Parsec Weekly #109
Opportunities in a dry market
nothing mentioned should be taken as financial or investment advice
Opportunities in a dry market
I’d be lying if I said the current market environment isn’t a tough one with many active traders giving their gains back to the market - death by a thousand cuts. Long only, longer timeframe investors aren’t having a great time either with the past 90 day price performance of top 100 alts looking like:
Just about the only way to earn consistent returns at the moment is in stablecoin yield farming land (assuming you are not a trump admin insider, god tier scalper etc.). With that said, in today’s weekly I wanted to review some opportunities which I have been perusing on the stablecoin farming side of things.
HLP
With a current yield of 14%, the HLP vault on Hyperliquid has been a consistently good source of returns. Using their own description, HLP “provides liquidity to Hyperliquid through multiple market making strategies, performs liquidations, and accrues platform fees”. In a world where most traders are unprofitable, taking the other side tends to be a profitable endeavour on average.
One thing I have noticed is that HLP returns tend to be quite lumpy, the vault will often be flat/slightly up for extended periods and then produce significant 1 day returns during liquidation events:
On the one hand this means returns are inconsistent but equally, HLP exhibits a negative correlation to the market which makes it a good portfolio diversifier.
Sky Money
The MakerDAO rebrand Sky Money has some dependable and reasonably healthy yields on offer too:
sUSDS (the new staked DAI/easiest way to access the DSR) pays 6.5% with the rewards vault paying 7% in SKY. On the basis that the protocol are buying back their own token alongside multiple other positive catalysts (which we covered last week: link), one could make the case for farming to accumulate SKY rewards for higher prices in the future which would offer some upside to the current APR of 7%.
Granted, these yields aren’t going to make you rich but I would consider Sky to be one of the safest places to park stables (even more so than USDC in lending markets where bad debt, black swan risk still exists).
Ethereal
Ethereal is a decentralised perpetuals exchange closely tied to and endorsed by the Ethena team. It seems as though this will be launching on “the Ethena Network” and will be where the Ethena team looks to hedge their long spot positions, thereby leaking less value to CEXs.
They are currently running a “Season Zero” points campaign whereby USDe depositors accumulate Ethereal points and 30x Ethena Rewards (this is arbitrary as we don’t know what the base is, so we can just assume some $ENA will be directed towards depositors).
Unlike the other opportunities here, the APR is not currently known which could make it riskier from an opportunity cost standpoint if the yield is very poor in retrospect.
AO
With over $143m of stETH and $343m of DAI deposited, AO is a relatively large farm which seems to have been mostly overlooked by the market (for the uninitiated, AO is an AI project built by the Arweave team, we spoke about it here). With the $AO token being live, the APR is now able to be calculated as:
APR = $AO price*0.004424 (as per the 1 Year Projection on ao.arweave.dev)
This equates to a current APR of around 13% which again, similar to the Sky Rewards opportunity, could have some upside for farmers willing to accumulate tokens and sell at a higher price.
Berachain
Berachain is also home to some healthy stablecoin yield opportunities such as the USDC.e/HONEY pool on the native dex which currently pays 14.38% in BGT. Again, depending on where the market trades in the future there could be upside to this yield for a patiently bullish farmer!
We’re also seeing plenty of attractive yield opportunities on Sonic, one of which is paying 100%+. But for now, you’ll have to wait for our Sonic-focussed Parsec Weekly which is on the way soon. Subscribe below so you don’t miss it!
Wow! I just learnt new things about stable coin yield farming.