DeFi money legos can help you double your portfolio dollar value really quickly, if you know where to look. Today we discuss how to make over 100% APY (annual percentage yield) on Curve Finance. You see Lego Batman’s smug face? He knows what’s up.
Not kidding. Make 100% annual returns on Curve Finance.
It’s a decentralised exchange specialising in stablecoins. There are plenty of stablecoins today – Dai (DAI), Tether (USDT), True USD (TUSD), USD Coin (USDC), Gemini Dollar (GUSD), Binance USD (BUSD), Paxos Standard (PAX), and even JP Morgan’s JPM Coin. You get the idea. There are a lot.
To understand why Curve exists, you need to understand the problem. The market wants a place to trade stablecoins with low slippage and low fees. Curve aims to make the experience of trading between different stablecoins better, because on other exchanges like Uniswap things are the opposite. High slippage and high fees.
Curve currently attracts liquidity to its stablecoin pools by handing out CRV, a governance token. Remember that. That’s what you’re going to make your money on!
The Curve trading platform interface
This is what the Curve interface looks like. I grew up on Windows 3.1 and Windows 95, on a 28.8k dial up modem. This is so unsexy it’s actually fun. Call it 90’s nostalgia. Here you can see I’ve made an example selection to trade 10,000 USDT for 9,990.44 USDC. Cheap.
Your role as a liquidity provider is to facilitate trading. Buyers and sellers come to Curve to make their trades against your pool. You collect a fee for providing this service. There are a number of liquidity pools on the Curve protocol, but I’ve chosen to focus on the Y pool. The Y pool consists of:
Presently there’s about $805 million held in the smart contracts for this pool. I happened to begin on this pool because I was trying to farm YFI many weeks back.
To become a liquidity provider, what you’d need to do is deposit any of these 4 stablecoins into the Y pool, and in exchange for your deposit, you’d get a token called yDAI+yUSDC+yUSDT+yTUSD, representing the liquidity you provided to Curve. It’s a really cumbersome name, so everyone calls it yCRV.
A classic Lego instruction sheet
You see these numbered steps 1-6 above? Building a DeFi yield farm is exactly like that. You need to get the right bricks, then assemble them into bigger chunks, then stick the different structures onto each other, and finally you have a money generating asset. When you’re bored of it, tear it down and build something else.
So in our example earlier, the individual Lego bricks would be your stablecoins. On their own they aren’t very meaningful as money generating toys. You could put them on Aave or Compound and make a really low interest rate. Have you every tried playing with a single Lego brick? It quickly becomes not very stimulating.
But when you start combining bricks, you create different toys. So yCRV is your first instance of how the Curve smart contract allows you to deposit stablecoins… and then you’ve built your first secondary structure.
Which would have then opened up these options.
The APY figure refers to the value you’re receiving based on the current prices of your bonus tokens. The assumption is that if things stayed this way for the next 365 days, that’s the figure you can expect to make. Obviously they fluctuate. But we move around fast to farm higher APY yield elsewhere.
Your farm accumulates CRV pretty quickly. You can click “claim all” at regular intervals, and collect that CRV in your web wallet. The more frequently you do so the more gas you pay, but at least you secure your rewards.
Claim your CRV incentives periodically
Now once you have all this CRV, you’re free to do a number of things. Remember, it’s like Lego. Go ahead and get creative. But here are some straightforward things you can do with your CRV if you’re scratching your head over what to do with them.
Of course, the most unimaginative (but not necessarily the least profitable) would be to just hold on to the CRV inventory, assuming you’re bullish on the Curve platform’s prospects.
As you can see, points 2 and 3 above would open up future earnings on the CRV you already earned, meaning you can probably see yourself pushing your overall earnings potential way above the 100% face value. It would also mean you’d need to farm a sizeable stack of CRV before you begin, but it’s a plan.
At the very least, the protocol is saying 100% is what you can expect. This is me winning in Malaysia.
100% APY? Double the happiness like a champ!
Do you see the endless potential of DeFi money Legos now? It goes on much deeper for layers and layers. Your original assets in this example (the stablecoins) have gone on to create so much more value down the line. Single digit percentage returns is shameful. I personally farm on the sBTC pool on Curve, apart from the Y pool.
As long as you’re aware of the smart contract risks, this is an absurdly geeky and fun way to make money with tech.