August 10 2021 BSC & Polygon Stablecoin Defi Rates
Stablecoin defi rates are higher than last week, the U.S. Senate passes new crypto regulations, and the largest cryptocurrency hack ever has occurred.
Disclaimer
This isn’t investment advice, I am not an expert. Any risk analysis is how I understand the risks and may be inaccurate. As always, do your own research before investing in any projects.
Weekly Summary
In the last week stablecoin defi APY’s have seen a nice bump. TVL’s (“Total Value Locked” is the amount of money held in a liquidity pool) have both increased and decreased depending on the pool, notably the Iron Stableswap pool on Polygon saw a huge exodus of funds (about $329m less than last week).
Volatile cryptocurrencies have continued to climb over the last week. Bitcoin is up +13.7% in 7 days, Ethereum +17.4%, BNB +9.4%, and MATIC +5.8%. The current crypto price rally has been ongoing for about 3 weeks.
Politicians and regulators in the United States continue to focus on new taxes and rules for cryptocurrency. The U.S. Senate passed its bipartisan infrastructure bill today (Tuesday) and send it to the U.S. House of Representatives to be debated and voted on there. Although it is an ‘infrastructure bill’, the bill includes cryptocurrency reporting regulations for “brokers”. The term “broker” as is currently written is very broad and may apply to people that have no ability to gather the information required by the bill.
Today, it is reported that the largest cryptocurrency hack ever has occured. The PolyNetwork (which I am honestly unfamiliar with, don’t confuse this with Polygon itself) had approximately $600m worth of cryptocurrency stolen across Ethereum, Binance Smart Chain, and Polygon networks.
Rates
29.17% APY - (Polygon) MAI-USDC Quickswap-LP Staked on Beefy
$9.13m TVL on Beefy ($109m held in the LP itself)
Pool Risk: Medium-High (Maker-like protocol, audited by Bramah Systems)
Farm Risk: Medium (Beefy auto-compounding on top of Mai Masterchef)
Asset Risk: Medium-High (Mai risk)
The TVL (Total Value Locked - the USD value of tokens held in the liquidity pool) of the MAI-USDC LP is down $11m since last week. The APY is down 8% from last week’s 37%. This LP pair has enjoyed a good run, I wouldn’t be too surprised to see the rate continue to decrease and head into the 10-20% range over the next few months.
MAI (also called MiMatic) is a stablecoin like DAI, but is exclusive to Polygon. Created by Mai Finance, MAI allows users to vault their MATIC and borrow MAI against it. A somewhat unique feature about Mai Finance is that they have a 0% interest rate when you borrow against your holdings and create MAI.
I have noticed that the price of MAI seems to bounce around a bit, so my own internally calculated APY has not been as high as Beefy’s stated rate, mostly because I got my MAI at around $1.01 and the price has stabilized closer to $1.00. As of this post, I can trade 1,000 MAI for 994.02 USDC. This exchange rate is to the point where the coin needs some babysitting. I will watch for it dipping below 990 USDC before I become overly concerned. If the price continues to slide and the liquidity in the pool continues to shrink, I would take that as a sign to pull out right away.
24.05% APY - (BSC) BUSD-USDT BiSwap-LP Staked on BiSwap
$43.3m TVL on BiSwap
Pool Risk: Medium-Low (Modified UniswapV2 LP - audited by Certik)
Farm Risk: High (Modified Masterchef - audited by Certik, migrator code with short timelock)
Asset Risk: Low (Mostly USDT risk)
This LP’s TVL is almost double last week’s $23.3m, and the APY is up 7% from last week’s 17%. BiSwap has this LP marked as “Boosted” right now, I am not sure exactly what that means other than the rewards given to this pool are maybe a bit higher than usual. In a previous post I outlined some issues with the timelock contract at BiSwap that gives me some concern. I really wish BiSwap would put a normal timelock on their masterchef so that I could throw some money in and not have to worry about them running off with it. For now I will only keep a very small amount of money parked at BiSwap. If you are looking at BiSwap, also take a look at their USDC-USDT pair which is also “Boosted” at the moment and paying 27%.
23.98% APY - (BSC) Dolly-BUSD-USDT Dopple-LP Staked on Beefy
$4.1m TVL on Beefy ($5.97m held in the LP itself)
Pool Risk: Medium-Low (Curve StableSwap copycat - audited by Certik)
Farm Risk: Medium (Beefy autocompounding on top of Dopple Masterchef)
Asset Risk: Medium (Dolly risk, partially mitigated by multi-asset pool)
Over the last week, total investment in this LP has decreased by about $1.3m, which helped boost the APY up by about has gone up by about 4.45% over last week’s 19.5%. Currently this LP is one of the top place to park your stablecoins on BSC (its main competition is the other 4Belt pool on Beefy at 24.5% APY). I plan on continuing to hold on to this LP until there is a reason not to.
23.5% APY **New to My List** - (MATIC) UST-USDT DFyn-LP Staked on Beefy
$2.3m TVL on Beefy ($58.4m held in the LP itself)
Pool Risk: High (New Cross Chain Liquidity Swapping Protocol)
Farm Risk: Medium (Beefy auto-compounding on top of DinoSwap masterchef)
Asset Risk: Medium-High (UST algorithmic risk, USDT regulatory risk)
This LP is new to my list. At the surface this LP seems like a relatively straight forward 2 coin liquidity pool, but after reading into it more, I am not quite sure what is happening here. DFyn is a newer defi project that advertises itself as a “Multi-Chain DEX”. The only audit I can see is one from a place called QuillAudits, which is an auditor that I haven’t seen much from. At the moment, I just don’t know enough about DFyn to put any serious amount of money into this pool. I am interested in keeping an eye on it, and hopefully figuring it out a bit more.
22.9% APY - (BSC) UST-BUSD-USDT-DAI-USDC AcryptoS-LP Staked on AcryptoS
$2.52m TVL in AcryptoS farm
Pool Risk: Very Low (Curve StableSwap clone)
Farm Risk: Medium-Low (Masterchef clone with rewards boost code added)
Asset Risk: Medium (UST algorithmic risk, partially mitigated by multi-asset pool)
The AcryptoS UST is about the same as last week, with only $50k withdrawn from the TVL. The APY is up about 3.2% from last week’s 22.9%. Although the APY has been increasing, I would really love if this LP got back to its glory days of 40%+ APY.
Risks here are mostly UST risk, but the pool diversifies with 4 additional coins (although the target is to have UST half of the pool). UST has historically had a very strong peg to the dollar, with a few days that broke the peg down to around $0.94 with a pretty quick recovery after. UST is currently 37.36% of the pool, which means UST is unusually strong at the moment and has a higher value than the average value of BUSD-USDT-DAI-USDC. At the moment I can get around 1,005 USDC for 1,000 UST. If you are part of this pool, watch for times when UST is over 60% of the pool, as that can be a warning of coming trouble.
21.7% APY - (Polygon) FRAX-USDC SushiSwap-LP Staked on Beefy
$177k TVL on Beefy ($8.6m held in the LP itself)
Pool Risk: Low (SushiSwap LP)
Farm Risk: Low (Beefy Autocompounding on top of SushiSwap Masterchef)
Asset Risk: High (FRAX risk)
FRAX is back on the list! In my posts I have occasionally included this LP, depending on how its rate is doing compared to others on the list. This week is one of those weeks where it is doing pretty well.
FRAX is the algorithmic stablecoin that IRON’s code was copied from. IRON did change a few details, but was largely identical to its predicesor FRAX, which is a project that lives on Ethereum and has its tokens “bridged” over to Polygon.Will FRAX meltdown like IRON did? Probably not. It doesn’t have the same attention and crazy rewards that IRON did, so it is hard to imagine the same meltdown that IRON had. FRAX also has the added benefit of being around much longer than IRON ever was. In the world of stablecoins, establishing a peg over a long period of time is important. I still consider this pool to be higher risk. Right now 1,000 FRAX will get me around 994 USDC.
17.69% APY - (Polygon) USDC-DAI-MAI-USDT Staked on Balancer
$36.7m TVL on Balancer
Pool Risk: Low (Balancer)
Farm Risk: Low (Balancer’s farm)
Asset Risk: Medium-Low (Mostly MAI and USDT risk)
This LP is relatively unchanged from last week. TVL is up $1.5m and APY is up by 0.04%. This pool was added to my list last week. For those unfamiliar with Balancer, it has been around for a while on Ethereum and has a great reputation. Recently Balancer expanded onto Polygon, and so I am including their top stablecoin pool. Balancer is a platform that is meant to create LP’s that act as a sort of index fund with assets that aren’t similar held by the LP. For example the 2nd top LP on Balancer Polygon is MATIC-USDC-ETH-BAL. The LP code holds a certain percent composition of each asset, and allows for heterogenious asset pools. But, that doesn’t mean they can’t have a good old fashioned stablecoin pool as well!
My only hesitation for this pool is MAI, well I guess I always have some type of issue with USDT as well. See the MAI-USDC LP post above for my current thoughts on MAI.
16.72% APY - (Polygon) DAI-USDC-USDT CURVE-LP Staked on autofarm
$13.8m TVL on autofarm ($345m held in the Curve LP itself)
Pool Risk: Very Low (Curve StableSwap)
Farm Risk: Medium-Low (Autocompounding on top of Curve’s Gauge farm)
Asset Risk: Low (Aave wrapped USDT, USDC, DAI)
Just a reminder that for this LP I have transferred my holdings from Beefy to autofarm. Autofarm has consistently been paying a better rate than Beefy. Both autofarm and Beefy have no deposit or withdrawal fees for this LP, so it is relatively harmless to switch from one to the other.
Seeing this LP continue to hang out in the 15%+ APY range is music to my ears. I still consider this one of the safest LP’s that I hold. Curve has one of the best reputations around and tons of audits. If something were to go wrong I would expect it to be at the Aave or autofarm level, and those are both levels that I consider pretty safe and established as well.
This is the first week since June 21st that the TVL on this LP has increased. The amoutn invested in the LP increased by about $8.1m since last week. The APY of the LP is also up a little over 1% since last week.
Other Posts:
Last Week’s Post
Looking At Iron Finance’s Failures (6/19/2021)
The Return of Iron Finance (7/12/2021)