Some DeFi Yield Could Still Be Higher Than 10-year US Treasurys

Though the 10-year US Treasury yield increased by four basis points on Monday, DeFi is still offering attractive alternatives

article-image

William Potter/Shutterstock modified by Blockworks

share

The rising 10-year yield on US Treasury bills, which increased by four basis points to 3.506% on Monday, is now higher than many yields that can be earned via DeFi protocols. 

The Treasury yield increase hit on Monday as Federal Reserve Chair Jerome Powell suggested interest rate hikes could soon come to an end. The 10-year Treasury yield is one metric of investor confidence in the US market. 

At 3.506%, its yield over a decade is now clocking in higher than many DeFi yield-bearing opportunities. 

In DeFi, investors often earn yield through yield farming, that is, the process of earning rewards through providing liquidity to token pairs or trading pools.

Decentralized protocols such as Aave, Curve and Compound are often used to facilitate yield farming. 

Aave’s annual percentage yield (APY) on stablecoins such as USDC, USDT and DAI are currently at 2.57%, 2.43% and 2.71% respectively.

Compound’s APY for these tokens sit at 1.93%, 2.50% and 1.66%

Curve’s 3pool’s base APY is at 0.07% with 0.52% – 1.32% in token APY rewards.

Varying DeFi yields may beat Fed’s rate

Although such large DeFi players may not be currently offering higher yields than the Treasury, DeFi yields do vary across the board. 

Liquid staking derivatives and service providers on Ethereum — such as Lido, Rocket Pool and Frax Finance — have been offering alluring alternatives to US-backed bonds. 

Staking is the process of locking up tokens to participate in the network security of a proof-of-stake blockchain. 

Liquid staking derivatives enable token holders to put their tokens that would otherwise sit idly to use, and these protocols have since become a popular investment model.

Lido, one of the largest staking protocols, with over 6.6 million ether (ETH) staked on its platform, offers a 6.0% annual percentage rate (APR) to customers who lock their ETH onto its platform. 

Similarly, Rocket Pool offers around 5.17% APR in ETH to customers interested in participating in staking — and around 6.98% APR in ETH and rocket pool rewards to those interested in running a node and stake on its platform.

Frax Finance, especially, is offering attractive returns. Its VST/FRAX pool is offering a base of 6% APR to stakers, but its base APR could be upwards of 20%.

Loading Tweet..

Ethereum is not the only network offering attractive staking solutions. Abundant liquid staking options are also available via Cosmos and Solana as well. 

Like all other investments, there are risks associated with staking. 

The crypto yield-bearing process staking facilitates can be quite volatile, and the underlying token prices could change quickly due to variable market conditions. 

Errors with validator nodes can also be possible, and some tokens may require lock-up periods.


Don’t miss the next big story – join our free daily newsletter.

Tags

Upcoming Events

HYATT REGENCY SALT LAKE CITY

TUES, OCT. 8, 2024

Guided by the expertise of Blockworks Research Analysts team, this one day event will feature senior leaders, entrepreneurs, and developers from across the crypto industry. Attendees will have the opportunity to participate in an immersive experience to explore the latest trends, […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

hivemapper.jpeg

Research

We believe crypto market participants overlook Hivemapper’s fundamental potential due to a poor understanding of both the niche map data market and Hivemapper’s positioning relative to incumbents. Hivemapper’s token model catalyzes both a cost and product advantage via unmatched map freshness and near real-time accuracy, which is its wedge into a market characterized by stale data and high data collection costs. Its current and potential future product suite may represent one of the strongest possibilities for PMF in crypto today.

article-image

Exploit shows centralization can sometimes be an asset

article-image

The Fidelity Ethereum Fund, like other proposed ETH ETFs, seeks to stake a portion of its assets, according to the firm’s Wednesday registration statement

article-image

The DAO first voted on enabling SAFE transfers over a year ago

article-image

The final Bitcoin halving, where the mining reward becomes smaller than one satoshi, is expected to occur in 2140

article-image

The Department of Justice and Commodity Futures Trading Commission announced back-to-back lawsuits against KuCoin Tuesday

article-image

Judge Failla found that Coinbase didn’t operate as an unregistered broker in offering its wallet service