Before we get started, this is not a recommendation or endorsement to buy any token(s) mentioned.
A new strategy for sustainable ETH earnings was recently published by the team at KyberSwap which combines a range of concepts we’ve covered in Wealth Mastery! These protocols and yields include:
- KyberSwap Farms
- Pendle Finance and tokenized yields
- Lido staked ETH (stETH)
They call this strategy “the ultimate ETH earning strategy in DeFi” thanks to a combination of greater earnings, greater rewards, and near zero impermanent loss.
What makes this ETH strategy better than others? Here’s a breakdown…
Demand for Cross-Chain Swaps: KyberSwap’s wstETH/axl.wstETH and wstETH/ETH concentrated liquidity pools are designed to handle substantial ETH and wstETH bridging demand via Axelar’s cross-chain swaps and Squid routing. The volume should result in long term, sustainable LP fees.
Underlying ETH Staking Yield: Lido stETH staking rewards are historically near 4%. That 4% is in addition to current farming rewards and trading fees earned by LPs.
Farming Rewards: LPs will earn farming incentives provided by Lido, KyberSwap, and Axelar in the form of wstETH, KNC, and AXL tokens.
Pendle AMM LP Boosted Yield: On top of all this yield, Pendle Finance will be adding support for these yield-bearing LP tokens on September 27th. Pendle tokenizes yield-bearing assets, such as an LP token, into a Principal Token (PT) and Yield Token (YT), thus requiring liquidity providers in Pendle AMM so that traders can speculate on yield rates and swap PTs and YTs. According to Equilibria, a popular yield booster built on top of Pendle, the average boosted wstETH LPs in Pendle AMM are earning 7-10% APY. So that’s even more yield coming! Bonus: Learn more about Pendle Finance with this recent episode of The Edge Podcast.
Near Zero Impermanent Loss: These supported liquidity pools have near zero impermanent loss because wstETH, axl.wstETH, and ETH are all correlated. In the future, when Pendle adds its own LPs for these KyberSwap LP tokens, users can rest assured that this bonus yield will not be affected by impermanent loss because Pendle LPs have been studied and shown to exhibit near zero impermanent loss.
L2 Support: These liquidity pools are not only on Ethereum Mainnet, but also on Arbitrum and Optimism, meaning LPs save huge on gas and fees.
Today, I’ll show above how I might enter these top ETH yield farms (2 of which are on Optimism) with a correlated LP composed of wstETH, ETH, and/or axl.wstETH.
How to Farm Up to 14.5% APY With The Ultimate ETH Earning Strategy in DeFi by KyberSwap
Before we get started, please be aware of these risks.
- Smart contract risk in Lido, KyberSwap, Axelar, and eventually Pendle Finance
- Oracle manipulation risk
- Front-end spoof attack on app app frontend
- An economic design exploit in the design of any underlying protocol, especially a bridging protocol like Axelar
- Pegged tokens like axl.wstETH can depeg
- Colluding signers on any multisig
Here’s how I get started!
- First, let’s assume I know how to navigate to mint stETH at Lido.fi or know how to wrap my stETH to wstETH here to be used on Optimism. I may need to swap for axl.wstETH using the KyberSwap app here. Reviewing the farms above (link to Farms on Optimism), I’ll opt for the…
DeFi Dad is one of the earliest power users of DeFi, having worked with early Ethereum startups going back to 2018, including Zapper.
