Defi Yield Hacking (Investing) Beyond Ethereum 1.0

Defi Yield Hacking (Investing) Beyond Ethereum 1.0

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  21st, December 2020 (4 months ago)

Cryptocurrency

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Defi on Binance Smart Chain - See previous post for more details on BSC Defi on BSC is growing by leaps and bounds. Check out BSC news to get a sense of what is going on.

Introduction - Defi on Binance Smart Chain

While we are waiting for eth 2.0 to support smart contracts (probably a couple of years), we have some other alternatives which are compatible, quicker and less expensive. In fact many of the good Defi projects (like Cream, For.tube and Alpha for example) run on both chains (Eth and BSC). The only difference is that the same dapps on BSC are faster, cheaper and support more coins from different chains. Unless you are a big time whale, network fees account for a large difference in ROI. Testing and evaluating defi dapps is much easier on BSC. Learning is also easier for new dapps. How much is your time, and frustration levels worth? BSC has been a pleasure to use after struggling with Eth 1.0 during over-congested times. If network fees are rising, you could be waiting an awfully long time, when trying to transact on Eth 1.0.  Why subject yourself to this when there are good, viable alternatives available now? 

Don't get me wrong. I am still a fan of Eth in the long term. I still have a number of key defi investments on Eth 1.x, and can easily go back and forth, since they both use Metamask. Its relatively easy to transfer assets if necessary using either the Binance Panama 2 way migration bridge, or even the native Binance exchange wallet which works well also. Aside from the speed improvement, and the multi-chain features I really like the ability to move investments around, and harvest yields more often without high cost. You can change strategies on a dime, and BSC is much more forgiving to mistakes or errors, which are bound to happen.

To me the future is about agility, and interoperability, and not about so called "Eth killers". I don't believe in tribalism, and hope we can move beyond that kind of FUD and work together. I believe that different chains will have advantages and disadvantages, and suitability for different use cases as we get into more mainstream adoption. We are just getting started, and its going to take a lot of effort to move beyond the traditional financial system, and all of the associated problems which have grown over the years because of old rails, or abuse of power. At least we are on a level playing field now. 

Defi on Binance Smart Chain - See previous post for more details on BSC

Defi on BSC is growing by leaps and bounds. Check out BSC news to get a sense of what is going on. 

 Cream - Good dapp which works in a similar way to the Eth equivalent, except it is faster and cheaper. More diverse coins are supported, and the rates are different, based on the demand for borrowing and the current supply. Rewards in cream token seem to have expired. 

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 For.tube - Similar to Cream, with generally higher rates if you take into account the additional rewards. You can also automate the harvesting and re-selling process if you use Beefy (see below)

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 Pancake Swap - Biggest and most diverse of the swapping, liquidity providing and farming alternatives, of which there are many. You can also automate the yield farming process by using Beefy (below) for harvesting yields automagically and selling every hour, for a compounding effect. 

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 Beefy.finance - meta-yield farming which is integrated with For.tube, Pancake, Burger swap, and Traphouse to increase yield and reduce manual work. 

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This excerpt is taken from a recent article in BSC news about Beefy swap, and is worth reading:

 recent article in BSC news"This is where Beefy separates itself from the pack. De-Fi projects already boast insanely high yields, but Beefy vaults take it to the next level. Just in the sense of compounding, Beefy vaults can earn users upwards of 8x their initial investment after three years of compounding."

This is similar to YFI, but on BSC, which allows for more elaborate strategies because of faster thruput and lower fees vs. ethereum. The only thing that I don't like is that the founders are anonymous. I realise that there are some advantages to that approach, in terms of censorship resistance, but in my opinion is that it is negative for mainstream adoption of serious financial applications. 

Burger Swap - See previous post on BSC for more details

Venus.io - Money market which just launched recently. This one deserves a whole review article. I am just in the process of evaluating it, and it looks great. More to come in my next blog post. article

Alpha - Yield farming with leverage to increase yield (and risk). In process of migrating from Eth 1.0 to BSC. It works well on eth, but not yet operating on BSC. Next version will include options and derivatives, and is currently in Beta. 

Defi on Kava/Cosmos (connect using Trust wallet)

  • Kava- Similar to Maker Dao, but interoperates across chains, instead of eth only. You mint USDx loans for staking BNB as collateral. Works with the Trust mobile wallet. You have to maintain a collateralization ratio, or risk getting liquidated (similar to Maker Dao and Dai) You also get Kava tokens as a reward, but they have introduced a vesting period, which means that your rewards will be locked for a period of time, however that usually tends to increase the value of the token, since it lowers the inflation. 
  • Harvest.io - Cross chain money market running on the Kava/Cosmos chain. They will also be adding more xchain defi services. You can invest Kava and USDx for interest, and also earn some incentivised rewards for now (HARD governance tokens). (Don't confuse with harvest.finance, which is another project on eth). 

Defi on Eth L2

 Matic - Easyfi - Money market running on Matic, with incentivised rewards for liquidity

 OVM  (Optimistic eth) - Synthetix - Test version works well, but not live yet

 Other L2 - Xdai, ZK rollups, many others

Conclusion

I have tested all of these Defi dapps, and they worked well for me. In general I have been very happy with the experience, and yields on these newer platforms. However, they are not perfect (nothing is). They are still not as mature as the Eth 1.0 dapps, and the ecosystem doesn't have as many good tools yet, like analysis utilities which are comparable to Zapper.fi, or Zerion for example for tracking and monitoring Defi portfolios. But, I believe that this will come in time. Binance has been funding some analytical and advanced Defi projects, which are in progress. There are also other chains evolving which may turn out to have some good support for defi apps such as Polkadot, Solana, Tron, Fusion, Fantom, and maybe even defi on a Bitcoin L2. Who knows? Only time will tell if  Eth 2.0 will become dominant again, or if we will have a handful of major players which will be strong in different use cases, and will all co-exist and complement each other. Personally, I favour an interoperable future. What do you think? 


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