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DeFi Vaults Issue #70

DeFi Market Research | zkSync Stablecoin Strategy, USDC/LUSD 20% APR, and more.

⚡️What’s new?⚡️

🏦 DeFi Vaults: The Best LST and Stablecoin Yield Opportunities

📊 Charts & Stats: zkSync accounts for 7.74% of the total on-chain volume leading to Great Yield Opportunities for Farmers

🌾 Yield Farming 101: zkSync Stablecoin Strategy -PancakeSwap to Maverick Protocol

🐦 Last Week in Crypto Twitter (CT): Is Solana the perfect network for payments?, $USDR depeg, Yearn updates tokenomics, and more

🏦 DeFi Vaults

Liquid Staked Tokens

Stablecoin Yields List

Ethereum

Polygon

Optimism

Avalanche

Arbitrum

zkSync

📊Charts & Stats

zkSync Experiences High on-chain Volume leading to Great Yield Opportunities for Farmers

TL;DR:

  • zkSync ranks #3 in DEX volume, an impressive feat considering it holds the 19th position in total value locked (TVL) among all Layer 1 and Layer 2 solutions.

  • The cumulative volume on zkSync ($8.30 billion), contributes to a substantial 7.74% of the total on-chain volume.

  • Currently, zkSync boasts approximately 155% more Daily Active Addresses than Base and processes about 129% more transactions.

  • Stablecoin farmers can reap the benefits of high double-digit yields, thanks to the elevated on-chain volume. This, in turn, leads to more robust fees for liquidity providers (LPs).

Primer on zkSync Era

zkSync Era is a layer 2 protocol designed to enhance Ethereum's security and capabilities through zero-knowledge cryptography. It employs a robust ZK technology stack, incorporating an LLVM-based Solidity compiler, an acclaimed GPU prover, and the cutting-edge Redshift proof system. This combination drastically reduces transaction costs to a fraction of a penny. Additionally, zkSync Era offers cost-effective storage, significantly decreasing expenses compared to Layer 1.

What's The Alpha?

zkSync has handled an immense volume of transactions. Over the past seven days, traders have executed swaps amounting to a staggering $573.7 million in DEX volume:

DEX Volume & DEX TVL

While holding the #19 spot for overall TVL, zkSync ranks among the top 3 chains by DEX volume. This highlights the active trading ecosystem on zkSync, with traders capitalizing on the network's low fees and high-speed transactions:

Overall TVL

Upon closer examination of zkSync's standing among Layer 2 networks, it holds the #4 position, positioned just below Base:

L2 TVL & Market Share

However, it's worth noting that its position is dynamic and subject to change. Currently, it's approximately $133 million below Base in terms of TVL, a relatively narrow margin.

Moreover, zkSync boasts approximately 155% more Daily Active Addresses compared to Base. Impressively, it has recently surpassed Base in Daily Transactions, processing about 129% more transactions than Coinbase's L2:

zkSync vs. Base Daily Transactions
zkSync vs. Base Daily Active Addresses

How Does This Affect Farmers?

zkSync is handling a substantial volume relative to its TVL, and this increased volume results in higher fees, benefiting liquidity providers (LPs).

To begin our search for yield, we can turn to Maverick Protocol, one of zkSync's largest DEXes, currently holding the #3 spot in terms of 7-day DEX volume:

Volume by DEX

Upon closer examination of the LP vaults, we find numerous double-digit APRs available:

Farmers should monitor zkSync's volume as the weeks progress, as currently, the yield opportunities are abundant. Additionally, zkSync is preparing for an upcoming airdrop, which is anticipated to substantially boost on-chain volume!

A clear illustration of how trading volume impacts fees can be observed on Pancakeswap through zkSync. Upon examining farms on PancakeSwap, it becomes evident that the LP fee APR (auto-compound yield) surpasses the farm APR (in $CAKE rewards) for many of the stablecoin LPs:

if you're interested in farming on zkSync, i've provided a list of bridge's here.

zkSync supports swaps from Arbitrum, BNB Chain, Ethereum, and more!

Happy Farming! 👩‍🌾

🌾 Yield Farming 101

zkSync Stablecoin Strategy -PancakeSwap to Maverick

Strategy

Farm Diversified Stablecoins on zkSync Era: Farm BUSD/USDT and Use $CAKE farm rewards to create USDC/LUSD

  1. Swap $500 50/50 for $BUSD and $USDT

  2. Create BUSD/USDT LP on Pancake Swap

  3. Enter BUSD/USDT LP Farm for a ~19% APR

  4. Swap $CAKE rewards 50/50 for $USDC and $LUSD

  5. Create USDC/LUSD LP on Maverick Protocol

  6. Enter USDC/LUSD LP Farm for a ~20% APR

Risks:

  • Smart Contract risk from interacting with multiple protocols

  • Price divergence risk: Depending on the parameters you set for liquidity provision you're LPs profitability may vary

🐦 Last Week in Crypto Twitter (CT)

USDR Depeg

Solana shows promising future of facilitating payments worldwide

Solana Token2022 is making waves!

The DeFi Investor documents the latest developments in DeFi

Yearn updates tokenomics

That's all for this issue of DeFi Vaults, stay up on your research, and happy farming! 👩‍🌾

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