Stablecoins are the backbone of DeFi, offering a way to earn yield while minimizing volatility. But with so many options, how do you maximize your returns while managing risk?
Here's a guide to optimizing your stablecoin yield on Solana, from secured 5% up to risky 20+% !
What we will cover in this thread : 1. What are the stable coins ? 2. How do stable coins generate yield ? 3. What are the top 25 Solana protocols ? 4. What are the best strategies ?
1. Understanding Stablecoins
Stablecoins are cryptocurrencies designed to maintain a stable value relative to a specific asset, usually a fiat currency like the US dollar. They are pivotal in reducing the volatility typically associated with cryptocurrencies, making them ideal for transactions, savings, and earning yield.
This is also the best web3 use case to onboard the billion users and true to the web3 roots to cut tradfi out.
The main stable coins on Solana are by far $USDC and $USDT even though new stable coins emerge such as $PYUSD or $USDS.
Yield-bearing stablecoin, ie backed by US Treasury bills, will also play a significant role in the future. @solayer_labs started it with $sUSD and more will follow (Tether announced one as well).
2. How do stablecoins generate yield?
Stablecoins can generate yield through several DeFi mechanisms, let's break it down.
π Lending :
You can lend stablecoins to earn interest from borrowers. Rates depend on supply and demand. Key Solana lending protocols:
β’ @KaminoFinance
β’ @marginfi
β’ @save_finance
β’ @LoopscaleLabs
β’ @DeFiTuna
π§ Liquidity Pool Fees :
Contributing stablecoins to liquidity pools allows you to earn trading fees from swaps occurring in the pool of your stablecoin pair. Key LP protocols on Solana:
β’ @Meteora
β’ @RaydiumProtocol
β’ @orca_so
β’ @KaminoFinance
β’ @Perena__
β’ @stabbleorg
π Derivatives/Perps Funding :
Perpetual futures protocols generate funding rate arbitrage opportunities. You can use stablecoins to fund positions, rewarding funders with a portion of the trading fees, funding rates and liquidation fees. Key platforms:
β’ @DriftProtocol
β’ @JupiterExchange JLP
β’ @AdrenaProtocol ALP
β’ @FlashTrade_ FLP
Even if you put stablecoins in and you get stablecoin yield, you are exposed to the traded assets you're funding, ie impermanent loss. However you can hedge that risk by shorting the funded assets, which is a common strategy used in the protocols listed next.
βοΈ Synthetic Assets and Hedge Funds:
Protocols use strategies like delta-neutral positions, arbitrage, and synthetic assets to optimize yield, based on underlying strategies. Notable projects :
β’ @TradeNeutral
β’ @synatraxyz
β’ @elementaldefi
β’ @vectis_finance
β’ @gauntlet_xyz
βοΈ Yield Aggregators :
Yield aggregators optimize returns by auto-compounding and reallocating funds across different yield sources. Top aggregators :
β’ @uselulo
β’ @DeFiCarrot
π Yield Trading :
Protocols allow users to exchange their productive yield assets (e.g. lending positions, yield-bearing tokens) for a fixed return or amplified exposure to their yield.
β’ @ExponentFinance
β’ @RateX_Dex
β’ @sandglass_so
Lot of free tools exist on the market and are enough for 99% of CT.
However there are a few I use everyday and for which I was happy to buy the NFT, acting as access to the tool or app.
Full list below
ππ
1/12
PORTFOLIO TRACKER
@NetrunnerNFT is my daily go-to portfolio tracker. Super extensive, include all tokens and NFT (incl. staked in custodial), can adjust to floor traits, calculate tax report, etc.
@subberxyz is what we all dreamed of : having access to a single page where you can see all the WL giveaways you can participate in, without going through all the Discord servers one by one.
Holding one key allows you to do that, saving so much of time !
Haven't done this for a month but market conditions are changing so time to update you!
Current branding meta is starting to fade as you see and we're starting a new period in the money rotation cycle
My thoughts below
π
(1/17)
The last projects have been a deception for most people on Solana: @kingsofdastreet, @JIKANSTUDIOS and @trippyworldlabs as an example. Everyone was waiting for mininmum x5 on mint price to flip.
A couple of next mints will do very well but 90% won't (I take bets π)
(2/17)
@kingsofdastreet@JIKANSTUDIOS@trippyworldlabs As in every situation let's properly define the problem first to take effective decisions, which comes to 3 things imo: 1/ Unreal expectations 2/ Mint liquidity > Sol NFT adoption 3/ Projects valuation vs delivery