Before we get started, this is not a recommendation or endorsement to buy any token mentioned.
During a bear market, yields tend to dry up. This is due in part to the selling pressure on newer protocol tokens, which are commonly used as inflationary rewards for lenders, liquidity providers, and stakers. With less noise and froth, comes simplicity in our choices as DeFi market participants. One haven for yield in a bear market is stablecoins, excluding catastrophic depegging of UST. I find stablecoins easier to work with because there’s sustained demand to hold, trade, and lend them in a bear market. Coingecko estimates there’s $154B in stablecoins with $68B in trade volume the last 24 hours.
During the bull run, we saw new DeFi structured products in the form of vaults by teams such as Yearn Finance, which automated investment strategies. These vaults allowed for more users to gain exposure to advanced DeFi strategies. Today, stablecoin vaults remain popular on Yearn, Beefy, Spool, and Vesper, among others. What’s changed is the ability to continually find high yields for stablecoin earning strategies. Instead of constantly hunting for new strategies or relying upon the likes of vault-based protocols like Yearn, what if we can invest in one interest-bearing token as an index of stablecoin yields being passively earned?
A new project launched called Pony Finance offers DeFi’s “one interest-bearing token, with world-class stablecoin yield.” This isn’t a new idea. In fact, PowerPool launched the Yearn Lazy Ape (YLA) Index in March 2021, as an index composed of Yearn vault tokens. Pony offers some subtle improvements, especially now that we’ve transitioned into a crypto bear market, with lots of stablecoin activity beyond Ethereum Mainnet.