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Pendle Finance

28/09/2023

Home | News & Insights Pendle Finance – DeFi’s Yield Trading Protocol Starting to explore yield farming strategies based on protocols, and today we’ll take a look at Pendle Finance. Table of content Pendle Finance is one of the most intriguing protocols in DeFi right now. Its launch somewhat preceded its time, and the DeFi market wasn’t ready for widespread adoption of this protocol just yet. However, Pendle Finance has benefited from many innovations in DeFi over the past year: the emergence of the LSDfi narrative, the introduction of numerous other efficient yield-bearing assets, and the thriving DeFi ecosystem on Arbitrum. So, what is Pendle? Pendle Finance is a protocol in the Interest Rates Markets category. What does Pendle do? It divides yield-bearing tokens into two parts: the base portion (Principal Token = PT) and the income portion (Yield Token = YT), creating a market (pool) for them. Naturally, each specific YT/PT pool will have a maturity date. At the maturity date, the YT token will be worth 0, while the PT token will be equal to 1 unit of the underlying asset. Let’s take a look at an example using stETH. YT (Yield Token) By holding 1 YT stETH 🪙 🟢 You will receive the yield generated by stETH. This yield can vary depending on the activity in the Ethereum network, changes in the Lido protocol, and changes in staking rewards in the Ethereum network. 🟢 Your YT stETH will have a value (and a market with sufficient liquidity, by the way). The value will be influenced by: It’s worth noting that the price of YT is significantly lower than that of the underlying asset. For example, currently, you can buy YT stETH with a maturity date of December 30, 2027, for ~$250, while stETH is priced at ~$1850. This means you can exchange 1 stETH for 7.4 YT stETH and earn the yield equivalent to that of 7.4 stETH. It’s a kind of yield leverage without liquidations. Degen Tips: By holding a position in the Yield Token (YT), you, in a sense, have a long position in the yield of the underlying asset, and you generate this yield more efficiently (with “leverage”). PT (Principal Token) By holding 1 PT stETH 🪙 🟢 You will not receive the yield generated by stETH. 🟢 Your PT stETH will have a value (and a market with sufficient liquidity as well). The value will be influenced by: In the example of the same pool with a maturity date of December 30, 2027, the price of PT stETH would already be around $1600. By purchasing PT, you essentially acquire the underlying asset at a discount. More precisely, you are fixing the current yield. Degen Tips: By holding a position in the Principal Token (PT), you, in a sense, have a long position in the underlying asset + fix the yield. This can also be partially viewed as a short position in terms of yield if you expect the yield to decrease. DeFi opportunities with Pendle Finance So, we’ve discussed how interest rates markets work on Pendle. Now, let’s explore some specific farming use cases with Pendle and around it. Let’s dive in and explore the Pendle APYs! Impermanent Loss-free farming through YT At Leech Protocol, we don’t consider Impermanent Loss (IL) as a significant risk (we can provide a detailed explanation upon request), but nevertheless, this feature is present in DeFi. Pendle helps to coexist with this feature. That’s exactly what Pendle, in collaboration with @‌CamelotDEX ⚔️, has done. In the screenshot, you can already see LP PENDLE-ETH (Camelot) and ARB-ETH (Camelot). Farming Tips: If you don’t want to deal with asset price volatility in the pool and are bullish on the yield of a specific LP, YT LP is suitable for you. Farming Tips: If you want to lock in the current yield of the LP you are farming, PT LP will be useful for you. Farming in Pendle pools Alright, so Pendle has liquid markets, but where does that liquidity come from? It comes from its own liquidity pools, which means we can also become liquidity providers in these pools. Pay close attention here. Let’s say you have ARB-ETH LP (Camelot) and want to earn additional yield on top of it. You can come to Pendle and use the zap-in strategy (similar to providing liquidity to a regular pool) in the LP pool. Now, your LP is split into YT LP and PT LP, and you: Moreover, the nature of YT/PT assets in Pendle pools allows you to not worry about Impermanent Loss. Pendle pools are one of the best places in DeFi for liquidity providers. 💡 Farming Tips: If you want to increase the yield of your yield-bearing asset, take a look at Pendle Pools. If you truly want to delve deep into DeFi strategies related to Pendle Finance, you won’t find better threads than those from Vu Gaba Vineb. Farming based on Pendle The ve-tokenomics of Pendle Finance have not gone unnoticed, and the Pendle Wars have even ignited. To learn more about what is currently happening, check out an excellent thread by Small Cap Scientist. In any case, this has provided a boost for the development of a range of projects built on Pendle. The rewards earned in $PENDLE can already be directed towards yield boosters such as Equilibria or Penpie. Additionally, you can provide liquidity in Pendle Pools through similar projects, thereby earning yet another type of token rewards. Just take a look at the yield structure! In conclusion, we want to emphasize that Pendle may not be the most intuitive protocol, but it is highly versatile. It’s worth understanding it, if only because interest rate markets have the potential to become one of the largest markets in DeFi in the medium to long term. What should you do next? *Try our automated cross-chain farming app (soon) * Follow our Twitter for more DeFi and YieldFarming tips * Join our Telegram for Daily Farming discussion * Join our Discord to claim your roles and become early community member Share: Twitter Facebook Telegram

All you need to know about Ve(3,3) projects

21/10/2023

Home | News & Insights All you need to know about Ve(3,3) projects The presence of deep liquidity in a pool is a crucial requirement for ensuring trading volume and stable prices of a particular token. Every project that launches its own token faces the challenge of attracting liquidity to these pools, in addition to attracting liquidity to its own product. However, the emergence of ve(3,3) protocols in the DeFi space helps solve this problem and offers a new perspective on the relationship between liquidity providers and decentralized exchanges (DEX). Let’s take a closer look at the ve(3,3) concept. First and foremost, it’s worth mentioning Andre Cronje and Daniele Sestagalli – two of the most famous builders in crypto. Among their notable projects, one of them is Solidly – a decentralized exchange with the ve(3,3) tokenomics concept. Solidly gained attention when Andre Cronje published a brief article on Medium in January 2022, explaining the tokenomics concept of the new project and naming it ve(3,3). The Origins of ve(3,3) The name ve(3,3) stems from the combination of two tokenomics designs. The first design, ve (Vote Escrow), enables token holders to participate in the governance of a project by locking their tokens for a specific period. This design was first implemented in the Curve DAO project. However, one of the challenges of this design was locked liquidity. Users who acquire voting power by locking their tokens are unable to sell or transfer them until the lock-up period expires. The second design, (3,3), is derived from the concept of “Nash Equilibrium” in the Olympus DAO project. It attempted to set up a tokenomics framework where staking was the most profitable behavior for token holders, while selling tokens was the least profitable. Andre Cronje decided to incorporate a similar equilibrium into the Solidly project, but with more refined incentives. Thus, ve(3,3) © In his Solidly project announcement on Medium (ve(3,3), Andre Cronje outlined the following principles of this design: ve(3,3) Actors The ve(3,3) tokenomics in a decentralized exchange (DEX) involves four key types of participants: ve-token holders, liquidity providers, protocols, and traders. Let’s explore the roles of each of these participants in the overall ecosystem: Is ve(3,3) Concept Thriving? The general principle of ve(3,3) revolves around each participant having their own interests and incentives for mutually beneficial participation. For liquidity providers, it is also attractive that everything happens transparently, and at the end of each epoch, they can know in advance which pool will bring more profitability. By following the voting process, they can secure higher returns compared to the average market. Currently, there are numerous Solidly forks and projects that utilize the ve(3,3) design, each introducing their own additions. Some of these projects, such as Velodrome and Thena, have shown excellent results. Each project makes minor changes to the ve(3,3) concept, such as shifting from dynamic to linear emissions or introducing other modifications to timing and reward structures. For liquidity providers, this allows them to make informed decisions based on reward structures and potential profitability. If you’re interested, you can explore Solidly forks on the DefiLlama website (DefiLlama). If you have any questions, feel free to ask. We’re happy to engage in further discussion! What should you do next? Share: Twitter Facebook Telegram

Memcoins aren’t bros?

21/10/2023

Home | News & Insights Memcoins aren’t bros? Over the past few weeks, we have seen a new wave of memecoins flooding the market. Trading volumes on these meme pools are skyrocketing, APRs are hitting the roof, and CT is full of $PEPE stories and life-changing cases. But how does this affect our DeFi market? Our view is simple — memecoins aren’t bros. Here’s why… 1. Meme coins and liquidity. The DeFi market is still relatively small and faces problems related to low liquidity. When the hype around meme coins grows, liquidity begins to shift from “solid” projects to these meme coins. This can result in profit-taking in altcoins, decreased trading volumes, reduced profitability for liquidity providers, and even the appearance of impermanent losses larger than expected. 2. Lack of value. This is a fundamental problem with meme coins. By sucking up liquidity, meme coins do not create any value for the industry. They do not generate new projects, technologies, development teams, or expertise. Meme coins simply create memes, hype and fomo. 3. FOMO growth. The meme coin hype creates excellent conditions for new scams to emerge. Numerous honeypots, phishing scams, and social media spam start to appear. In addition, there are numerous negative cases emerging, which worsen the overall perception of the crypto among people. 4. Meme coins are a zero-sum game in which liquidity flows from small retail investors to large ones, creating potential for further manipulation. In conclusion, we believe that meme coins are not a suitable investment for DeFi. Although they may seem fun and exciting, investing in them can lead to significant losses and hinder the development of more meaningful projects in the industry. Share: Twitter Facebook Telegram