The Bitcoin ETF narrative has finally come to a close. ETF issuers are battling over fees, and all $BTC holders have the pleasure of sleeping, knowing that in the coming decades, institutions, pension funds, and even sovereign wealth funds will be pumping their bags.
A small $80 million wipeout on the 9th following the SEC’s security lapse showed investors the future a day early. The best pair immediately after the false Twitter approval was the ETH/BTC pairing, and the next narrative has already begun. Prepare for Ethereum to dominate in Q1 and for $ETH betas to make face-melting rallies.
Spot ETF issuers are fighting tooth and nail over fees, which makes sense, given the passive nature of ETF funds. Acquired customers will more likely than not stay with that provider for life. BlackRock announced a fee cut to 0.25% with 0.12% for the first $5 billion, aiming to crush the competition. Now that the Bitcoin Spot ETF saga has closed, the next ETF narrative will be 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
$GLP holders have been eating well with the SEC false start and then the approval. Trading activity is up, and the $80 million liquidation wave from the false SEC approval was easy money for these liquidity providers.
Staking yield slowly ticking up on stETH as mainnet activity increases. Smart traders are rotating into Ethereum now the Bitcoin ETF narrative has elapsed. Celsius dumping and general bad sentiment make this an excellent time to enter $ETH. Still, readers of the Rainforest Stack will already be aware that Q1 belongs to $ETH and $ETH betas.
Notable Mentions
Pool: USDC on Aave V3. APY: 12.35%. TVL: $3.98m. Chain: Optimism
Pool: USDC on Aave V3. APY: 15.50%. TVL: $5.61m. Chain: Avalanche
Borrowers are still paying through the nose for increased market exposure, and anybody holding stablecoin to buy dips can earn easy two-digit APY on any of DeFi’s large lending markets.
Observations
ETH pairings on mainnet absolutely crushing it. These LPs are profiting from flows into Ethereum, and triple-digit APYs are becoming the norm.
GMX V2 pairings are strong across the board, with decent APYs for holding blue chip altcoins paired with USDC.
Notable Mentions
Pool: HLP on Hyperliquid. APY: 271%. TVL: $24.5m. Chain: Hyperliquid
The increase in trading activity makes supplying counterparty liquidity to perp DEXs interesting once more. Search DeFiLlama’s Derivatives dashboard, filter by volume, and supply liquidity to protocols managing the bulk of trading action. Hyperliquid is a cosmos app-chain. Fast to list new tokens, and it offers a massive range of trading pairs. Popular with degens, it is a great spot to provide liquidity.
Pool: JLP on Jupiter. APY: 99.8%. TVL: $40m. Chain: Solana
Jupiter is Solana’s dominant DEX and has a perps platform. The first snapshot has already been completed for the $JUP airdrop (users before November 2nd 2023). Still, more rounds should occur, and providing liquidity will likely be a criterion for future airdrops.
Observations
TraderJoe’s Liquidity Book model keeps pumping out fees for LPs. ARB-ETH 10 basis point pairing has been killing it as investors jump on the $ETH beta bandwagon trade.
Camelot pairings have performed excellently. Understandable given its position in the Arbitrum ecosystem, and ETH-PENDLE enjoyers are eating well.
Notable Mentions
Pool: MOE on MerchantMoe. APY: N/A TVL: N/A Chain: Mantle
All Rainforest Stack readers who staked their $JOE on MerchantMoe will have qualified for the airdrop and received $MOE. Playbook is the exact same as TraderJoe. Stake $MOE and run it back, turbo.
Pool: milkTIA on MilkyWay. APY: 14.4% TVL: N/A Chain: Osmosis
Liquid staking protocol for $TIA with a confirmed airdrop for early users. $milkTIA can be leveraged on Demex lending pools and one Quasar Vault. Expect new utilities for this LSD soon.
Observations
All the action is taking place on Mantle. MerchantMoe is a massive boon to the ecosystem, with a reliable and skilled team deploying a front-page dApp on Mantle, which has been incredibly slow to start despite its impressive technical performance. Circuit is a yield aggregator building on top of MerchantMoe, and with barely any liquidity in its vaults, the APYs are insane. Expect these yields to get diluted fast as TVL arrives.
FET-USDT paying out more than 20,000% APY shows that investor appetite for AI coins is heating up again, and any liquidity providers on BSC are laughing all the way to the bank.
Notable Mentions
Pool: INJ staking on Keplr. APY: 16.02%. TVL: $1.8b. Chain: Injective
Pool: PRISMA-ETH Vault on Beefy. APY: 1,447%. TVL: $647,000. Chain: Ethereum
Hydro Protocol airdrop confirmed for all $INJ stakers. Celestia airdrop season continues, but $INJ should not be faded.
$ETH beta plays catch a bid, especially LSTs, and $PRISMA is no exception. Featured some weeks ago in the Rainforest Stack, anybody who has been leveraging this Beefy Vault has been printing.
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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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