⍺ DeFi Alpha: Maximize Yield and Avoid Impermanent Loss with Like-Asset LPs
DeFi Alpha is a weekly newsletter published every Friday, contributed by Defiant Advisor and DeFi investor at 4RC, DeFi Dad, and our Degen in Chief yyctrader. It aims to educate traders, investors, and newcomers about investment opportunities in decentralized finance, as well as provide primers and guides about its emerging platforms. It is meant to be highly actionable and shareable.
Two years ago, DeFi investors could easily name every yield farming opportunity without much effort. It was a simpler time, where only a handful of teams had launched with any liquidity to trade, lend, borrow, provide liquidity, or even demonstrate new primitives such as no-loss savings by PoolTogether.
But times have changed! DeFi liquidity has grown to over $250B on Ethereum alone, with $171B in new burgeoning DeFi economies on EVM-compatible chains such as Polygon and Avalanche and non-EVM chains such as Terra and Solana. Any given day, a new DeFi or NFT project is launching. So after writing and creating countless DeFi guides and tutorials since 2019, we at The Defiant agreed it’s time we publish a more detailed weekly guide with all you need to know to keep up with new and old yield earning opportunities.
This is DeFi Alpha by The Defiant.
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📈 Yield Alpha
Each week we will provide options to earn yield on ETH, WBTC, stablecoins, and other major tokens.
ETH - staking ETH in Tokemak for a total annualized return = 12% APR
This yield is issued in TOKE rewards and has risen the last few weeks as the TOKE price rises against the price of ETH.
To participate, deposit ETH into the Tokemak Pair Reactor under ETH.
Happy to report, this was the highest yield on ETH deposits 4 weeks ago!
WBTC - stake Curve ibBTC / crvsBTC LP in Convex Finance for 12.61% vAPR
This yield is backed by trading fees, plus CRV and CVX rewards.
Happy to report, this also was the highest yield on WBTC deposits 4 weeks ago! We’re always hunting for a long-lasting yield like this.
Honorary mention: We didn’t want to highlight selling WBTC call options during a market crash/correction because the annualized performance is misleading since we cannot assume sold call options will remain a favorable strategy the next 365 days, but worth noting Premia Finance is currently rewarding 30% APR in PREMIA tokens for WBTC deposited for selling call options and has an additional estimated 20.8% APR from selling WBTC call options.
SOL - lend stSOL with Francium on Solana to earn 12.3% APY (from Francium) + 5.2% APR from the underlying SOL staking rewards
LUNA - stake LUNA in Stader liquid staking dApp for 9.35% APY
ATOM - mint pATOM and stake the pATOMs on Ethereum to earn more pATOMs on pSTAKE at a rate of 7% APR
The yield earned is issued and claimable in pATOM and this yield is expected to hold steady for weeks/months unless pSTAKE changes their liquid staking model.
Then, deposit/stake pATOMs to get stkATOMs and earn 7% APR
Stablecoins - deposit UST to earn 77.3% APY lending UST via the lending/borrowing aggregator Hundred Finance on Harmony network
The yield is backed by borrowers paying interest as well as a sizable amount of HND rewards from Hundred Finance.
To participate, I go to Hundred Finance dApp on the Harmony network, deposit UST (2 transactions) and then stake my hUST tokens to earn HND rewards netting me up to 77% APY as of this writing.
🪂 Airdrop Alpha
In each DeFi Alpha guide, we update a list of the most obvious DeFi protocols that have yet to announce and/or launch a token.
Arbitrum - one of the leading L2 solutions for Ethereum with live dApps such as Uniswap, SushiSwap, Hop, and more, we expect a token to eventually launch so by depositing assets or transacting, one might earn a future airdrop
Stader Labs - by depositing LUNA into LunaX (a liquid staking equivalent of LUNA) and pairing LUNA<>LunaX as an LP here on TerraSwap, one can farm SD rewards, the Stader protocol token that’s yet to be generated but expected to launch in late January
Ronin Blockchain - by depositing assets on the Ronin blockchain or playing Axie on this Ethereum sidechain built specifically for blockchain games, we speculate you’ll earn the future RON token. RON will be used to pay gas fees and secure the network for both Axie Infinity and future games/products hosted on the chain.
Katana DEX - Farm/stake the AXS/WETH LP or SLP/WETH LP on this forked AMM on Ronin to earn WRON (wrapped RON), so this is a guaranteed reward but for a token not yet trading
Element Finance - stake/lend to earn fixed interest with fixed terms on Ethereum
DeFi Saver - a one-stop dashboard for creating, managing and tracking DeFi positions across Aave, Compound, Maker, Liquity, and Reflexer
Set Protocol - one of the earliest DeFi protocols yet to launch a token for DeFi asset management, popular for TokenSets and known for powering IndexCoop indexes
Goldfinch Finance - lend permissionlessly to institutional borrowers without collateral
Hop Protocol - become an LP to enable bridging instantly between Ethereum Mainnet, Polygon, Arbitrum, or Optimsm without waiting for long delays in withdrawals; DeFi Dad has a full blown video tutorial on how to become a Hop LP and potentially earn a future HOP airdrop.
Francium - leveraged yield farming similar to Alpha Homora but on Solana, one can choose to simply lend single assets or hold leveraged LPs to potentially earn an airdrop here.
Optimism - one of the leading L2 solutions for Ethereum with live dApps such as Uniswap, Hop, Synthetix and more, we expect a token to eventually launch so by depositing assets or transacting, one might earn a future airdrop
Opyn - one of the OG decentralized options protocols on Ethereum, with major investors that signal a token has to be in their future. Buy/sell puts or call options to earn a possible future airdrop.
Polymarket - one of the strongest players in the DeFi prediction market vertical, bet on an outcome related to crypto, politics, sports and more or add liquidity
Yield Protocol - a newer protocol for fixed-term, fixed-rate lending in DeFi, backed by Paradigm, one might earn a future airdrop by lending DAI or USDC
Zapper - participate in Zapper trading, lending, providing liquidity, or yield farming; given the Zapper Quests and NFT Rewards program, it can be surmised that if Zapper ever releases a token, this is one way they might do a retro airdrop
Zerion - same can be said speculated about Zerion; if they ever release a token, they’re likely to reward those who interacted with their smart contracts swapping, lending, providing liquidity, or borrowing.
🧑💻 Defiant Starter Tutorial
How to Maximize Yield and Avoid Impermanent Loss with Like-Asset LPs
Opportunity: Earn yield with like-asset LPs without the risk of impermanent loss (IL)! The idea is to understand why Curve, Convex, and other LPs with high trade volume but nearly equivalent pool assets (like-assets) are one of the easiest ways to earn higher yield without having to lose value in volatile long term holds like ETH. Here’s what you need to know:
When you deposit into an LP with 2 different assets (ie ETH + WBTC), there’s no guarantee you will withdraw the same ratio of those tokens.
Impermanent loss refers to the decline in value of assets in an AMM LP vs simply holding them in a wallet. This occurs when the price of one of the tokens in an AMM's trading pair changes in any direction.
One of the few ways to avoid impermanent loss is to participate in LPs that have assets equivalent in value, so that you can reliably withdraw the same value of assets you deposited, plus earned trading fees.
If you follow this logic, it makes clear why Curve Finance has been such a popular dApp in DeFi and why yield farmers talk so much about using Curve, or similar AMMs optimized for trading like-assets.
Time to Complete: 5 minutes if paying the recommended HIGH gas price on the Etherscan gas tracker.
Estimated Length of Rewards Program: There’s no end date to this strategy
Gas + Protocol Fees: Based on gas prices under 100 Gwei on Ethereum, it should cost as little as $1 or up to $100 on Ethereum depending on whether one uses Curve on Ethereum or other networks like Polygon, Arbitrum, Avalanche, Fantom, Harmony, Polygon, xDAI.
Fees: If one uses Curve to deposit a single asset into an LP, they’ll pay a trading fee (0.04%) but if one uses Convex Finance to maximize CRV rewards, they’ll also pay a net 20% performance fee.
Risks: As always, this is not financial advice and you should do your own research. The following are risks I incur when participating in this opportunity.
Smart contract risk, oracle failure, and governance attacks in Curve, Convex, and possibly Zapper if using to deposit into an LP
Systemic risk in DeFi
Pegged assets such as stablecoins may de-peg
First, to find opportunities to farm with like-asset LPs, I go to one of three places:
Depending on which EVM network I’m on and which assets I’m holding (ie stablecoins, tokenized BTC, derivatives of ETH like stETH, or near equivalent assets like cvxCRV + CRV), I can begin searching by APY which pools might suit me. Zapper.fi (under Pool) is a great place to search by protocol (Curve) or by token for LPs.
Let’s say I’m holding ETH and I realize i) I can earn with the Curve stETH pool on Ethereum but I can also maximize yield by staking the Curve LP on Convex to earn 6.05%.
I can then Zap (deposit via a single asset) into the Curve stETH LP on Zapper with ETH or another asset, which Zapper will swap for the underlying pool assets.
Lastly, I can go to Stake under convexfinance.com to boost my CRV earnings and earn additional CVX rewards. TLDR, I’m earning 4 forms of yield in this like-asset LP but without worry of any major impermanent loss including:
Curve trading fees
ETH staking rewards via stETH
CRV rewards from Curve
CVX rewards from Convex
🦍 Defiant Degen Tutorial
Bridging to zkSync and Swaps on ZigZag
zkSync is a Layer 2 scaling solution for Ethereum that uses zero-knowledge proofs to enable scalable low-cost payments. With gas prices on Ethereum on the rise again, it’s likely that we’ll see further adoption of L2s and sidechains in 2022.
The protocol doesn’t have a token yet, so yyctrader is going to show you how to bridge some assets over and do some swaps. He’s crossing his fingers that might qualify for a future airdrop. Of course, there is no guarantee that zkSync will issue a token.
Step 1: Navigate to
Connect your Metamask wallet, and click on ‘Add Funds’
Step 2: Choose the asset and amount that you wish to transfer, click on ‘Add Funds’, and confirm the transaction in your wallet. Bridging will cost you around $20 at 100 gwei.
Step 3: Head over to
and connect your wallet. You will be asked to sign an authentication message to prove that you own the wallet.
Note: Wait until your bridge transaction is confirmed before connecting to ZigZag to avoid getting an ‘Account Not Found’ error message.
Once connected, you can swap between ETH, WBTC and an assortment of stablecoins.
Do a few swaps using the assets you previously bridged, and you’re all set!
📰 Elsewhere on The Defiant
Tuesday Tutorial on The Defiant YouTube: This week, Robin covered how to use Degenbox, a strategic program created by Abracadabra Money to create a looping yield mechanism through UST and MIM. Learn how and subscribe to The Defiant on YouTube!
The information contained in this newsletter is not intended as, and shall not be understood or construed as, financial advice. The authors are not financial advisors and the information contained here is not a substitute for financial advice from a professional who is aware of the facts and circumstances of your individual situation. We have done our best to ensure that the information provided are accurate but neither The Defiant nor any of its contributors shall be held liable or responsible for any errors or omissions or for any damage readers may suffer as a result of failing to seek financial advice from a professional.