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Article

It's Time to Yield

8 yield protocols to put your idle capital to work.
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Aug 31, 2023 • 6 min read

Dear Bankless Nation,

DeFi yield farming feels poised for a comeback and we want to make sure you've got all of the tools you need to allocate effectively.

Today, we're surfacing hot potential opportunities on 8 yield protocols – our analysis is available in full exclusively to our paying subscribers.

- Bankless team

Yield-farmers are preparing for a comeback.

Get ready for it. Hunting cryptocurrency yields alone is no small task. With hundreds of yield protocols to sort through and a seemingly limitless number of pools to choose from, finding the best yields in DeFi can often feel overwhelming!

To help out, we've amassed eight unique yield protocols you can use today to put your idle capital to work.

The protocols below have some pretty complex underlying technical mechanics, so get ready to put on your DeFi expert hats or take a look at our 8 Bear Market Investment Strategies if you're looking for a more intermediate take on leveling up your crypto investooor skills.

For the rest of you... let's get started! 👇

💫 Gamma

Website | Twitter
Ticker: GAMMA
TVL: $75.2M
Yield Source: Swap Fees, Token Incentives

🧐 What is it? Set-and-forget LP strategies

Gamma offers active management infrastructure for concentrated liquidity pools. The Protocol uses “Strategies” to actively manage liquidity, meaning LPs on Gamma have no need to manually reset tick ranges, claim compounded fees, or monitor their risk of impermanent loss!

Stakers of the Protocol’s governance token, GAMMA, earn a portion of fees accrued from all Gamma-managed pools. Currently, they are free to withdraw stake at their discretion, however, the Protocol’s V2 staking module will allow users to lock tokens for enhanced yields.

Protocols can partner with Gamma to distribute targeted liquidity incentives towards depositors of specific pools and strategies.

🔥 Hot Yields:

🌊 Maverick

Website | Twitter
Ticker: MAV
TVL: $42.7M
Yield Source: Swap Fees, Pool Incentives

🧐 What is it? An AMM with directionally biased liquidity strategies

Maverick provides users with 4 different out-of-the-box automated liquidity strategies called “Modes,” which intelligently shift liquidity depending on the user’s price bias and keep it active according to certain predefined parameters. Liquidity is concentrated within bins, a form of discrete price range, and traders receive zero-slippage swaps within bins, a feature that makes the AMM a highly attractive exchange venue for whales and aggregators.

Users can attract highly specific forms of liquidity by providing incentives on Maverick pools with unique variables (i.e.; the token pair, fee tier, bin width, liquidity mode, and liquidity distribution). Protocols can take advantage of this incentive structure to rent ETH liquidity to pair with native tokens from the treasury.

🔥 Hot Yields (Top Bin APY):

🐰 Bunni

Website | Twitter
Ticker: LIT
TVL: $9.9M
Yield Source: Swap Fees, Token Incentives

🧐 What is it? A liquidity engine for incentivizing Uniswap V3 positions

Bunni has two components: a protocol that places Uniswap position NFTs into fungible ERC-20 wrappers and a vote escrow tokenomics system used to incentivize liquidity. Liquidity providers earn their yield from swaps and emissions of oLIT, a call option token that allows its holder to purchase Bunni’s native token (LIT) at a 50% discount.

LIT holders can deposit it alongside WETH into a Balancer 80/20 pool and lock the receipt in Bunni for veLIT. In exchange, their earned yield is paid out in both WETH – earned from oLIT redemption and Bunni swap fees – and BAL – sourced from the veLIT gauge incentive program. Generate additional yield on veLIT by voting to direct oLIT emissions to pools with high amounts of bribes.

🔥 Hot Yields:

🍔 Umami

Website | Twitter
Ticker: UMAMI
TVL: $3.2M
Yield Source: Trading Fees
Chains: Arbitrum

🧐 What is it? Delta targeted real yield sourced from GMX

Umami’s current product, deconstructed GLP vaults, allows depositors to earn yields from GMX V1 while targeting their price exposure to a single asset (compatibility with GMX V2’s GM pools is in the works).

Vaults breakdown GLP into its underlying assets and can hedge against fluctuations in price both externally (i.e.; on Aave or GMX) or internally. Zero fees are incurred from internal netting, which reduces hedging costs. Users comfortable with a 14-day unbonding period delay can earn enhanced yields on deposits with “boosted” vaults.

Holders of UMAMI, the Protocol’s governance token, can “marinate” it to receive a portion of protocol fees paid out in WETH. Compounding, an alternative to marinating, further boosts staker rewards by swapping the WETH for additional UMAMI and restaking it.

🔥 Hot Yields:

🥧 Penpie

Website | Twitter
Ticker: PNP
TVL: $41.4M
Yield Source: Pendle, Token Emissions

🧐 What is it? A yield-boosting service built on Pendle

Penpie is a DeFi platform designed to provide Pendle Finance users with yield and veTokenomics boosting, servicing Pendle’s users in a similar capacity to what Convex does for Curve users.

Users can vote-lock their PENDLE for mPENDLE through Penpie to maximize the APR that they earn. Penpie uses these deposits to establish a bribe market that enables vlPNP holders to influence PENDLE emissions, creating a capital efficient route for interested parties to purchase influence over Pendle’s emissions over short periods of time.

Additionally, Penpie allows liquidity providers to Pendle to take advantage of its amassed vePENDLE holdings to access boosted yields without needing to lock PENDLE themselves. Boosted yield from liquidity farming is distributed between the LPs (83%), mPENDLE stakers (12%), and vlPNP holders (5%).

🔥 Hot Yields:

🫂 Base Velocimeter

Website | Twitter
Ticker: BVM
TVL: $1.5M
Yield Source: Swap Fees, Token Incentives

🧐 What is it? A DEX you can use to earn yield on friend.tech keys

Velocimeter is a Velodrome-inspired project that started on the Canto network but has since expanded to a handful of other L1s and L2s. Most recently, the Protocol deployed to Base, the same network as friend.tech!

After a wrapper was launched that turned friend.tech keys into fungible tokens, Base Velocimeter users quickly spun up liquidity pools for fractionalized keys and started incentivizing liquidity. Have any spare friend.tech keys sitting around? With Base Velocimeter, you can turn chat room access into a productive asset and start earning yield today!

Base Velocimeter liquidity incentives are paid out in oBVM, an options token that can be used to purchase BVM at a discounted rate.

🔥 Hot Yields:

🌈 Aura

Website | Twitter
Ticker: AURA
TVL: $313.6M
Yield Source: Swap Fees, Token Incentives

🧐 What is it? A yield optimizer built on top of Balancer

Aura is a yield protocol built to deliver maximum incentives earned by Balancer’s liquidity providers and vote escrowing system. AURA, the Protocol’s native token, can be locked by holders to direct incentives to Balancer’s gauges.

Holders of vote escrowed BAL (veBAL) can convert their receipt into auraBAL to receive additional yield earned in BAL and AURA emissions. The Protocol abstracts away the complexities of Balancer’s gauges system for liquidity providers and uses protocol owned veBAL deposited by auraBAL holders to boost yields for LPs. In exchange for their service, a percentage of yield generated is diverted to auraBAL stakers.

🔥 Hot Yields:

🟣 unshETH

Website | Twitter
Ticker: USH
TVL: $11.3M
Yield Source: ETH Staking, Token Incentives

🧐 What is it? A protocol trying to decentralize staking with incentives.

unshETH is an LSTFi protocol that is focused on using incentive engineering to improve liquid staking and strengthen Ethereum’s anti-fragility. Armed with the power of token incentives, unshETH aims to attract liquidity to distribute capital across the LST ecosystem in a manner that prioritizes validator decentralization.

Holders of the Protocol’s governance token, USH, can lock it alone or in combination with ETH liquidity (i.e.; a BPT from the 80/20 USH/ETH pool) to receive token incentive rewards from unshETH and partner protocols.

🔥 Hot Yields:

Action steps

Not financial or tax advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This newsletter is not tax advice. Talk to your accountant. Do your own research.

Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here.

Published in Bankless

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