Before we get started, this is not a recommendation or endorsement to buy any token mentioned or to use any strategy listed by DeFiLlama. I originally planned to cover how one can wind up a 7x position with wstETH on Euler Finance netting 100-150% APY but given the state of the world post-FTX, I decided last minute to cover a less risky yield discovery tool.
As a follow-up to last week’s tutorial on delta-neutral strategies using DeFiLlama Strategies, I’ll cover an even simpler tool by our friends at DeFiLlama that every DeFi investor ought to be aware of. DeFiLlama has been a long time tool for tracking on-chain metrics like Total Value Locked (TVL), liquidations, and yield strategies.
One of the most important skills to develop in DeFi is being able to find new undiluted yield opportunities. When I use an on-chain search tool like DeFiLlama Yields, I specifically search for yields with these characteristics.
- Passive - Strategies I do not have to babysit and can let run for weeks
- Single token exposure - This way I avoid the complexity of impermanent loss
- Sustainable yield - Real yield, due to real demand, denominated in the token I’m depositing so I do not have to farm and dump rewards tokens
Source: Example of ETH and WBTC lending yields on Ethereum
Today, I’ll show how I could use DeFiLama Yields to filter for single-token lending yields on my preferred L1s and Ethereum L2s.