How to Earn a Minimum of 58% APR with MoreMoney on Avalanche
Before we get started, this is not a recommendation or endorsement to buy MORE or any tokens mentioned below.
One of a few passive strategies I expect to carry us through a future “bear market” in DeFi is farming with stablecoins and borrowing stablecoins against yield-bearing assets or long term store-of-value tokens. These are simple ways of earning yield without holding or borrowing volatile assets in choppy markets.
After the recent crypto market drawdown following lots of macro global conditions that accelerated a selloff, we’ve been left with an sizable amount of capital transacting across many chains that make up the DeFi economy. Avalanche has been a top contender competing for second/third place behind Ethereum. However, it’s relatively early in the maturity of Avalanche dApp development and one DeFi lego with lots of room to grow is money markets for lending and borrowing.
MoreMoney is a new lending protocol for opening interest-free collateralized debt positions using liquidity pool tokens (LPTs), interest-bearing tokens (ibTokens) and other major tokens as collateral. Borrowers can deposit collateral and then mint MONEY, a USD soft-pegged stablecoin backed by an overcollateralized debt position. There’s a a number of reasons this is compelling to DeFi borrowers.
- Deposited collaterals can be used for earning in partner protocols like Banker Joe, Yield Yak, Benqi, and Aave. For example, AVAX collateral is used to continually earn interest plus the protocol governance token, which this strategy sells for more AVAX, increasing the borrower’s total AVAX collateral.
- It’s interest-free! That’s a huge advantage to borrow at 0%, despite there being a 0.5% withdrawal fee, meaning you must acquire MONEY to repay your debt and withdraw your collateral. (ie borrow $100, pay back $100.50)
- What I described above also means you can borrow without an urgency to pay back due to higher variable rates that are common on other money markets (ie Aave). MoreMoney mirrors some of the benefits and utility of Liquity on Ethereum.
- By supporting LPT and ibTokens and other blue chip tokens, one can passively earn yield with their collateral while borrowing MONEY against it.
- Lastly, there is an ability to earn MORE token yield by becoming an early LP on a Curve factory pool with MONEY, USDC, DAI, and USDT.
MoreMoney has accumulated about $17M in TVL with a little over $4M in MONEY minted. The tokenomics are fairly simple: 1 billion MORE governance tokens, with 75% allocated to the community fund for possible grants, liquidity mining and staking rewards. I believe the MoreMoney core team has the other 25% of the supply, but I’m unable to confirm how that allocation is broken up and how it’s vesting.
In the future, MORE holders will be able to stake MORE to claim the fees paid by borrowers on the platform. MORE stakers will receive 70% of the revenue generated by the protocol, which as of today since launching a week ago is just under $40,000 MONEY.
The MoreMoney protocol has been audited by Peckshield and “peer reviewed by several solidity developers.” There is always a risk of smart contract bugs and exploits that can’t be ruled out. And of course, worth noting if your vault falls below the liquidation threshold, any third party has the right to pay off your debt in exchange for your vault’s collateral plus a liquidation fee.
How to Earn a Minimum of 58% APR with MoreMoney on Avalanche
For anyone holding any of the supported collateral assets on MoreMoney, there’s a few ways for me to earn yield simultaneously.
1 – Mint MONEY by borrowing against collateral assets. The deposited collateral earns yield with partner protocols like Banker Joe, Benqi, and Aave.
2 – Then, LP with the MONEY in the new Curve pool of stablecoins, earning trading fees on Curve. FYI: It’s not necessary to borrow MONEY to LP in Curve. I could just bridge stablecoins to Avalanche and then deposit them into the MONEY Curve factory pool.
3 – I can stake the Curve LP to then earn 58% APR in MORE tokens.
For the sake of demonstrating interest-free loans by MoreMoney, I’ll show how I borrowed MONEY first against my AVAX.
Before we get started, please be aware of a few major risks.
- Smart contract risk in MoreMoney protocol or any partner protocols for earning with underlying collateral
- There’s risk of liquidation if I do not maintain my collateralization ratio
- Systemic risk in DeFi composability
- Pegged assets, especially such newer stablecoins like MONEY can potentially de-peg (we saw this recently with MIM on Abracadabra)
- Estimated vault APYs can go up or down depending on the amount of competing liquidity and the price of tokens being farmed
- I want to emphasize I know nothing more than I’ve shared here about the MoreMoney core team, and so there’s always a risk of new unknown builders not being good actors. Please exercise caution if you choose to ever deposit into MoreMoney.
Here’s how I get started!
1 – First, let’s assume I will mint MONEY by borrowing against collateral on MoreMoney. I might consider which of the collaterals under Borrow I already have on Avalanche. In this guide, I’ll deposit my AVAX. Btws, I can skip the next few steps and head straight to the Curve factory pool if I have stablecoins on Avalanche such as USDC, USDT, DAI, MONEY.
2 – If I need to bridge assets from Ethereum to Avalanche, I can use this bridge run by the core team behind Avalanche. I can follow the prompts after connecting my Ethereum wallet to choose a token like DAI, USDC, or USDT and send tokens in a single transaction to Avalanche. Btws, sending more than $75 of any token gets you an AVAX airdrop, enough to do a few transactions.
3 – Next, I go to the Borrow tab on the MoreMoney dApp and connect my MetaMask wallet to the Avalanche network.
4 – I choose AVAX to deposit as collateral and borrow well under the Max Loan-to-Value specified (80%). In this case I borrow about 30% against 5 AVAX, which is 100 MONEY, knowing I could get liquidated if the price of AVAX crashed to a point where my LTV hits 80%. My deposited AVAX collateral will be used in partner protocols to earn about 12.6% APY on top of the 58% APY in MORE tokens from being a Curve LP.
5 – I follow the prompts to Deposit & Borrow, initiating a transaction on MetaMask.
6 – Next, I go to the Curve factory pool for MONEY and deposit my MONEY to become a Curve LP. I specify how much MONEY to deposit and follow the prompts to Approve and then Deposit (2 transactions).
7 – Now that I’m an LP in Curve, I can go back to stake the LP here under Farm on the MoreMoney dApp to earn additional MORE.
8 – Lastly, I will return to this dashboard to track my debt position and ensure my collateralization ratio stays healthy (well above 125% in my case)! I can also return to claim my MORE tokens on the Farm tab in the future from the staked Curve LP.
That’s it! I’m earning with stablecoins and allowing my deposited collateral to earn yield with this very capital efficient new DeFi protocol.
For more DeFi video tutorials and insights, follow me @DeFi_Dad on Twitter and subscribe to DeFi Tutorials with DeFi Dad on YouTube at defidad.com. If you’re a builder raising capital for the next killer DeFi app, my team and I would love to partner with you at 4RC (Fourth Revolution Capital). Contact me via DMs on Twitter or at email@example.com.
Disclaimer & Risks: This is not financial advice or a recommendation/endorsement to buy any token mentioned in this post. You should approach all DeFi applications, wallets, protocols, and tools with caution. Please be aware there is always risk in using DeFi, especially technical risks (ie smart contracts bugs), financial risks (ie liquidity crises), and potentially admin risk (admin key compromise, governance vulnerabilities). There’s no guarantee that a new protocol like MoreMoney is not being run by bad actors who seek to exploit users.