August 29, 2023: $crvUSD Travel Guide 🏖️🍹

Review of every $crvUSD yield farming destination

So you’ve minted some $crvUSD and want to do something with it?

DeFi Summer has given way to DeFi Autumn. Parking money into T-Bills is the preferred yield farming strategy nowadays, but some people prefer to stay onchain to keep their money more readily able to deploy. Thankfully, yield farming within $crvUSD is providing yield reminiscent of DeFi’s heyday.

Of course, yield farming is dangerous! Rates fluctuate, stablecoins depeg, and smart contracts in new and untested protocols can get hacked. Over the past month we saw hacks in Conic Finance, Zunami Protocol, and even older Curve pools. Know that risks abound in this space!

With this in mind, know that everything offered below is for educational purposes, not financial advice.

Here is our annotated guide to all the potential yield farming destinations for $crvUSD (that we know of), the back story, and the risk factors to contemplate if you are considering aping. We’ve indicated wherever the author also serves as an LP.

One final warning that applies to most pools below… the rewards tAPRs displayed on the screenshots below include a range of boosts — if you do nothing to maximize the boosts, then you’ll be earning closer to the lower end of the boost. Most users put their assets into Convex, which typically earns 1.8x the boost. Stake DAO and Yearn have underutilized $CRV and may be able to earn more. Stake DAO recently released a white paper on maximizing boosts through a forthcoming service called Onlyboost that is expected to launch in September:

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Volatile Pools

If you just YOLO-ed your net worth into a $crvUSD loan, you might not want to park your money in a volatile pool. If the prices of the underlying assets tank, you may well find yourself underwater and unable to pay back your loan.

We know degens always enjoy gambling though, so a contingent of users are always interested in gambling. If the prices of the underlying assets happen to go up, then you might find yourself ahead.

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TriCRV

The best yielding pool is TriCRV, which combines $crvUSD with ether and $CRV. This is one of our favorite pools to LP. It serves as the largest source of onchain liquidity for $CRV (currently near 10MM tokens), so it’s reasonable to conclude that the pool will be heavily incentivized in the future to encourage LPs. This also means that it can earn underlying a little extra yield from underlying base trading APY in volatile periods. It provides the ability to withdraw deposits to three of the most useful tokens in crypto.

However, be aware that $CRV is exceedingly volatile due to its shallow circulating supply. The existence of $crvUSD in the pool helps to reduce the volatility a bit, but the value of your investment is expected to fluctuate very wildly in this pool:

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TricryptoLLAMA

This is another of our favorite pools to LP. Combining some fairly decentralized assets in tBTC and wstETH is a nice touch. It is also quite volatile, basically giving you 2/3 exposure to the price of the top two assets in crypto.

One of the nice things about the pool is that wstETH provides some exposure to ether staking yields, so it’s an interesting asset. We dropped a few more thoughts on Threshold Network’s $tBTC in yesterday’s post, and posted a bit more on this pool back when it launched:

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Stablecoin Pools

All the following pools are meant to hold their value and may be considered safer places to keep your money. Unless they depeg!

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$XAI

This pool is offering seemingly absurd yield, which means you should always be asking yourself… what’s the catch?

Well, for starters, it’s very low liquidity, just about $500K, which means you can easily get rekt by slippage. It can also be a sign that the market is steering clear for whatever reason.

More importantly, be aware of some of the context around Silo Finance. $XAI was its stablecoin for its initial markets, but it’s recently made moves towards utilizing $crvUSD as their stablecoin of choice. Bootstrapping liquidity for its own stablecoin is extremely costly for a small protocol. They recently relaunched their markets with exposure to $crvUSD instead, which they dubbed Silo Llama.

Not to worry though, we’ll see Silo again a bit lower in this list…

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$GHO

Like many stablecoins, the new Aave stablecoin has been hit by a lot of FUD since it launched. Most notably, it’s been trading just a touch below peg.

The team is not terribly concerned about this fact, noting they have yet to launch their price stability module. Note also the pool has extraordinarily low liquidity at the moment… just $150K in TVL means even extraordinarily smol fish like me could imbalance the pool with just a few thousand dollars worth of deposits.

If you agree with the FUD, of course you’d steer clear. If you suspect it might repeg in the future, then LPing using $crvUSD could give you some quick upside. You get a deposit bonus at the moment. It may also carry sustainable emissions, given that the Aave DAO recently voted to acquire $CRV on the cheap.

Our hunch is that it’s not a question of if it repegs, but wen. At some point in the future we’ll probably hear news of their stability module launching, and TVL will likely flow in fairly quickly. Aave team is among the best in the business, so we have little doubt in the long-term prospects of $GHO, we just imagine users are playing a bit of a waiting game.

$DOLA

The good news about crypto is that there exists a service to handle all the due diligence you could need, and it’s entirely free. Whenever the Llama Risk team speaks, you need only listen. In January, they wrote up a comprehensive report on $DOLA.

Asset Risk Assessment: DOLA

The long and the short of it is that the team has been saddled by the albatross of bad debt hanging around its neck. It’s spent most of the past year diligently working to undo this damage. Until this is cleared, it’s likely always going to be perceived as a riskier bet.

At least one degen is betting in favor of Inverse Finance’s stablecoin though. Curve Founder Mich has about a $350K position on Convex

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$fFRAX

Technically you might consider this a “volatile” pairing, but we include it here because it’s an LP token minted by depositing Frax.

The pool came into existence in the immediate aftermath of the Vyper exploit that created a vacuum where $CRV liquidity once existed onchain. As always, $CRV shorters tried and failed to liquidate Mich, and the pool was created as part of his efforts to toy with his predators.

For some more background on how Fraxlend LP tokens work, check out this thread

Suffice to say, we consider the pool a very good bet. We have previously LP’ed it. There’s even reason to expect your investment may accrue value (NFA).

One red flag, however, is that the pool does not receive streaming emissions from the DAO, but Mich personally deposits $CRV to serve as streaming rewards. This can be nice in that you don’t need to worry about boosting, but it also may well dry up if he opts to not redeposit.

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Silo Llama

The only $crvUSD destination outside of Curve to make our list. We don’t presently LP here, but we plan to very soon. It’s currently delivering a solid 14%, but it’s about to double!

Silo Finance has a really good track record for safety, but note that depositing outside of Curve exposes you to the risks of two protocols.

Naturally, since they have a $CRV lending market, Mich will naturally play with it. Note that if you are supplying here, you’re making a handshake agreement with Mich that you’ll be on the hook if he defaults.

Since Mich has a 5 year history of always maintaining his high APY loans in outstanding health, we’d personally consider this a stellar risk-to-reward ratio. Yet moralizing nags on X (neé Twitter) disagree. They claim, without citing evidence, that Mich is essentially a washed up deadbeat who is incapable of managing his positions.

Via this market you can judge for yourself, using your wallet to put your stablecoins where your mouth is.

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$MIM

We presently LP this pool. Throughout the stablecoin’s history, betting on a $MIM repeg has consistently been a winning bet for us. The token most recently depegged around the time of the Conic Finance hack. We withdrew from Conic at a 2% loss and $MIM repaid our gains. Thanks!

Of course, it does depeg pretty often in times of crisis, so you can see where users may be reluctant to buy while it’s at peg.

For a bit of recent news, check their governance forum for a recent overhaul.

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$TUSD

As a Peg Keeper pool, this one is systemically important to $crvUSD. It’s also about to get derisked somewhat.

The “Llama Risk” rule applies here as always. The gorgeous Llama Risk team recently wrote up a full assessment.

Asset Risk Assessment: TrueUSD (TUSD)

The TL/DR is that they looked, but couldn’t substantiate most of the FUD around $TUSD. They do have a few lingering concerns about transparency, hence the recent governance forum suggestion to reduce Peg Keeper debt ceiling.

We wouldn’t be averse to LP-ing this pool, since they often do pretty good trading volume. It’s also got good liquidity depth. At this particular risk/reward ratio, though, we preferred to gamble on the upside of the MIM depeg and other pools around this level.

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$MAI

We’re a big fan of the $MAI stablecoin and have LP’ed it in the past. It’s built very heavily cross-chain, and as a result it’s a very good choice for developing markets, due to the low gas fees.

Being cross-chain, $MAI was also heavily exposed to the Fantom issues, and it’s been trading well below peg ever since. We covered it in greater depth last month:

We haven’t LP’ed here, but we’d actually consider it a decent bet. In theory, the depeg offers a great incentive to people who minted $MAI through borrowing to repay at a discount, and we expect the peg will heal as this ultimately plays out. The stablecoin’s proven resilient, so we don’t particularly think there’s existential risk. So there could be upside for whomsoever gambles on a recovery.

The main reason we don’t currently LP is that liquidity is vary low. Given that $MAI’s primary footprint is on L2s, it may commonly see less demand on mainnet.

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$GUSD

Gemini’s $GUSD stablecoin is, by far, one of our favorite bets at this level of emissions. Gemini had a few minor issues with their Earn product during last year’s summer of terror. But for the most part, Gemini’s been very dependable among CEX’s and quite boring. Their $GUSD has a great peg history and its reserves are as kept 1:1 with the utmost of precision. The pool also has $1.5MM in liquidity, which is a bit deeper than some other pools in this range. We happen to have a Gemini account, so it’s an easy decision for us to LP with good piece of mind at slightly above treasury rates.

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$USDP

Another great choice in this tier is $USDP. Paxos is among the most boring and by the book stablecoin issuers, building a nice business for itself as an issuer of white-labelcoins. As a Peg Keeper pool, it’s systemically important to $crvUSD, which comes with some of the benefits like steady incentives, decent volumes, and deeper liquidity. We haven’t LP’ed, preferring the slightly higher incentives of $GUSD at present. At this yield though, it’s definitely a great option.

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$SUSD

The Synthetix stablecoin is also a great choice at this level. We’d probably give the slight edge to $GUSD or $USDP around this range, but both of those are very centralized. If you want a far more decentralized stablecoin, $SUSD subs in quite nicely here.

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Blue Chips: $USDT, $USDC, and $FRAX

We’re lumping the last three together in the same category, because our commentary is essentially the same for all three of these coins. They are all blue chip stablecoins. With market caps over $1 billion, they are among the safest harbors. They are about the safest stablecoins you can choose in AD August 2023. They all have great redemption mechanisms if you need to make a hasty exit. Two of the three pools here are Peg Keeper pools, which comes with all the benefits of such pools as we cited above.

The only issue? The rates are sufficiently low enough that they are competing with treasury bills. If you have your money in $USDC, why not bridge to fiat for a bit and get comparable yield with lower risk?

Perhaps you need to be onchain for some reason though, in which case these are all reasonable substitutes. Author presently LPs here too.

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We hope you found this useful and informative! Again, this is all presented for educational purposes, none of this is financial advice.

Disclaimers!