August 16 2021 BSC, Polygon, & Terra Stablecoin Defi Rates
Rates up to 51%, get them while you still can!
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 remained in elevated positions. The average APY of all the rates that I track is 23.73%, up from last week’s 20.97%. I think a lot of the reason that average APY is up is Dopple’s migration to a new masterchef (see below). Total TVL (“Total Value Locked” is the amount of money held in a liquidity pool) across all of the pools that I have been tracking is $833m up $26.2m compared to last week.
Volatile cryptocurrencies have done well in the last 7 days. Bitcoin is up +4.9%, Ethereum +4.9%, BNB +22%, MATIC +33%, CAKE +23%, CRV +20%. The current crypto price rally has been ongoing for 30+ days.
Since last week there have not been any hacks of defi platforms that I am familiar with. A hack on Punk Protocol (never hear of it) got $8.95m, but $5m of it was able to be captured and saved by “whitehat” hackers (the good guys). It was also very interesting to see that the hacker of last week’s biggest cryptocurrency hack ever, returned all of the funds to Poly Network.
Rates
51.98% APY - (BSC) Dolly-BUSD-USDT Dopple-LP Staked on Beefy
$2.06m TVL on Beefy ($3.3m 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)
The APY on all of the pairs at Dopple Finance have exploded. Dopple switched to a new masterchef contract (the smart contract that controls payouts and holds LP tokens for the farm) and it requires users to manually withdraw funds from the old contract and “migrate” them to the new contract. A lot of funds are still in the old masterchef contract, which means that you can enjoy some juicy rewards before all funds migrate. Over the last week, total investment in this LP has decreased by about $2.68m, which helped further boost the APY. Currently this LP is the top place to park your stablecoins on BSC. If you are alright with not using an autocompounder, consider using the UST 3pool or BUSD-DAI-USDC-USDT 4pool and deposit it directly into Dopple’s farm. Those two pools are not yet migrated on Beefy, leaving more rewards for early depositors. My back of the envelope calculations are showing around 55% APY for the UST 3 pool and 51% for the 4pool. The rates at Dopple say something much lower, but I am pretty sure those aren’t calculated correctly.
32.19% APY - (Polygon) MAI-USDC Quickswap-LP Staked on Beefy
$10.77m TVL on Beefy ($100m 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 around $9m since last week. The APY has come up about 3% from last week’s 29.17%. This LP pair has enjoyed a good run, and I was sort of expecting the APY to continue to decrease (as it did last week), but it looks like MAI was able to keep that rate in the 30’s.
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 996 USDC (compared to 994 last week). This exchange rate seems pretty healthy. I will watch for it dipping below 990 USDC before I become overly concerned. If the price slides and the liquidity in the pool continues to shrink, I will take that as a sign to pull out right away.
23.28% APY - (BSC) BUSD-USDT BiSwap-LP Staked on BiSwap
$49m 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 up $5.9m this week and $23m was added last week. The APY has held steady (down less than 1% from last week’s 24.05%). BiSwap still 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.
20.62% APY - (MATIC) UST-USDT DFyn-LP Staked on Beefy
$2.25m TVL on Beefy ($38.8m 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 was new to my list last week. The APY is down about almost 3% from last week’s 23.5% APY. TVL is also down over the last week, almost $20m has been taken out of the LP. 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.
20.5% APY - (BSC) UST-BUSD-USDT-DAI-USDC AcryptoS-LP Staked on AcryptoS
$2.56m 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 holdings are about the same as last week, with only $40k deposited into the pool. The APY is down about 2.4% from last week’s 22.9%. I don’t see any real reason I would park money here instead of Dopple’s UST 3pool, which is paying a much higher rate with a pretty similar risk profile.
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 34.5% of the pool (last week was 37.36%), 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 1,007 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.
19.48% APY **New to My List** - (Terra) UST Anchor Deposit
$497m held in Anchor (deposits minus borrowed funds)
Pool Risk: Very Low (Curve StableSwap clone)
Asset Risk: Medium (UST algorithmic risk, partially mitigated by multi-asset pool)
Ever since I started doing this newsletter, I have had many people ask me to start tracking Anchor’s rates paid on UST deposits. Anchor runs on top of the Terra blockchain and allows you to deposit UST as well as borrow UST against ETH holdings.
I was surprised to see that Nexus Mutual, a platform that provides insurance for defi investments, gives the same rate (2.6% annual) for insuring Anchor deposits as they do for investments with Curve. In my mind that means that Anchor is seen as a pretty safe spot to park UST.
I think the riskier part of the investment on Anchor is probably still the UST peg risk. But even that is insurable at Unslashed for 2.64% per year. So even if I were to get full Anchor and UST coverage, I would still be getting a pretty close to risk-free 14.2% APY. One hesitation I have is buying into a single asset pool like this, while UST is over valued. Since UST is an algorithmic stablecoin, its algorithm will continue to work on getting the price of UST back to $1.00. Currently UST is closer to $1.011, so I can reasonably assume that I will likely take another 1.1% haircut if I buy in on UST now.
18.54% APY - (Polygon) DAI-USDC-USDT CURVE-LP Staked on autofarm
$16m TVL on autofarm ($387m 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, I even recently saw a tweet from autofarm advertising this very pool and saying they had the best APY for it. 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.
I really am happy when this LP is not the last on the list, it means some good rates are being paid that don’t quite match up with the risk profile (in a good way). 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.
This last week we have seen another boost in TVL, with around $41.6m more being added to the liquidity pool. The APY of the LP is also up a little over 1.8% since last week. I didn’t do the research to support this, but I think a lot of the rise in APY may be from the autofarm side of things, since AUTO (a token liquidity providers get as a bonus for depositing into their pools) has increased in value.
17.69% APY - (Polygon) USDC-DAI-MAI-USDT Staked on Balancer
$47.7m TVL on Balancer
Pool Risk: Low (Balancer)
Farm Risk: Low (Balancer’s farm)
Asset Risk: Medium-Low (Mostly MAI and USDT risk)
This Balancer LP has seen an increase of $11m of funds since last week, which brought the APY down by 1%. This pool is still pretty new to my own personal portfolio, but even with a rate that is a bit lower than last week, I like the lower risk profile and also just being familiar with the Balancer platform. 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.
Other Posts:
Last Week’s Post
Looking At Iron Finance’s Failures (6/19/2021)
The Return of Iron Finance (7/12/2021)