July 26 2021 BSC & Polygon Stablecoin Defi Rates
Stablecoin Rates are Much Higher This Week. Many Different Low Risk Pools That Pay High Rewards!
Disclaimer
This isn’t investment advice, I am not an expert. Any risk analysis is how I understand the risks and may be wildly inaccurate. As always, do your own research before investing in any projects.
Weekly Summary
In the last week stablecoin defi APY’s have shot up by about 1-10% depending on the pool. Most of the pools I track have seen their TVL’s decrease (“Total Value Locked” is the amount of money held in a liquidity pool). Decreasing TVL’s mean that farming yields are distributed to a smaller share of holders, so higher rewards.
Bitcoin is up +18.5% in the last week, Ethereum +18.87%, BNB +0.6%, and MATIC +31%. After last week’s selloff, many of the volatile cryptocurrencies have had steady gains. Today cryptocurrency markets saw big gains likely from a “short squeeze”.
Today, Bloomberg reported that the U.S. Department of Justice is investigating Tether (USDT) executives and whether they may have committed bank fraud years ago by concealing from banks that their transactions were linked to cryptocurrency. Tether remains an ongoing source of concern for me. I would like to try to focus on some pools that do not have any Tether exposure, but that is easier said than done.
In the last week, there weren’t many defi hacks or exploits, only a single attack on THORChain for $5m. I have never followed THORChain and it has never been mentioned in this newsletter.
Rates
32.73% APY - (Polygon) MAI-USDC Quickswap-LP Staked on Beefy
$5.4m TVL on Beefy ($121m held in the LP itself)
Pool Risk: Medium-High (Maker-like protocol, audited by Bramah Systems)
Farm Risk: Medium (Beefy autocompounding on top of Mai Masterchef)
Asset Risk: Medium-High (Mai risk)
This LP has had about $10m withdrawn from it in the last week, which has helped keep the APY up a bit. The APY is up almost an additional 3% from last week’s 29%. MAI (also called MiMatic) is a stablecoin like DAI, but exclusive to Polygon. Created by Mai Finance, MAI allows users to vault their MATIC and borrow MAI against it. 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. I am still happy about my holdings in this LP and plan to continue holding it while the rate is still juicy. If you want some more juice, you can use the “DinoSwap” vault on Beefy for MAI-USDC instead of the Mai vault. This will park the funds in DinoSwap’s farm instead of Mai Finance’s farm. I do not know much about DinoSwap yet so I have kept my funds at Mai.
20.6% APY - (BSC) UST-BUSD-USDT-DAI-USDC AcryptoS-LP Staked on AcryptoS
$2.5m 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)
Wow I love seeing the rate on this pool come up. If you have followed this newsletter, you know I have been bummed out about the drop in APY over time. The pool’s TVL is down $520k from last week’s post, which has contributed to the rise in APY. The APY is up about 7% from last week’s 13.3%. I have previously mentioned that you may want to consider Dopple’s UST 3pool instead of this 5pool, but as of now this is paying out about 1% more APY than Dopple.
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 46.6% of the pool (about the same as last week), which means UST has a higher value than the average value of BUSD-USDT-DAI-USDC. 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.
19.27% APY - (BSC) Dolly-BUSD-USDT Dopple-LP Staked on Beefy
$4.74m TVL on Beefy ($9.25m 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 $100k and the APY has come down by around 1% during that time. Currently this LP is the top place to park your stablecoins on BSC (its main competition is the other 4Belt pool on Beefy (19.7% APY), but I have never considered that a viable investment after it was hacked a few months ago). I plan on continuing to hold on to this LP until there is a reason not to.
18.54% APY - (Polygon) FRAX-USDC SushiSwap-LP Staked on Beefy
$1.37m TVL on Beefy ($9.3m 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)
Last week I didn’t include this LP because it was just too low in APY (11.54%) to spend the energy writing about it. This week this LP has seen a nice boost in APY and a drop in TVL of about $1.2m.
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. I consider this pool to be higher risk, and not quite a high enough rate to make it worth my time to buy into. I will continue tracking it, but would really like to see it have a rate is at least similar to the MAI-USDC rates.
18.29% APY - (Polygon) USDC-USDT-DAI IronSwap-LP Staked on Beefy
$19.12m TVL on Beefy ($748m held in the LP itself)
Pool Risk: High (StableSwap on Solidity, Dopple clone? No audit)
Farm Risk: High (Beefy autocompounding on top of Iron Masterchef, no audit)
Asset Risk: High (Who knows what the Iron team is up to…)
Not surprisingly, this LP has continued to lose its sparkle since I originally posted about it when it was at 608% APY. Almost $269m has been added to the liquidity pool since last week’s post. Iron Finance has hired Certik to audit the stableswap LP code, but for some reason gone with a different auditor for their customized masterchef code. I don’t trust Iron Finance all that much, so will keep any investments in this LP minimal until audits are done (they are still pending). This is a similar product to Curve’s 4 pool and paying only a tiny bit higher APY, so I would much rather go with the lower risk for a similar reward.
18.24% APY - (Polygon) DAI-USDC-USDT CURVE-LP Staked on autofarm
$12.4m TVL on autofarm ($44m 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)
For now I have transferred my holdings of this LP from Beefy to autofarm. Autofarm is paying out around 18% while Beefy is only getting 13% APY. Both autofarm and Beefy have no deposit or withdrawal fees on this LP, so it is relatively harmless to switch from one to the other.
Last week I mentioned that “this LP is the LP that lets me sleep at night”, but with the news I mentioned about Tether (USDT) in the weekly summary above, my sleep will not be quite as solid. Can’t someone please come out with a 3pool or 4pool that excludes USDT?
The rate of the LP has a nice bump this week from last week’s 11.4% to this week’s 18.24%. The amount invested in the LP is down about $24m, which gives me a bigger share of the pie. As money continues to leave this Curve pool, LP holders see increased rates because they will get a larger portion of the payouts and trading fees. MATIC and CRV are both up in value over the last week, which helps boost the APY values since the Curve farm pays out in MATIC and CRV. If you have this LP on Beefy, consider moving over to autofarm.
13.63% APY - (BSC) BUSD-USDT BiSwap-LP Staked on BiSwap
$23.3m 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 and Binance-pegged asset risk)
This LP’s TVL has gone up about $1.3m since last week and the APY is up about 0.5%. 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. I noticed that several of the other stablecoin pairs on BiSwap are paying out higher rates, such as DAI-USDT at 18.74% APY. If you are in this pool, it could make sense to shift to a different pool on BiSwap.
Other Posts:
Last Week’s Post
Looking At Iron Finance’s Failures (6/19/2021)
The Return of Iron Finance (7/12/2021)
Hi, thanks for the newsletter. I am wondering what's your view on Nerve Finance (https://nerve.fi/)? The yield is pretty good at the moment.
Thanks a lot for this newsletter. Is there any reason why you are excluding ETH stablecoin farms? Fees are low now, and some good farms available. E.g. I find the uniswap v3 pools on harvest.finance having the same/better risk:reward as the ones you mention here.