Maximize your returns: yield strategies and leveraged plays
In this report, we explore exciting strategies that range from straightforward yields on stablecoins to advanced approaches involving delta-neutral derivatives, offering principal-protected investments with leveraged upside potential.
There are countless ways to make money in crypto, catering to every kind of investor. While some thrive on the adrenaline of riding meme coin volatility, others prefer the steady flow of passive income. Whether you're a cautious investor seeking consistent returns or an adventurous one diving into leveraged opportunities, we’ve got actionable strategies tailored just for you.
Curious to know more?
Let’s dive in…
Disclaimer: This is not financial or investment advice. You are responsible for any capital-related decisions you make, and only you are accountable for the results. "One Glance" by Cryptonary sometimes uses the RR trading tool to help you quickly understand our analysis. These are not signals, and they are not financial advice.
Stablecoins
Stablecoins are an essential component of any investment portfolio, providing liquidity during market downturns while also safeguarding against volatility. If you can put your stables to work, you can earn yield and slowly grow your portfolio even without market exposure. Therefore, here are two stablecoin yield opportunities that we find attractive right now in the market.USDC
USDC, short for USD Coin, is a stablecoin issued by Circle, a well-established financial technology firm renowned for its robust licensing and regulatory compliance across multiple jurisdictions. It is widely recognised as one of the most secure stablecoins available, thanks to its commitment to regular audits by top-tier accounting firms and its policy of transparently reporting its reserve holdings. This dedication to transparency and security ensures that each USDC is consistently pegged to the value of one US dollar, providing users with a stable digital asset that mirrors the predictability of the US currency.Moreover, USDC boasts one of the deepest liquidity profiles within the crypto market, facilitating seamless transactions and minimal slippage even during high-volume trading periods. Its reliability in maintaining the dollar-peg has been exemplary, offering investors and traders a dependable medium for value transfer and storage within the volatile crypto ecosystem. Earning sustainable yield of USDC generally presents one of the most reliable ways to earn passive income:
Benefits:
- Principal protected: regardless of price action the principal is protected from market volatility. In other words, you won’t lose what you have invested due to market volatility.
- 9% - 13% APY on a stablecoin
- Easy and relatively safe
- Stablecoin risk: as with any stablecoin, the peg to the dollar can be broken if the underlying mechanism protecting the peg isn’t robust
- Smart Contract Risk: Interacting with any smart contract carries the risk of losing access to your funds in case of an exploit.
- Get some USDC to Base (Either withdraw from CEXes or bridge to Base)
- Go to Extra Finance
- Deposit your stables to the USDC pool
- Happy farming!
sUSDe is a staked version of USDe, a stablecoin developed by Ethena. We previously provided an in-depth analysis of Ethena, highlighting its strong product-market fit as well as risks. The staked version, sUSDe, allows holders to earn rewards, which are essentially yields from a delta-neutral derivatives portfolio.
Derive (formerly Lyra) is taking this yield strategy to the next level. As we have previously covered, Derive is a full-suite options platform with its own customised L2 chain on top of Ethereum. It offers options trading and automated strategies on top of its liquid market.
One of them that caught our attention is the principle-protected yield on sUSDe. The strategy harvests the previous week’s sUSDe yield, and purchases weekly bull call spreads on Ethereum. This generates leveraged upside exposure to Ethereum price appreciation, while only risking the weekly Ethena Staked USDe yield if the Ethereum price decreases $100 or more in a week. Pretty neat play!
Benefits:
- Principal protected: regardless of price action the principal is protected from market volatility. In other words, you won’t lose what you have invested due to market volatility.
- Leveraged exposure to ETH: the strategy can generate up to 2.5x your sUSDe weekly yield. Around 20% - 50% depending on the market.
- Airdrop: potential airdrop from Derive
- Stablecoin risk: as with any stablecoin, the peg to the dollar can be broken if the underlying mechanism protecting the peg isn’t robust
- Smart Contract Risk: Interacting with any smart contract carries the risk of losing access to your funds in case of an exploit.
- Go to Uniswap and get some sUSDe (beware of the gas fees contract address: 0x9d39a5de30e57443bff2a8307a4256c8797a3497)
- Go to Derive
- Deposit sUSDe from Ethereum
- Go to the Earn section and deposit into the sUSDe vault
- Happy farming!
Leveraged strategies
Leveraged strategies, while potentially offering significant returns, are inherently high-risk and can lead to substantial losses, including the complete depletion of your investment. These strategies are not suitable for beginners or anyone not prepared to potentially lose their entire capital. It's crucial to approach leverage with a deep understanding of the markets, robust risk management, and a tolerance for volatility.However, if you are willing to take on more risks for a higher upside or simply want to play around with it with a small amount of capital, here are some cool strategies leveraged yield strategies.
SOL
SOL is one of this cycle’s top performers, with plenty of upside still in its tank. The following strategy includes getting leveraged yield by using liquid-staked SOL as collateral to borrow stables to get even more liquid-staked SOL to use as collateral.Benefits:
- Leveraged upside on SOL if the price goes up
- (1) 7% - 11% APY on principal SOL + (2) 7% - 11% APY on leveraged SOL
- Works best in a bullish environment
- Leveraged downside on SOL if the price goes down
- 3%-5% interest rate right now (can vary from time to time)
- There is a need to actively manage margins to avoid liquidation in times of turbulence
- Go to Jupiter and get some jupSOL
- Supply jupSOL to Kamino
- Borrow pyUSD from Kamino (up to 30% LTV, less is safer)
- Go to Jupiter and buy more jupSOL
- Supply jupSOL to Kamino again to bring down your margins
- Actively monitor your position to avoid liquidations and loss of funds
- Happy farming!
JLP
As we have covered previously, JLP is a unique index-like asset that offers diversified exposure to the market because it tracks a basket of major blue-chip assets like SOL, ETH, BTC, and stablecoins (USDT/USDC).It was developed by the Jupiter team to serve as the liquidity backbone for Jupiter Perps. This pool essentially takes the opposite side of perpetual futures (perp) trades, enabling these transactions by providing the necessary liquidity. In return for this service, the JLP collects fees from traders, which are then used to generate yields for liquidity providers. These yields can range from 18% to 40%, depending on prevailing market conditions.
Kamino offers an automated way to leverage both market exposure to an index and yield, offering an attractive leverage play in a bullish market environment. It supplies the JLP as collateral in the money market and borrows USDC against it. It then loops the borrowed USDC to get more JLP and provides it as collateral again to further borrow USDC to repeat the cycle. It offers up to 3.2x leverage, boosting both gains from capital appreciation of an index and yield generated from fees.
Benefits:
- Leveraged upside on JLP (index of BTC, ETH, SOL and stables) if the price goes up
- Up to 28%-40% depending on the APY of JLP (Right now max is 28%)
- Easy and automated
- Works best in a bullish environment
- Leveraged downside on JLP if the price goes down
- Yield depends on the performance of Jupiter traders. if they consistently win, the yields will drop. It can even turn negative if the borrowing rate exceeds the yield generated by JLP. However, historically, the majority of traders tend to lose on longer timeframes
- There is a need to actively manage margins to avoid liquidation in times of turbulence
- Go to Jupiter and buy JLP
- Go to Kamino and navigate to the Multiply feature
- Choose JLP and multiply with leverage
- Happy farming!
Delta-neutral strategy on stables
Alternatively, instead of leveraging up and buying SOL or JLP, you can put the borrowed at work somewhere that pays a higher yield but still doesn’t have exposure to market prices. For example, if the borrowing rate of pyUSD is 3% - 4% and the yield on stablecoins somewhere else is around 10%, you can essentially build a delta-neutral position and pocket the spread between stablecoins.Benefits:
- No exposure to market fluctuations
- Getting approximately 10% on borrowed stables while retaining the market exposure. Could be higher depending on the stablecoin chosen.
- Works best in a bullish environment
- Complexity: Finding stablecoin yield that is higher than the interest rate generally requires bridging to different chains
- Stablecoin peg risks:
- Potentially liquidation in case the market moves aggressively down
- Requires active monitoring.
- Supply jupSOL to Kamino
- Borrow pyUSD from Kamino (up to 30% LTV, less is safer)
- Go to Jupiter and swap pyUSDC to USDC
- Go to Mayan Finance, and bridge USDC to Base
- Deposit into USDC vault on Extra finance
- Earn spread yield on borrowed stables while retaining market exposure
- Happy farming!
Note. You can apply the same concept in different contexts. E.g. You can borrow stables against ETH on CEX to deploy across DeFi and pocket the spreads etc.
Cryptonary’s take
The crypto market continues to present an array of opportunities for earning yield, from stable and low-risk strategies to those that require a higher appetite for risk and leverage. The key is to assess your risk tolerance, thoroughly understand the strategies, and have a plan in place for active management, especially with leveraged positions.Stablecoins provide a solid foundation for those who prioritise safety, while leveraged plays on assets like SOL and index-based strategies like JLP offer enhanced upside potential for those with a more adventurous spirit. As always, leverage is a double-edged sword—while it can amplify gains, it can also lead to significant losses if not managed properly.
We have presented opportunities both for those who like peace of mind and those who are into higher returns. Remember, no strategy is without risk, and your capital is always on the line. Choose wisely, manage your positions diligently, and happy farming!
Peace!
Cryptonary, OUT!
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