encryption Bull Market Money-making Technique! How to Stably Earn High Returns with Decentralized Finance, Experts Teach You 5 Strategies

While many investors are busy looking for the next meme coin with a hundredfold return or trying to guess which old altcoins will pump again without any signs, there are also some people focusing on the high-yield opportunities brought by Decentralized Finance in the Bull Market. The demand brought by the Bull Market has caused the on-chain yield to soar, thereby magnifying some interesting Decentralized Finance strategies.

This article will delve into the strategy of using sUSDe in different lending markets, how to estimate the actual return rate using a calculator, and how Token JLP works, etc.

Kamino Finance

Kamino Finance is the sponsor of the original text. Kamino's various indicators (such as TVL and fees) maintain a rising trend, and the protocol currently provides the highest yields for assets (such as $SOL, SOL LST, and stablecoins). These yields can be easily obtained by depositing assets into the lending market, including:

The Annual Percentage Rate (APR) of USDC is 18.3%;

The Annual Percentage Rate of PYUSD (Ethena Market) is 27%;

The Annual Percentage Rate of USDS is 15%;

The Annual Percentage Rate of $SOL is 9%.

Image Source: On Chain Times

Kamino's more complex yield strategies include their Multiply product, which allows for leverage on $SOL LSTs (effectively gaining leveraged exposure to $SOL stake earnings), as well as JLP. Currently, the JLP leveraged Position's Annual Percentage Rate exceeds 100%, combining JLP Annual Percentage Rate and USDC borrowing Annual Percentage Rate.

To understand how Kamino Multiply Vaults work and how they are designed to drop liquidation risks, you can read the complete guide: Maximizing Solana Yield with Kamino Multiply.

Ethena's sUSDe circular trading strategy

Since the beginning of November's election, the funding rate of assets such as BTC and Ethereum on the exchange has risen significantly.

Image Source: On Chain Times

Ethena's income and Annual Percentage Rate (APR) earned by holding sUSDe are positively correlated with these funding rates, as the protocol hedges the underlying asset Spot exposure through shorting futures contracts. Therefore, the APR of sUSDe has significantly risen in the past few weeks, currently around 21%. Here are several ways to take advantage of this income:

AAVE

There are several ways to obtain high yields for sUSD, one of the newer strategies is to integrate sUSD through Aave. The specific method is:

Using sUSDe as Collateral on Aave;

Mortgage borrowing using stable coins such as USDC;

Exchange USDC for sUSD;

Repeat step 1......

Through this method, you can effectively obtain leverage exposure to sUSDe income, where the actual return is the sUSDe income minus the USDC loan Intrerest Rate, multiplied by the applied leverage multiple.

Image source: On Chain Times Aave sUSDe Market

( Note: The current deposit limit has been reached, but it is expected to be raised within a few days, so if you want to deposit, please follow closely for the official announcement of its reopening.)

Due to the maximum loan-to-value ratio (LTV) of 90% for E-Mode on Aave, depositors can leverage up to 10 times. The table below shows the return of this strategy in each cycle based on a 21% sUSDe APY and a 12.5% USDC borrowing Intrerest Rate. In this example, using 10,000 US dollars worth of sUSDe as Collateral, borrowing 9,000 US dollars of USDC and converting it to sUSDe, and then re-collateralizing as Collateral. The total Collateral balance is now 19,000 US dollars, borrowing 8,100 US dollars of USDC, and the total borrowing amount is 17,100 US dollars. This process can be repeated up to 100 times, or until the strategy LTV reaches 90% (0.9). As shown in the table, the more cycles, the higher the strategy's APY.

Image source: On Chain TimesAave sUSDe circular loan

Please note that manually executing this operation requires some effort and multiple iterations will generate higher Gas, so this method is only more meaningful when the scale of strategy execution is larger.

For ways that can be automated and consume less gas, we can use Fluid.

Fluid

Fluid has recently gained widespread attention due to its integration with DEX, which introduces smart debt and smart Collateral. On Fluid, users can automatically carry out leveraged and deleveraged operations, making the process faster and cheaper.

The maximum LTV of the sUSDe<>USDC or USDT market on Fluid is also 90%, allowing up to 10 times leverage. However, compared to Aave's 3% liquidation penalty, Fluid's liquidation penalty is only 2%, and the liquidation risk is significantly lower. Fluid uses smart contract pricing as the oracle for sUSDe, so even if sUSDe temporarily unpegs due to liquidity contraction, the multiplier Position will not be liquidated due to price decline. Positions will only be liquidated when borrowing interest rates are high for a long time and users are not paying attention, or when the sUSDe contract is attacked.

The introduction of Fluid DEX and smart debt allows users to borrow sUSDe by using USDC/USDT Liquidity pool positions as Collateral, thereby obtaining Money Laundering. The debt will be a mixture of USDT and USDC, and the borrowing cost will drop due to the positive Money Laundering earned by these assets. In the example shown below, the actual borrowing annual interest rate (APY) paid by the user is 3.79%, not the borrowing cost between 8% and 9%.

Image Source: On Chain Times

This results in a higher Annual Percentage Rate (APR) as long as the Interest Rate for borrowing USDT and USDC is lower than the APR for sUSDe. Based on the current Interest Rate shown in the post above, when the leverage ratio reaches 90%, the strategy's APR is 101.1%.

Source: On Chain Times Fluid sUSDe circulating loan

(Click here to access the real-time calculator)

Please note that the sUSDe<><>USDC/USDT liquidity pool is currently at its maximum capacity, but is expected to increase soon. In the meantime, users can access the standard sUSDe<><>USDT or sUSDe<><>USDC liquidity pools, which also offer automated leverage and deleveraging functionality.

Overall, it is recommended to closely follow the Interest Rate when using these strategies, as they may experience significant Fluctuation and may result in the strategy no longer being profitable. It is also important to note that there is no risk-free in the world of Decentralized Finance, and the risk of Smart Contract may lead to fund loss, especially in the event of a vulnerability attack.

Note - How to calculate the actual sUSDe Annual Percentage Rate (APY)

Based on the fees earned in the previous week, Ethena distributes rewards to the sUSDe contract. Therefore, the APY displayed on the Ethena user interface is usually different from the actual real-time APY. This difference is important because a change of a few percentage points can make a cycle trade profitable or unprofitable.

To calculate the actual APY, you can check the reward information sent to the sUSDe contract. Rewards are sent every 8 hours. By adding up the past three transactions (rewards in the past 24 hours) and dividing by the total USDe supply (click here to view), then multiplying by 365 days, you can get the real-time sUSDe APY.

Please note that the earnings of sUSDe are obtained through the increase in sUSDe price, not through withdrawable earnings.

JLP

JLP has been discussed several times before. Earlier this year, we delved into its underlying design and concluded that, from the perspective of volatility adjustment, $JLP outperformed most mainstream encryption assets.

In the performance since the beginning of the year, $JLP has risen by 87%, while BTC has risen by 90%, Ethercoin has risen by 65%, and $SOL has risen by 104%. (Data as of December 4th)

Image Source: On Chain Times

From the perspective of volatility adjustment, we calculated the Sharpe ratio, which considers volatility and the 'on-chain risk-free rate' (set at 7% per year in this case). As shown in the figure, $JLP's performance exceeds that of BTC and other major assets by more than 2 times after considering volatility.

Image Source: On Chain Times

$JLP continues to outperform other assets primarily because sustainable traders on Jupiter have paid substantial fees as shown in the image below. More information about JLP can be found on the Gauntlet dashboard.

Image Source: On Chain Times

Conclusion

In this article, we have introduced two high-yield Liquidity Mining strategies. However, there are still other high-yield strategies to choose from, such as Pendle's high fixed income, YT Token, basis trading, etc. These strategies involve different levels of risk and potential returns, which we will detail in the future.

【Disclaimer】There are risks in the market, and investment needs to be cautious. This article does not constitute investment advice. Users should consider whether any opinions, viewpoints, or conclusions in this article are suitable for their specific circumstances. Invest at your own risk.

This article is authorized for reprint from: 'Foresight News'

Original editing: Thor Hartvigsen, On Chain Times

'Encryption Bull Market Making Money Art! How to Stably Earn High Yields with Decentralized Finance, Experts Teach You 5 Major Strategies' This article was first published in 'encryption City'