June 28 2021 BSC & Polygon Stablecoin Defi Rates
Stablecoin rates continue to be low, with few hidden gems.
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
The last week stablecoin defi rates have continued to decrease. It used to be pretty easy to find a few medium risk farms that would pay 40%+ APY on stablecoins, and now that is almost impossible to find. I am optimistic that there will be recovery in stablecoin rates in the coming weeks, but for now I am holding on to solid LP’s with minimal risk.
Two stablecoin projects were hacked on BSC in the last 7 days, StableMagnet ($27m lost) and SafeDollar ($250k lost). Although neither of those two projects were ever listed on this newsletter, Dopple does have similar code to StableMagnet, but confirmed that they were not impacted by the malicious code that was hidden in StableMagnet’s smart contracts. When projects are exploited, it is a quick reminder that none of these projects are “risk free”, so I always consider it important to do my own research on the risks involved with each investment.
The UK’s Financial Conduct Authority has issued a warning (not a ban) to consumers about Binance. Will these issues start to impact Binance Smart Chain and their Binance-Pegged assets?
There were mixed messages from the United States Federal Reserve as one Federal Reserve governor warned about stablecoin risk, while another governor came out in support of stablecoins.
Rates
25.9% APY - (BSC) Dolly-BUSD-USDT Dopple-LP Staked on Beefy
$4.51m TVL on Beefy ($12.9m 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 $1.8m. The LP has also continued to decrease in APY. Three weeks ago the LP had a 98% APY, two weeks ago 42% APY, last week 34% APY, and this week about 26% APY. Although the rate has slid down from the 98% APY that it once was, the current rate is still one of the higher rates out there on BSC.
18.9% APY - (Polygon) FRAX-USDC SushiSwap-LP Staked on Beefy
$291k TVL on Beefy ($12.5m 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)
Do you remember IRON? FRAX is the algorithmic stablecoin that IRON’s code was copied from. IRON did changed a few details, but was largely identical to its predicesor FRAX, which is a project that lives on Ethereum. The FRAX stablecoin has been bridged over to Polygon, and SushiSwap is offereing some generous rewards to liquidity providors. Will FRAX meltdown like IRON did? Maybe yes, maybe no. It doesn’t have the same attention and crazy rewards, so it is hard to imagine the same meltdown that IRON had. I consider this pool to be high risk, without a high enough reward to make up for the risk.
18% APY - (BSC) BUSD-USDC JetSwap-LP Staked on autofarm
$3.2m TVL on autofarm ($6.8m held in the LP itself)
Pool Risk: Low (JetSwap LP)
Farm Risk: Low (Standard Masterchef Clone)
Asset Risk: Low
JetSwap is paying out some decent rates at the moment. They have a low risk rating from rugdoc, and have two audits performed. I consider this a decent place to park some money while the rate is this high. The overall TVL in the LP is low, so I expect the rate to decline as more people start to invest in this pool.
16.6% APY - (BSC) UST-BUSD-USDT-DAI-USDC AcryptoS-LP Staked on AcryptoS
$3.9m 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)
This has historically been one of the well paying medium-low risk stablecoin farms, but it seems like times have changed. The pool’s TVL is down around $200k from last week’s post, and the rate is down from last week’s 20%.
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 been very strong the last few weeks. UST is currently 44.5% of the pool, which means it 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.
15.7% APY - (BSC) BUSD-USDT BiSwap-LP Staked on BiSwap
$18.1m TVL on BiSwap
Pool Risk: Medium-Low (Modified UniswapV2 LP - audited by Certik)
Farm Risk: High (Modified Masterchef - audited by Certik, Migrator code with no Timelock!)
Asset Risk: Low (Mostly USDT risk and Binance-pegged asset risk)
The rates on BiSwap are way down from last week. This LP’s TVL has dropped $3.1m since last week’s post, and the rate is down from last week’s 40.4% APY. Last week I was new to BiSwap and just starting to investigate them. I figured BiSwap was safe to give a try, and I thought of their risk level as “Medium-Low”. While I was doing additional research on them after last week’s post, I discovered that rugdoc considers BiSwap as high risk. BiSwap has the ability to pull all users funds at any time. This problem is usually solved with a smart contract called a “timelock” which BiSwap does not have and for some reason has not yet added. I will avoid using BiSwap until they get a timelock and more precautions in place.
edit: While doing my final edit of this post, I see that BiSwap has added a 6 hour timelock to their Masterchef contract. I consider this about the same safety level as no timelock at all. Rugdoc summarizes it perfectly “The only way to be ‘safe’ in this project is to set up alarms to never sleep more than 4 hours at a time”.
11% APY - (Polygon) DAI-USDC-USDT CURVE-LP Staked on Beefy
$18.01m TVL on Beefy ($474m 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)
This LP’s rates are down from the 21% APY that we saw last week. In the last we there were pretty significant outflows from the LP, with TVL decreasing by $407m (-53%). Decreased value of MATIC and CRV tokens that this pool pays out are primarily to blame for the lower rates. Historically I have really liked this pool, but I am starting to look elsewhere until the rate is more attractive. Note that if you had this staked on Autofarm, or on Curve’s Guage platform, then you need to manually migrate your LP tokens to an updated pool.