July 3, 2023: WBTC Summer 🎆🗽
$crvUSD emerges as the leading use case for Wrapped Bitcoin
The first DeFi Summer is now but a distant memory.
Nowadays the popular narrative is all about LSDs and LSD-Fi, thanks to staked Ethereum earning a raw rate of… :checks notes: … 4%
Yesser, a whopping and wild 4%… a number that falls short of treasury bills… has got degens buzzing. LSD-Fi has seized the narrative and spawned a cottage industry of protocols built atop staked Ethereum.
We don’t even say this dismissively… we have ourselves joined the hoopla… we run our own nodes and partake in the occasional hit of LSD.
Compared with its rival Bitcoin, the capability of earning yield native to the coin is indeed bespoke. Bitcoin natively offers nothing of the sort.
For this reason, offering wrapped Bitcoin yields had been an early narrative for Ethereum DeFi. Yet the promise has lagged the potential. For the past several years, bitcoiners have been lucky to eke out 1-2% yields, and then only after navigating sketchy bridges and often suffering heaps of losses.
Bitcoin HODLers hoping to earn high yield on their stacks of sats may finally have caught a break. Good yield on Bitcoin is here, and it has signs of being sustainable.
We don’t expect it will last forever…
We don’t argue it exists in the absence of risk…
We don’t pretend it’s exclusive to BTC…
Yes, everything we’re about to talk about also applies to ETH, but ETH has had no shortage of utility. Bitcoin, in contrast, has been such a relatively boring token.
So we’re excited to see that, for the first time since we’ve started this newsletter, we’ve observed the holy grail: high yield on WBTC, that may also be sustainable!
The solution is $crvUSD, which can be restaked on Conic to earn some high yield (high single digits to low double digits at the moment).
Even better for the “don’t sell a sat” community, the platform’s innovative liquidation mechanism is way less lossy than typical lending platforms.
From the looks of it, Bitcoiners are catching on to the news.
And… it may only get better.
This above fact indicates that these Bitcoin yields may be more persistent than most, since the ecosystem will be mostly tailored to keeping ETH lending profitable, but BTC will get a 40% bonus on this.
Yield farmers… ignore what’s going on with $crvUSD at your peril.
The current “premia” column on Bitcoin and Ethereum derivatives, as calculated by the great Curve Monitor dashboard, is using no sleight of hand. This number has fluctuated between 2-16% over the course of the past few weeks, but it has always been positive and generally resting in double digits.
We’ve been testing $crvUSD experimentally a few weeks now. In this article we lay out our actual results from yield farming with $crvUSD using both wstETH and WBTC.
What follows is not financial advice. As much as $crvUSD tries to lower risk, experimental lending protocols always carry extreme risk.
We’ll provide a TL/DR for those who are too poor to afford membership from the newsletter:
Even though my tests with $crvUSD are profitable, the poors are advised to stay away from $crvUSD. It is exclusively a rich person’s game.
Expect around $300 in gas costs to round trip your position at 15 gwei (if you make no other changes to your position throughout its lifecycle). For a small loan about $10K, this might take several months to repay. A $100K loan could repay this in a few weeks.
If you want to play with anything under 6 figure loan positions in $crvUSD, you’re going to have a bad time.
This turns out to be quite a shame for the poors, since $crvUSD is quite nifty. Fortunately it’s free to read more from the great “Poopman.”
To filter out the poors, we’ll paywall the remainder of the article: