Hi folks, so I’ll be publishing a follow-up monthly article probably later this week about some of the best stablecoin yields across all the major chains, but in my research process, I found so many good opportunities on Optimism that I ultimately decided to compile a completely separate list highlighting the best Optimistic strategies that I’ve seen.
Normally in my stablecoin articles, I have a strict criteria of only including strategies that have no lock-ups, but in order to stabilize platform liquidity needed for trading/leveraging, a trend that I’ve noticed is that many platforms (as you’ll also see in the following strategies) will require a lock-up for at least 3 days or so. In addition, some of these strategies will pay out at least partially if not all in alt-coins (in most cases the $OP token). Now of course it’s up to you and your own risk appetite for your exposure into alts, but if we’re truly going into alt-season, this may not be a bad thing.
As far as the other criteria go, I will still try to stay away from:
- Algo-backed stablecoins: After the Terra death spiral, it will be some time before I trust anything that’s linked algorithmically again.
- Only DeFi platforms/exchanges: The general consensus is that DeFi platforms are safer because you have control over your crypto, but please remember that DeFi protocols might still be subject to smart contract hacks/exploitations
Alright let’s get to it, starting with the most lucrative first:
Unidex — 47.61% APY using $DAI
Unidex is a perp trading platform supported by several different chains including BSC and Fantom, and similar to Gains Network’s gDai vault, Unidex dips into the pool whenever the platform’s traders receive profits or losses. As is with Gains Network (or any casino-like platform for that matter), there’s always a risk that your PnL could go into the negative if the traders do miraculously well, but so far, that doesn’t seem to be the case:
A couple of other things to note about the Dai Pool are that there is a 3-day holding period before you can withdraw your $DAI along with a a 0.6% tax fee. However from what I can tell, this doesn’t apply to your yield earnings, which can be collected at any time.
Pika Protocol — 20.49% APY using $USDC
Another DeFi perpetual exchange, Pika Protocol has a $USDC Vault that is currently offering more than 20% APY, which is super impressive considering that their TVL in the vault is nearly at $10 million. I’ve been keeping an eye on Pika for awhile, for month by month it’s been increasing greatly in trading volume:
Similar to Unidex, it’s important to note that there is a 3 day holding fee once staked, but with an added caveat that the utilization ration + your share is less than 100%. My assumption is that this is just another added protective measure to ensure stability liquidity on the protocol, but I imagine that this probably isn’t a problem with such a large TVL in the vault.
A final note on the Pika vault is that rewards are paid out in both $USDC and $OP, roughly a 50:50 split. That being said, with $OP recently hitting ATH’s (multiple times), this might not be a bad thing.
Beefy Finance — 19.69%APY using USD+/LUSD
No stablecoin strategy list would be complete without having something from Beefy Finance, and this one using USD+/LUSD has been increasing steadily into the 20% APY range over the past couple weeks. This strategy from Beefy utilizes Velodrome, and then auto-compounds your returns, thus removing your exposure from Velodrome’s $VELO token. And like the other strategies this one uses USD+, and in addition LUSD — which is the native overcollateralized stablecoin from the Liquity protocol. If you’re unfamiliar with LUSD or Liquity, I highly recommend you check out some of the previous articles about the platform (1, 2).
Torŏs Finance — 43.49% APY using USDC
So out of all the strategies I’m listing today, this is perhaps the most complicated, but also perhaps one of the safest. In Torŏs’ USD Market Neutral Strategy, you exchange $USDC to buy $USDmny. Consequently Torŏs supplies your USDC on Aave in order to borrow $wETH, and then in turn supplies it towards the wETH-USDC Volatile Pool on Velodrome. As the price of $wETH moves, Torŏ’s’ positions on Aave and Velodrome will readjust, thus creating delta neutrality.
There are a couple of things to note on this one, including a 24-hour timelock and $USDmny’s peg. The timelock doesn’t come as a surprise considering that this strategy utilizes positions on Aave, for I imagine that there needs to be time for the Aave borrowed positions to be wound down. Secondly, if you look at the price of $USDmny, you might think that it’s a pretty poor peg, sitting currently at $1.023:
In the case of $USDmny, the longer that the strategy accrues interest, the further away it will go away from $1.00, as this is how yields are accrued. In other words, the higher $USDmny gets, the more yield the strategy has acumulated.
Honorable Mention — Saddle.exchange 46.51%~116.27% APR using FRAX/USDC
Saddle Exchanges’ FRAX/USDC pool gets on the honorable mention list here solely because of its amazingly high degen-triple-digits-range returns. Even though FRAX’s meddle was tested greatly this past year and has come out with flying colors, for me it doesn’t change the fact that FRAX is a partially algo-backed stablecoin.
A final consideration on this strategy is that rewards are paid out in $SDL, which obviously gives you some outside exposure to an altcoin; however, $SDL’s price action hasn’t been that bad, at least for the past few months:
Once again, despite it being a partial-algo, the rates on this strategy are about the highest I’ve seen for some time. If you’re more open-minded than me and you’re willing to read more about $FRAX and the FXS ecosystem, I highly recommend that you read Messari’s in-depth report from 2022.
Conclusion
With the bounce we’ve seen in the crypto-market at as a whole this past month, yield rates across the board have seemingly exploded, and the biggest explosions seem to be coming out of Optimism. Considering that many of these protocols and strategies are relatively brand new, I imagine that there are others out there, that I have yet to discover. If you think I’ve left out on any Optimistic stablecoin strategies worth mentioning, please feel free to let me know in the comments below.
As always, thanks for taking the time to read this and be sure to follow me on twitter (https://twitter.com/CryptosWith) to get all my latest updates. Also, looking for a gift for your Crypto-loving/hating friend? Give them a REKT journal to cheer them up!
Disclaimer: And as a final reminder, this is not financial advice and this is for educational and entertainment purposes only. Please as always, do your own research and find what investments are best for you. Cheers everyone!
