ethereum chains play now?
They provide yield.
Savvy Bankless readers can collect this rate of return and convert it into any asset they like. USD, ETH, BTC … or other things.
The following is what I said in a recent public topic.
Bankless will always cover the unbanked ecosystem, whether it is Bitcoin, Ethereum, or other things. But I am personally not interested in “DeFi” because it is easily controlled by the new banking group at the bottom. Discovering the difference is part of our ongoing journey to no bank, which is not easy.
We are not supported by venture capital companies. We are supported by values. Therefore, our goal is to maintain an open mind in methods, not to be blinded by packaging, but also to remain firm in values. Bankless is a paper-driven media company.
There is a version of cryptocurrency that is good for the world, and a version of cryptocurrency makes everything worse. We are fighting for the former.
Not a Bitcoin extremeist, or an Ethereum extremeist, but a Bankless extremeist.
Remember protocol sink thesis. Remember why we are here.
And… have fun and enjoy the benefits!
Author: Ben Giove, Bankless contributor and President of Chapman Crypto
Multi-currency income farming guide
We live in a multi-chain world.
As Ethereum’s high gas fees continue to exist, users who are hungry for revenue have to find other places in the endless pursuit of returns.
Fortunately, there are several networks that have helped to absorb the greedy desire of the natives of cryptocurrency to use these systems, and provide them with cheaper and faster transactions—albeit with lower security guarantees. Most importantly, these applications, and sometimes even the network itself (or both), are providing substantial liquidity mining rewards for profitable farmers willing to take risks and deploying capital to these newer systems.
Below we will talk about some of the opportunities available to farmers in the three ecosystems that currently experience most of the growth. Avalanche, Solana, and Terra.
These are certainly not the only opportunities, or even the most profitable ones. However, given that many of the agreements in these systems are very early and have not been tested in battle, the listed agreements are intended to strike a healthy balance between risk and reward.
As always, please make a responsible analysis of the following content.
Avalanche’s revenue opportunities
In recent weeks, the Avalanche ecosystem has experienced tremendous growth .
In less than three weeks, the value lock of the network exploded from $339 million to $2.2 billion, which was catalyzed by the announcement of Avalanche Rush, a $180 million liquid mining plan. The plan will soon provide solid rewards for major Ethereum DeFi protocols such as Aave and Curve.
With the soaring prices of AVAX and Avalanche DeFi tokens, there are many high-yield opportunities for savvy farmers who are willing to cross the chain, and take advantage of fast confirmation and greatly reduced gas fees, which are only between 0.50-2.00 US dollars.
Avalanche opportunity 1: BenQi
Estimated return on investment: 2-12% APY?
Given that Aave has not yet been launched on Avalanche, BenQi is currently the king of the online currency market. The agreement has experienced incredible growth, attracting more than $1.21 billion in TVL within two weeks of its launch. This emerging money market agreement has always been a key driving force for catalyzing the injection of capital into the avalanche ecosystem. BenQi currently has a US$3 million liquidity mining program. Depositors and borrowers earn QI and AVAX rewards to incentivize participation in the system.
The protocol currently supports deposits and loans of AVAX, wETH, wBTC, LINK, DAI, USDC and USDT. It must be realized that the rate of return for depositors is between 2.20-11.76%, depending on the asset, and the rate of return is composed of a combination of interest and token rewards. On the other side of the market, borrowers can get a net APY (incentive-interest) of 0.24% to 6.80%. This means that the farmer can get paid through borrowing and implement a variety of different strategies.
For example, a wBTC holder can adopt a strategy to deposit their tokens to earn 3.78% APY, and then they can use these tokens as collateral to borrow money and earn 5.30% APY of outstanding debt. This allows farmers to minimize liquidation risks while earning asset returns, because the value of their debt will move in sync with the value of their collateral. (The more depraved among us can repeat this process recursively). )
Avalanche Opportunity 2: Trader Joe
Estimated return on investment: 20-85% APY??
Trader Joe is the largest decentralized exchange on Avalanche, holding more than US$455 million in liquidity, and has promoted a daily trading volume of US$200 million to US$200 million since August 23, which clearly exceeds these two indicators. Forerunner Pangolin.
The agreement is currently incentivizing 23 different token pairs, and liquidity providers can use their LP tokens to earn JOE rewards, the native governance token of DEX, and a 0.25% transaction fee for each exchange. These pairs are very different in terms of asset composition, rate of return, and of course risk, allowing the farmer to express a variety of different views.
For example, a risk-averse farmer who does not want to have price or impermanent loss risks can enter the USDC/DAI and USDT/DAI pools to obtain the current income between 23-24% annual interest rate.
In addition, a farmer who believes that the market will fluctuate in a range and is willing to take some risks can obtain an annual interest rate of 29-86% in the wETH/USDT, wBTC/USDT and AVAX/USDT pools. Finally, the farmer who is willing to bear the maximum price and the risk of impermanent loss can obtain more than three-digit returns in some of the risk pools of the agreement.
Additional revenue opportunities
JOE pledge- 29% annual interest rate-bet on JOE, get 0.05% of each exchange in the form of xJOE tokens.
Solana revenue opportunities
Solana is another ecosystem that has experienced strong growth in the past few months . In SOL prices, the introduction of a new protocol on the network, and the use of small NFT Phantom Wallet frenzy of stimulation, Solana since July, it TVL up nearly six times to $ 3.6 billion.
Although it is still in its early stages, with 500ms confirmation and a fee of less than $0.01, there are several notable opportunities for farmers to make effective use of capital.
Solana Opportunity 1: Raydium
Estimated return on investment: 17-154% APY??
Raydium is the largest AMM on Solana, with more than $1.35 billion in value locked up, and daily transaction volume exceeding $220 million. Raydium is unique because it provides liquidity for Serum, which is a Solana-based Central Limit Order Book (CLOB) DEX . This means that traders can obtain liquidity in any agreement and obtain the lowest slippage for their transactions, and LPs can increase their returns through Serum’s trading volume.
Raydium provides two opportunities for income farmers.
The first is “Raydium Farm” . Liquidity providers of RAY-SRM, RAY-ETH, RAY-SOL, RAY-USDC, and RAY-USDT currency pairs can use their LP tokens to earn RAY rewards, and at the same time There is a 0.22% fee for each exchange.
These yields are currently between 66-117% annual interest rates, depending on the pairing. RAY-USDC and RAY-USDT are at the high end of this spectrum, which may be due to the impermanent losses that the farmer may have in these pools in the trending market. Risk pricing.
Raydium’s farmer can also enter the “convergence pool”, which is an incentive trading pair for other projects in the Solana ecosystem. There are currently 13 fusion pools, among which well-known agreements such as Mango Markets, Mercurial Finance and Cope use their local governance tokens to incentivize MNGO-USDC, MER-USDC and COPE-USDC pairs. The current rate of return of these fund pools is between 17-154%, depending on the token, but of course it is also accompanied by an increase in the risk of opaque loss.
Additional revenue opportunities
RAY pledges -20% annual interest rate-take the RAY method and earn 0.03% of each transaction on the platform in the form of additional RAY tokens.
Solana Opportunity 2: Saber
Estimated return on investment: 28-34% APY?
Saber is a decentralized exchange that optimizes transactions between similar assets and promotes cross-chain swaps by routing liquidity on the token bridge. The agreement has attracted more than $897 million in liquidity and, like its EVM-based competitor, Curve, provides a way for LPs to earn profits while minimizing the risk of impermanent losses .
Saber is currently using SBR rewards to incentivize 18 different currency pairs. In addition to the 0.04% swap fee, depositors can also trade in the pool. Although everyone’s specific composition is different, they can basically be classified into three different groups: stablecoins, bitcoins, and non-bitcoin assets.
The highest returns in each category are MAI-USDC, pBTC-renBTC, and wLUNA-renLUNA, which bring 34%, 28%, and 29% of returns to liquidity providers, respectively.
An important factor to pay attention to when using Saber is that some fund pools have withdrawal fees. For example, the USDC-USDT fund pool charges a 0.5% withdrawal fee to liquidity providers who wish to withdraw, which means that the farmer is operating at a loss before recovering this fee!
Terra’s revenue opportunities
Terra is another smart contract ecosystem that has experienced incredible growth. Driven by the increase in the price of LUNA, the adoption of the network-native stablecoin UST, and the strong product market matching of its applications, Terra is now the location of the third largest DeFi ecosystem for cryptocurrencies.
Since the locked value exceeds $7.53 billion, the chain is only ranked behind the Ethereum and Binance smart chains. Although there are fewer prominent applications on the Internet than Avalanche, the farmer still has several star opportunities.
Terra opportunity 1: Anchor
Estimated return on investment: 12-38% APY??
Anchor is the leading token market on Terra , with a locked value of more than $2.72 billion. The agreement uses a novel design to pay a fixed interest to UST depositors and allows the use of mortgage derivatives as collateral to borrow the above-mentioned UST.
Through a process called binding done through the protocol interface, borrowers can use their LUNA to mint the same amount of bLUNA, which can then be used as collateral in Anchor (it is worth noting that unbinding LUNA requires waiting 21 days!). In addition, the agreement also supports bETH, the Terra packaged version of Lido’s collateralized derivative stETH, as the collateral in the agreement.
Despite the risk of liquidation, the borrower can obtain a net annual interest rate of 12.9%, which comes from the 38.3% return rate awarded by ANC and the 25.4% annual interest rate of the borrowing. Currently, the rate of return paid to UST depositors is 19.4% APY, which is slightly lower than the agreement’s 20% target.
It is worth emphasizing that Anchor can provide several different functions for high-yield farmers .
First of all, risk-averse farmers can lock in a fixed rate of return for their stablecoin, which is much higher than other currency markets, such as Compound and Aave. Another strategy that a farmer can take is to use bLUNA or bETH as collateral, borrow UST, and then re-deposit UST into the agreement. This will give the farmer a 12.9% return on their collateral and a 19.4% fixed return on their outstanding borrowers. However, it should be noted that this strategy itself is risky because it introduces the threat of liquidation.
Terra Opportunity 2: Mirror
Estimated return on investment: 27-99% APY??
Mirror is another leading application on Terra , providing a profitable farming opportunity. An agreement to mint and trade synthetic assets, which currently has a value of more than $1.46 billion, users can deposit UST as collateral to generate one of 28 different mAassets supported by Mirror.
These assets include stock market indexes (such as mSPY), stocks (such as mAMZN), commodities (such as mGLD), and cryptocurrency assets mBTC and mETH. The liquidity of the transaction is carried out through Terraswap, which is the largest AMM on the network .
Participants of the mirror have two types of farming opportunities.
The first is long-term farming , where users can provide liquidity for the mAsset pair and receive transaction fees and additional MIR rewards. Yields range from 27% of synthetic cryptocurrency assets (such as mETH) to up to 48% of the annual interest rate of stocks (such as mHOOD, a substitute for Robinhood stock).
The second is short-term farming . The farmer can use UST, aUST (UST deposited in the Anchor) LUNA or other composites as collateral to mint another mAsset in the form of sLP tokens. This sLP token is automatically mortgaged by the agreement to win MIR rewards for its holders. At present, the yield of short-term farming ranges from 0.3% annual interest rate of mAMZN to 99.6% annual interest rate, most of which are between 30-40%.
Obviously, DeFi has moved towards multi-chain . After using tokenized incentives to infuse these new ecosystems in the past few months, billions of dollars are now locked up to power these emerging cryptocurrency economies.
But for all these ecosystems, it is still too early. For those who wish to take risks and explore these multi-chain opportunities, there will be rewards for sure. Even better, you can experience DeFi without the crazy Gas fees that Ethereum currently exists. Anyone can perform exchanges, deposits, loans and all other transactions at a price of a few cents or a few dollars, and the transaction confirmation is almost instantaneous.
This means that the second layer of the Ethereum ecosystem is coming . With Arbitrum’s recent mainnet launch and Optimism following closely behind, users can get the same fast and cheap transactions-all of which are secured by Ethereum.
We should expect that these second-tier agreements will run exactly the same rules of the game as the first-tier competitors succeeded . Therefore, we can imagine that competition will become increasingly fierce and the rate of return may become crazy.
But guess who will win?
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/the-world-beyond-ethereum-a-guide-to-multi-chain-yield-farming-profits/
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