160% APY on Stablecoins in 4 Steps

None of this is financial advice. Do your own research, make up your own mind.

You probably know by now about Terra’s fixed 19.6% APY on their stablecoin, UST. With USDT possibly in trouble, more and more users are flocking to UST, which is to say, it’s relatively safe from regulatory risk. Do Kwon, Terra’s founder, also sued the SEC for issuing a subpoena without jurisdiction (Kwon’s in S. Korea). If I were you, I’d park my dry powder stablecoin in UST, and hold some LUNA as well (or be on the lookout for a LUNA / market-wide dip to pick it up; right now, I’m uneasy, which is why I’m thinking of stablecoin yields). Not financial advice of course.

What you may not know about is the Degenbox where you can deposit UST for up to 160% APY or thereabouts. The “up to” part corresponds to how comfortable you are with leverage, or how confident you are that stablecoin prices won’t drop below a certain price. If you pull up a USDT chart, you can see the occasional extreme wicks to the downside (maybe to 96 cents or something, so in terms of my comfort zone, it’d be around 95 cents).

How it works: hopefully you know something about SPELL, or Abracadabra.money, which is a platform that allows you to borrow stablecoins on interest-bearing assets. Then you can deposit that borrowed money right back to the interest-bearing platform, like Yearn, and use those new interest-bearing assets to borrow more money. It’s obviously risky, which is why you should be mindful of liquidation levels, and set the re-borrow settings appropriately.