Hi everyone, it’s barely only a week into the new year and already so much has changed in the DeFi landscape. If you were involved with Midas Investments like me, you probably heard the news that came out late last month in regards to its closure via a 3-part livestream. The downfall of Midas is a painful reminder that if it’s not your keys, then it’s not your crypto. I think the only silver lining is that they allowed at least a partial release of user funds (or nearly all if you held less than 5k on the platform) — something that platforms like FTX, Celsius, or Voyager have yet to do.

If you’ve followed along with my other stablecoin articles, you’d have noticed that Midas was the only centralized platform that I had listed. So now with it’s demise, I now have an updated set of criteria for the strategies that I’ll highlight for this month. These criteria include:

1. No algo-backed stablecoins: I know that there are some great algo-backed stables out there generating some crazy returns, but after the Terra death spiral, it will be some time before I trust anything that’s linked algorithmically again. .
2. No lock-up periods: If you’re looking into earning into the 20%+ APY range, I highly recommend that you check out my previous articles on platforms such as Haru Invest where you can earn significantly more if you agree to lock-up your funds for 30+ days, but a word for the wise — there’s no such thing as a free lunch.
3. The protocol pays out in the native asset (stablecoins, not in alts): I know there’s some great returns that can be had with platforms like echnida or platypus finance, but the rewards are all in altcoins, which may have high volatility especially in a bear market.
4. And lastly, No CeFi 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

Anyways, without further ado, let’s jump into it shall we?

Tarot Finance on Arbitrum using USDC/DAI: 16.45% APR

Tarot.to actually has a lot of pretty insane stablecoin strategies, especially for degens that want to leverage their LPs up to a 10x position. But on even a base level, the 3xcalibur DAI/USDC LP offers a 16.45% APR return even without leverage which is pretty fantastic. I know with a low TVL that this probably won’t last, but I invite people to take a look at their other stablecoin strategies because once leveraged, they all go into the +20% range.

In order to take part, one must first create your DAI/USDC LP over on 3xcalibur and then deposit the LP over on Tarot. Once deposited, you’ll start accruing rewards in the native LP.

Pros: This strategy is on Arbitrum which means you’ll pay little in gas fees. Also, the fact that you can leverage your LP multiple times makes this strategy particularly lucrative — up to 92.87% APR for a 10x leverage!

Cons: If you end of considering leverage, keep in mind that you face a liquidation risk in the case of a depeg. Also it’s important to note that compared to the other strategies that I'll go on to mention, this one has a relatively low TVL, meaning that these rates probably won’t last forever.

Beethoven on Optimism using USDC/DAI: 13.97% APR

I’ve written about this strategy before, and although they’ve seen a significant downturn in TVL, the Overnight Pulse pool on Beethoven continues to generate some really solid returns. This strategy involves USDC and DAI, where these stables are wrapped up in wUSD+ and wDAI+ utilizing Overnight.fi. If you’re not familiar with USD+, it’s the native stable coin of Overnight.fi, which I’ll go into more detail a bit later. The interest that’s accrued is in USD+ which once you claim, will automatically earn rebases via Overnight.fi’s platform. So although this strategy technically doesn’t auto-compound, you’ll still be able to earn stablecoin interest off your claimed rewards.

Pros: If you’re already a fan of Overnight.fi, Beethoven’s strategy gives you a bit of extra added interest, and of course since it’s on Optimism, getting in or out of your position is relatively cheap. In addition the pool has over $1 million in TVL and still generating solid returns, which is normally a very good sign.

Cons: Although the Optimism strategy is fundamentally different than the Avalanche strategy on Overnight.fi, as I mentioned before in a previous article, it is important to note that there was a contract exploit on the Avax chain strategy which you can read more about here.

Reaper Farm on Optimism using USD+/USDC: 10.48% APY

I went back through my previous stablecoin articles and was in disbelief that I hadn’t mentioned Reaper Farm before, especially since over the past few months they’ve had some pretty high returns on not only their stablecoin LPs, but also with their single-sided staking ETH pools.

The only reason I think why I may have left Reaper out is because the rates have been pretty volatile, but this isn’t necessarily the case with the USD+/USDC pool that Reaper utilizes from Velodrome.

Pros: Once again, since this strategy is on Optimism, so getting in or out of your position is relatively cheap. Also, Reaper has a vary cool feature where you can see your projected profits and well as your historical returns:

Cons: Similar with the Beethoven strategy, the Reaper Farm LP utilizes the Overnight.fi’s stablecoin USD+, and as I mentioned before, it is important to note that there was a recent contract exploit on the Avax chain strategy.

Beefy Finance on Optimism using USD+/LUSD: 12.07% APY

No stablecoin strategy list would be complete without having something from Beefy Finance, and this one using USD+/LUSD has been shown to produce some pretty consistent returns, averaging greater than 10% APY over the past few weeks. Similar to the Reaper Farm pool, this one from Beefy utilizes Velodrome, and then auto-compounds your returns giving you an enhanced yield. And like the other strategies this one uses USD+, and in addition LUSD — which is the native stablecoin to 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).

There’s a few considerations that you should take when using Beefy:

1. Beefy provides the historical rate of returns to track volatility. There are some pools that might look great, but the pool itself could just be experiencing a temporary spike in activity.
2. Each pool has a “safety score,” and Beefy will help you breakdown where the APY’s and also outline whether or not the contract(s) are audited.

Pros: Similar to Beethoven’s DAI/USDC pool, this LP is also on a layer-2 which means gas fees to enter and exit are very cheap. In addition, returns have been pretty consistent and so has the TVL.

Cons: This pool has a safety score of 8.0 which isn’t that bad, but could be better.

Honorable Mention: Kamino Finance on Solana using USDH/USDT: 19.53% APY

The last strategy that I’ll mention on this list is Kamino’s USDH-USDT stable strategy on Solana. If you’ve followed closely with my other stablecoin articles, I haven’t really talked that much about any strategies Solana and in all transparency, given all of the latest FUD surrounding Solana associated with the FTX collapse, I was even more hesitant about listing this one.

However given the high APY as well as the decently sized TVL, I thought this pool worth mentioning. If you’re unfamiliar with USDH, it’s a native stablecoin of Hubble Protocol, which similar to MIM, is an overcollateralized stablecoin primarily backed by other cryptocurrencies.

Pros: You’ll be hard pressed to find a stablecoin yield this high right now anywhere else, especially with a TVL in the 6-figure range.

Cons: USDH like MIM has a soft-peg to the US dollar, which is the reason why you’ll see the price graph look like this:

In addition to the soft peg, if you’re wary about Solana’s future in general, then the extra 6% or so in APY might not be worth the risk.

Conclusion

Hopefully you’ve discovered a new protocol to capitalize off of and if you’ve heard of any others that aren’t listed here, please drop me a comment below because I’d love to check it out. If you’re interested in digging for more stablecoin opportunities with disregard to my low risk parameters (no algos, no lock-ups, no altcoins) I’d recommend checking out stable.fish — a great compiled list of any LP involving any stablecoin out there. They don’t have their stats updated in real time, but it will give you a really good picture of what’s out there.

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.

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!