Before we get started, this is not a recommendation or endorsement to buy any token(s) mentioned.
As the crypto bull market possibly returns, it’s exciting to see DeFi trailblazers like MakerDAO continuing to grow and innovate.
One of the more popular yields during the end of this bear market was brought to us by Maker–called sDAI. In May 2023, Maker launched Spark Protocol which allows users to supply or borrow ETH, stETH, DAI, and savings DAI at competitive rates.
Spark is a fork of Aave so the launch was well received given the familiarity of the DeFi UX. One new yield-bearing token called sDAI, short for Savings DAI, represents DAI deposited in Maker’s DAI Saving Rate (DSR) module.
The DAI Savings Rate (DSR) is an addition to the Maker Protocol that allows any DAI holder to earn savings in DAI. This yield is generated by the revenue Maker generates on users who mint DAI as well as the RWAs it holds. As of this writing, the DSR is currently paying 5% APY.
Separate from MakerDAO and Spark, there was a fork of Aave launched on xDai Chain in 2021 cleverly called Agave. Like Aave, Agave is a decentralized non-custodial money market protocol where users can participate by borrowing or lending money through the application.
Agave is a fork of Aave, built by the 1Hive community and deployed on the xDai chain where network fees are much lower. Like on Aave, Agave users can deposit tokens where they receive an aToken in return. The aToken will accrue interest for token holders. Additionally, users can enable their deposit to be used as collateral and thus use this to borrow other assets. This allows users to leverage their deposits.
To bring this all full circle, Agave also supports a version of sDAI by Maker on xDai Chain (aka Gnosis) called Savings xDAI. Savings xDAI allows you to earn the DSR directly on Gnosis, where you can simply deposit your xDAI into Savings xDAI and start earning the Maker DSR rate back on Ethereum Mainnet.
Savings xDAI is redirecting all interest from the xDAI Bridge on Ethereum Mainnet. The bridge has its DAI deposits converted into sDAI on Ethereum Mainnet, which accrues the DSR on Maker. Because most DAI in the Gnosis bridge has been moved into sDAI on Ethereum Mainnet, as long as there are less sDAI on Gnosis than sDAI in the Gnosis xDAI bridge, the interest rate on Gnosis should be higher than the current 5% APY on Ethereum Mainnet, which is why Agave sDAI holders are earning 6.676% APY!
Today, I’ll show how you can earn 6.676% APY with sDAI using the Agave dApp.
How to Earn Up To 6.676% APY with sDAI on Agave Finance
Before we get started, please be aware of these risks.
- Smart contract risk in Maker and Agave
- Front-end spoof attack on app app frontend
- An economic design exploit in the design of Maker or Agave
- Colluding signers on any multisig
Here’s how I get started!
- First, I go to the Agave Finance app under sDAI and connect my Gnosis/xDAI wallet (ie MetaMask).
- Then, I specify how much xDAI to deposit and follow the prompts to transact and receive my sDAI. By simply holding sDAI, I’m accruing this 6.676% APY!
- Lastly, if wanting to earn a tiny bit more yield, I can lend my sDAI under the All Markets tab under sDAI but the yield is so negligible right now at 0.003% APY so I’ll skip it.
That’s it! Now I’m earning one of…
DeFi Dad is one of the earliest power users of DeFi, having worked with early Ethereum startups going back to 2018, including Zapper.
