📝 Editor’s Note:

Welcome to OurNetwork's Yield issue, where we dig into the corners of crypto where users are generating returns on their digital assets.

As you'll see, yields have come down in the past year — the benchmark rate on USD has dropped nearly 10%, according to vaults.fyi. Despite this, there's still a huge amount of yielding-bearing capital in DeFi — in fact, there are six single venues in DeFi with over $1B in total value locked.

We'll dig into the latest in DeFi yields in this issue as well as touching on two sophisticated players operating in the veTokenomics and yield-splitting space.

– ON Editorial Team

Stablecoin Yields | Stake DAO | f(x) Protocol

• Yields across leading DeFi protocols have dropped sharply, reflecting subdued borrower demand and market caution. At 3.1%, the vaults.fyi USD benchmark 7-day average APY has fallen below the current US 1-month T-bill yield of 4.3%. After peaking near 16% in late 2024, stablecoin yields on major DeFi markets have plunged to their lowest levels since late 2023, underscoring a pronounced shift toward a more risk-averse environment.

• Activity in the largest stablecoin markets continues to grow however, even as rates fall. Major vaults on Aave, Sky (formerly MakerDAO), Ethena, and Compound have nearly quadrupled in size during the past 12 months, rising from $4B to $15B TVL collectively. During the same period, yields have fallen from over 15% to under 5%.

• New challengers entered in 2024, attracting over $3B in assets. Fluid, a DeFi platform with over $1B in TVL, has sustained higher yields through higher utilization, moving capital across both DEX liquidity and lending. Morpho and Euler introduced modular lending, enabling curators to bring over 100 varied lending strategies to market.

• Stake DAO is a platform centered on veTokenomics. sdPENDLE, Stake DAO's liquid locked version of the PENDLE token, recently reached the 100% peg ratio it aims for. This again suggests the strength of Stake DAO's design for liquid staking of governance tokens. While other lockers struggle keeping their users —Equilibria's ePENDLE sits at 58% and Magpie's mPENDLE is still completely under water below 50% since a hack — the repeg mechanisms inherent to Stake DAO's liquid locker infrastructure enabled sdPENDLE to reclaim full peg after a depeg event that occured one year ago.

• Beyond the various repeg mechanisms, what is helping sdPENDLE to stay at peg, is its phenomenal APY. By managing votes smartly, taking into account both vote incentives brokered OTC and fees going to each pool, Stake DAO manages to keep sdPENDLE at a steady APY of 95% without a boost.

• Thanks to the positive momentum for its PENDLE locker which just passed 900k vePENDLE, Stake DAO is able to offer very competitive boost on Pendle liquidity providers. It generally has the maximum boost (2.5x), and with its lower fees (15% versus 23-25% for Equilibria & Penpie), it consistently offers the best yields.

• f(x) Protocol is a project which splits yield-bearing assets into a stablecoin and a leveraged position. With an average APY of 19.71%, its Stability Pool (SP), has demonstrated significant earning potential while maintaining robust liquidity reserves. The SP currently has, $39M in TVL, having peaked last month. APY has ranged widely between 41% and 12% year-to-date.

• f(x) Protocol's real-yield mechanism ensures that stability providers directly benefit from the protocol's actual transaction volume and success, creating a sustainable economic flywheel where increased trading activity translates to higher returns for liquidity providers.

• veFXN stakers, users who stake f(x) Protocol's veToken, FXN, earn 75% of revenue, receiving real yield in wstETH rather than inflationary tokens. This direct revenue-sharing model aligns governance participants with protocol growth, as higher trading volumes automatically deliver greater returns to committed token lockers.

• (fx) Protocol has plans to launch BTC markets, where projected yields could increase from 16% to 28% APY based on BTC's 1.89x larger market cap. This significant yield enhancement maintains the protocol's real yield advantage, as all returns continue to be generated from actual trading commissions rather than token emissions.