Pain for the overleveraged apes. Over $1 billion of Bitcoin futures open interest was wiped out. Why? Matrixport released a report predicting the SEC will reject all ETF applications. The bad news is that anyone leveraged got annihilated. The good news is that this flush has reset open interest and funding rates to normal levels- a better foundation for a post-ETF approval rally.
Remember, it is a bull market, and dips are for buying. Always watch relative strength; altcoins that recover fastest post-flush will be the best horses to back. The usual suspects are in speedy recovery- $RUNE, $KAS, and $SEI- but leading the recovery rally is $ARB, $OP, and $LDO. A clear signal that the Q1 2024 trade is Ethereum.
Welcome to the Rainforest Stack. A guide for the intrepid into the dynamic world of DeFi yield.
Constituted of four distinct layers: undergrowth, understory, canopy, and the emergent layer. Each layer boasts a different level of risk broadly categorized in line with the Lindy effect- the longer something has survived, the more likely its continued existence becomes.
An impact with oversized ramifications in the crypto space where hundreds of new protocols live and die each quarter.
More details about the Layers of the Rainforest stack here.
Observations
Nearly $200 million in the Curve Finance pool, which seems absurd given the low APY and massive opportunity cost of holding stables in the current market conditions. Obviously there is still plenty of old money on Ethereum.
Fast recovery from $ETH and its beta plays shows appetite for an ETH-driven rally this quarter, and keep an eye open for the introduction of liquid restaking tokens. The best thing about $ETH rallies is the wealth creation effect and how quickly this capital gets deployed into DeFi, recharging yields across the board.
Notable Mentions
Pool: USDT on Aave V3. APY: 14.79%. TVL: $16.82m. Chain: Arbitrum
Pool: DAI on Aave V3. APY: 19.03%. TVL: $7.12m. Chain: Arbitrum
Continued high supply rates for stablecoins- especially on layer twos. Borrowers are happy to pay a premium for leveraged exposure. Double-digit yield with size- DeFi is finally healing.
Observations
ETH pairings remain incredibly strong across the board, and liquidity providers earn on the way up and on the way down. Tight liquidity pairings, only suitable for more experienced LPs, have been printing close to 3-digit annualized APYs.
SOL-USDC pairing on GMX is very attractive. Broadly speaking GMX is paying out great rates on blue chip pairings.
Notable Mentions
Pool: vDOT on Bifrost. APY: 20.78%. TVL: $30.47m. Chain: Polkadot
Liquid staking is growing increasingly popular across the ecosystem, and chains with high inflation rates (Polkadot and Cosmos chains) are great opportunities.
Pool: YCRV on Yearn. APY: 31.63%. TVL: $22.97m. Chain: Ethereum
DeFi dinosaurs returning? Yearn Finance is currently filled with a swathe of attractive yield opportunities. The strong performance of $YCRV is just a snapshot of the current activity, and several stablecoins vaults are paying out triple-digit APYs.
Observations
AVAX-USDC continues paying out outrageous yields, and TraderJoe’s liquidity book model is arguably the best place for skilled LPs to earn fees.
Camelot pairings have been pumping out swap fees as ETH beta plays rally, and despite being the front page DEX of Arbitrum, the native token $GRAIL only has a $30 million market cap.
Notable Mentions
https://app.naviprotocol.io/details?id=0&coinType=0x2::sui::SUI SUI
Pool: JOE on MerchantMoe. APY: N/A TVL: $9m Chain: Mantle
The $MOE TGE event will be on the 8th of January, and all $JOE holders staking on Merchant Moe (Mantle network) will receive 2.5% of the total supply.
Pool: TIA Staking on Keplr. APY: 16.57% TVL: N/A Chain: Celestia
TIA staking is the gift that keeps giving. Anybody who staked will have received the $DYM airdrop. Check eligibility here.
Observations
All the truly degenerate yields are still on Solana shitcoins. Providing liquidity to these pairings is a thankless endeavor. LPs should only be providing liquidity in brief stints on the way up.
WIF-SOL pairing has been paying out incredible yields following a flurry of buying and selling. Providing liquidity to memecoins that break out of the bottom rankings (market cap $10m+) at key support levels is highly lucrative.
Notable Mentions
Pool: SEIGA-SEI on Astroport. APY: 300%. TVL: $228,000m. Chain: SEI
Pool: METH on Mantle. APY: 7.2%. TVL: $365m. Chain: Mantle
SEI is the only other chain boasting a memecoin renaissance, and getting to grips with the chain now will pay its own benefits. It was one of the fastest recoverers, and users adept in using the chain will be ahead of the rest as the parallelized EVM narrative grows.
Mantle has launched its own liquid staking program and doubled the base yield. How has it doubled payouts? It accrued stETH rewards in its Treasury and is now distributing them in boosted yield to early users of $METH. Classic liquidity mining incentive.
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Here’s an example of a portfolio on the Arbitrum chain generated by One Click Crypto:
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Disclaimer: This article, including insights on the “Rainforest Stack” and other DeFi strategies, is for informational purposes only and should not be considered as financial advice, investment recommendations, or an endorsement of any particular investment or strategy. The cryptocurrency and DeFi markets are highly volatile and unpredictable. Past performance is not indicative of future results. One Click Crypto makes no representations or warranties regarding the accuracy, completeness, or timeliness of the information provided. Readers should conduct their own research and consult with independent financial advisors before making any investment decisions. By using this information, you agree that One Click Crypto is not liable for any losses or damages arising from your investment choices.
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