Risk-adjusted yields in DeFi have effectively gone negative

It doesn’t make sense to risking your assets for such little yield

The only DeFi yield opportunities with decent sustainable yields have an unacceptable risk profile

I’ll explain why 🧵
Every decision is a risk/reward optimization problem

Only when there’s positive expected value (+EV) does a decision make sense

This logic is why I previously highlighted DeFi yield opportunities but am signaling the opposite now

The risk/reward ratio has changed
DeFi yield was never risk-free, and I’ve always flagged as such

But when yield was orders of magnitude higher and markets were stable / generally in a uptrend, DeFi yield was +EV

These days, yield has been crushed and risk profile is higher than ever
DeFi yields have been crushed for a number of reasons:

- The tokens used to subsidize yield aren’t worth as much now

- Demand for leverage is lower, reducing lending rates

- Market flooded with stablecoins looking for somewhere to park

- Lenders and protocols are blowing up
In parallel, DeFi risks have increased

- Protocols with unsustainable economics that only work when prices go up are imploding

- Insolvent lenders and funds are pulling out their assets, triggering bank runs

- Massive liquidations may cause unproven protocols to go insolvent
We also cannot ignore the macro-economic crisis the world is experiencing right now, which goes far beyond crypto
The +EV thing to do currently with your assets is to withdraw what you can to a hardware wallet

That said, each situation is different and not all yield opportunities are the same

Each opportunity must be analyzed individually
Stay safe out there my frens

• • •

Missing some Tweet in this thread? You can try to force a refresh

Keep Current with ChainLinkGod.eth

ChainLinkGod.eth Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!


Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

More from @ChainLinkGod

Jun 20
I wouldn’t blame you if you thought I lost faith in DeFi because of the content of my tweets the past couple months

But quite the contrary, I have never been more confident in the value-prop of DeFi

That’s why I’m so critical on it today, I know we could be doing so much better
I still stand by everything I said in this thread

Our industry looks like an absolute joke and that’s even more true today than when I posted this

We’re falling for all the same mistakes we made as a society hundreds of years ago

Right down to the bank runs and ponzis
Growing pains or reliving the past, whatever you want to call this phase we’re currently in, is just that, a phase

There are no government bailouts here, only the strongest may survive, and that is what makes crypto anti-fragile

It’s the ultimate stress test for the ecosystem
Read 9 tweets
Jun 20
.@Bancor halting Impermanent Loss Protection (ILP) was a calculated move

@CelsiusNetwork needs liquidity now and so they’ve been withdrawing assets from Bancor, selling their $BNT ILP rewards, and allegedly shorting $BNT on FTX

Thus, Bancor is disabling ILP until they’re gone
Bancor is betting that Celsius desperately needs liquidity and won’t wait until ILP is turned back on

However, this requires disabling ILP for everyone, which has significantly harmed Bancor’s reputation for LPs

It’s a calculated risk decision that may or may not pay off
Best case scenario, Celsius withdraws with no ILP rewards, then Bancor re-enables ILP & users are protected again

Worst case scenario, Celsius holds steady & waits for Bancor to re-enable ILP as confidence wanes

Worst worst case scenario, ILP is re-enabled & $BNT death spirals
Read 7 tweets
Jun 11
1/ Two major things stood out to me from Sergey's Consensus presentation

- Public good fast lanes
- Blockchain gas grants

These initiatives, along with other improvements, will eliminate the majority of costs for #Chainlink oracle networks

A 🧵 on improving tokenomics of $LINK
2/ Chainlink oracle networks connect smart contracts to external resources like data and computation

This requires Chainlink nodes to make on-chain transactions, incurring a gas cost

These on-chain gas costs are covered by $LINK rewards paid to nodes
3/ Thus, Chainlink nodes today need to convert some of their $LINK rewards to a chain's native coin to pay for transactions

But what if these on-chain gas costs were negligible or entirely eliminated?

Nodes would be able to keep all their $LINK rewards and compound via staking
Read 18 tweets
Jun 11
Seeing a lot of misconceptions and confusion around $stETH (@LidoFinance liquid staked Ether)

Thought I’d write a short thread on my perspective
$stETH is a fully collateralized representation of $ETH staked on the Ethereum PoS beacon chain

1 $stETH = 1 staked $ETH

When withdraws are enabled on beacon chain, 1 $stETH can be redeemed for 1 ETH

Any comparisons to an undercollateralized stablecoin like $UST are misguided
I think any comparisons of $stETH to $GBTC are misguided as well

$stETH is an ERC20 token that has utility within a growing DeFi ecosystem

It also have a native yield attached which you cannot get by having liquid $ETH alone

There are many who will take the carry risk
Read 17 tweets
Jun 7
1/ A new blog post by @chainlink was just published on $LINK staking

Lot’s of new information was presented, including a roadmap and initial implementation details

In this thread, I’ll break down what you need to know 👇
2/ First it’s worth setting some context, as staking is a broad term in crypto

Chainlink Staking introduces a new layer of cryptoeconomic security by applying rewards and penalties to incentivize the network’s proper operation
3/ With #Chainlink Staking, there are four long-term goals

These serve as guiding principles in its development and as the pillars on which the success of staking will be defined
Read 25 tweets
Jun 6
If smart contracts become the dominant form of digital agreements

Which they will because they’re superior to paper promises in every way

Then society will become more trust-minimized. transparent, and economically free

Fuck the ponzi meta-games, this is why I’m in crypto
It helps to zoom out every once in a while

People’s trust in traditional institutions are at an all-time-low, and there’s good reason for that

As the global economy continues to show its systemic cracks, demand for a viable alternative will become louder and louder
Nobody will care about your hot-potato ponzi speculation games

That just keeps the degens distracted and helps stress test the infrastructure

Ethereum, Chainlink, Rollups, etc were created to facilitate trust-minimized interactions between mutually non-trusting entities
Read 7 tweets

Did Thread Reader help you today?

Support us! We are indie developers!

This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Don't want to be a Premium member but still want to support us?

Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal

Or Donate anonymously using crypto!


0xfe58350B80634f60Fa6Dc149a72b4DFbc17D341E copy


3ATGMxNzCUFzxpMCHL5sWSt4DVtS8UqXpi copy

Thank you for your support!

Follow Us on Twitter!