Distributed research for distributed networks — OurNetwork is crypto's go-to platform for onchain analytics.

📝 Editor’s Note:

Today we are covering "Yield" protocols, a categorization of DeFi protocols whose naming was pioneered by DeFiLllama. While the term is admittedly somewhat nebulous, we can't think of anything better ourselves at the moment, so we're going to roll with it 🙂. There are 500+ protocols in DL's Yield category which currently boast an aggregate total $7.95B in TVL — that's down 74% from the November 2021 but still relatively impressive for a new decentralized financial system nonetheless.

While the market is constantly in flux, with legacy players and new entrant protocols vying for much of the same onchain capital, some notable winners have definitely emerged. Fixed-rate lending protocol Pendle stands at the top as the overall category leader with a tremendous 1st half to 2024, growing TVL by 10x from $300M to $3.5B in 6 months, even as the total size of the DeFi markets has declined. The PENDLE token has also tripled in value year-to-date. The protocol currently holds 44% of the TVL within the Yield category, and is on pace to collect $22.6M in annualized fees. This is a tremendous feat all things considered, and I'd love to see more onchain research explaining how they were able to accomplish this.

A gentle reminder: these DeFi yields are available to anyone in the world with a wallet and an internet connection! I encourage you to try some of the protocols out onchain to earn yourself. With that, let's explore the category deeper. 

– Spencer 🕛

Convex, Stake DAO, Tranchess, Pendle, Aura

• Convex enables Curve.fi liquidity providers to earn boosted CRV and liquidity mining rewards without locking CRV. On the other hand, it offers trading fees and boosted CRV shares to CRV lockers, enhancing capital efficiency. Recently, after the CRV price dropped caused by a big CRV liquidation, the total amount of CRV locked by Convex rapidly increased to over 384M in a month time (+17.5%). As you can see in the chart below, Convex remains by far the largest entity locking CRV.

• By locking up CVX, users get access to the CRV locked by Convex, and hence earn yield from the protocol (currently 0.05%) and from bribes (currently ~15%). You can also stake CVX, earning a 5.25% yield. In July we can see a slight decrease in the amount of CVX locked and a slight increase in CVX staked.

• By dividing the total CVX locked by the amount of CRV locked by Convex you get the number of CRV tokens per locked CXV, which has increased to 7.43 due to the increase in CRV locked and slight decrease in locked CRV. Meaning 1 CVX token locked gives access to 7.43 locked CRV.

• Stake DAO is the go-to place to generate yield on top of your cryptos. On Stake DAO, you can have a boosted access to yield opportunities from many protocols: Curve (DEX and lending), Pendle, PancakeSwap, Yearn, Balancer, F(x). It allows users to engage into liquidity provision, lending, leverage, on many chains, and with better rewards than if they were just using those protocols directly.

• This superior yield is made possible thanks to Stake DAO's share of the underlying protocols' governance token, which gives boosted rewards when providing liquidity. For example, on Curve, Stake DAO just reached 100M CRV locked into veCRV, and is the second holder to reach this level after Convex.

• Stake DAO doesn't only integrate Curve, but a dozen of protocols. Its success is linked to its superior peg maintenance and broader utility of its liquid staking derivatives.

• 💦🔬 Tx-Level Alpha: Finally, Stake DAO recently launched OnlyBoost, a product that simplifies decision making for users who are looking for the best yield on a certain pool, by allocating user deposits through different "boosters" (e.g. Convex and Stake DAO) to maximise the outcome. In this transaction, the user deposits $560k in a crvUSD lending pool. Those funds are split: $303k going through Convex and $257k going through Stake DAO. This allowed the pool to keep a 2.5x boost and the best yield possible.

• Tranchess is a DeFi protocol offering yield-enhancing products through tokens like QUEEN, BISHOP, ROOK, and CHESS for various risk profiles, supporting assets like BTC, ETH, and BNB. CHESS is the governance token, and veCHESS which represents locked CHESS tokens, granting voting power and rewards. Tranchess V2 introduces instant swaps and increased rebate pools, enhancing asset allocation flexibility.

• The asset's price fluctuated significantly over the period, peaking at $0.1954 in December 2023 before dropping and partially recovering to $0.1399 by July 2024. Trading volumes showed notable spikes, particularly on July 11 2023 and Nov. 11 2023, indicating significant market activity. Liquidity has remained relatively stagnant, with a gradual decrease from $1.03M in July 2023 to $253.64k now in July 2024. Significant unlock events over the last few months were marked by sharp price decrease and low trading volumes, such as on April 6 2024 June 2 2024. Overall, the market exhibited dynamic behavior with recovery trends in mid-July 2024.

• CHESS has seen a massive unlock of CHESS tokens of about ~101.58M and has also seen a reduction in staking according to DefiLlama.  Since Mar 28 2024 staking has fallen from $12.29M to $6.35M as of July 30th, 2024. The decline in staking for this protocol can be attributed to several factors. Firstly, the introduction of liquid staking tokens (LRTs) and also new staking models have created increased competition within the DeFi space.

• 💦🔬 Tx-Level Alpha:  There have also been numerous 6-figure Tranchess stakers as we entered into June which reflects the recent sentiment that this protocol is still desirable for some stakers. For example this user account staked $331,700.55 of eQUEEN on June 3 2024.

• Pendle, a protocol which splits yield-bearing tokens into principle tokens (PT) and yield tokens (YT), surpassed $24.5B in trading volume, with 96% MoM growth since Jan.

• Pendle currently $3B in TVL, with TVL peaking at $6.7B. TVL decline is due to pools maturing at the end of June with Pendle settling over $3B of yields.

• Pendle currently dominates ~40% ($600M) of Ethena’s sUSDe TVL, making us the largest holder of sUSDe so far.

• 💦🔬 Tx-Level Alpha: Justin Sun, the founder of Tron, purchased PT-eETH and PT-pufETH to obtain fixed yields. This link shows Justin Sun's dashboard on Pendle. TX is carried out in multiple transactions.

• Aura Finance is a $400M TVL+ protocol built on top of the decentralized exchange Balancer, itself an $800M TVL+ project. Aura interfaces with three key entities, BAL stakers, Balancer LPs, and AURA holders, all of whom can receive yield from the protocol. Aura has attracted 70% of all the "vote locked" BAL (veBAL), which is a token that confers rights to voting and fees on the Balancer platform. Users receive these benefits through auraBAL, which earns additional yield from Aura when staked or used in a liquidity provider position.

• The peg between auraBAL, the version of veBAL which Aura issues, has moved off its 1:1 peg with the 80/20 BAL/ETH Balancer LP token (veBAL is minted with a 80/20 BAL/ETH LP token). The ratio between the two tokens reached as high as 90% auraBAL in June. The ideal peg is 50:50.

• Aura has generated over $250,000 in revenue in all but one month since the protocol's launch in July 2022. The high came in August 2022 when the protocol clocked $835M in revenue.