Earning higher yield on top of your liquid staking tokens
Hey folks so I’ve written about liquid staking in the past, but I figured it’d be nice to start consolidating some of the best places I’ve found to utilize your liquid staking tokens — earning additional yield on top of your interest bearing tokens.
Liquid Staking
First, if you’re unfamiliar with liquid staking, essentially when you stake a token such as $ETH, depending on the validating protocol you can get a token derivative in return, sort of a receipt proving that you’ve staked your $ETH. This is a remarkable proof of concept for a couple reasons:
- You can take your token derivative and do cool stuff with it, like earn additional interest, swapping, etc.
- I’m by no means a tax advisor, but my understanding is that since the token derivative is an interest bearing asset, it’s a non-taxable event because as long as you don’t sell off the token, you’re not realizing any gains.
Because of liquid staking, for me there’s just not a whole lot of reason to do regular staking anymore. If you can make your staked tokens accrue more in overtime, why not?
Highest yields (I’ve found) to earn from your liquid staking tokens
In the world of DeFi there are a growing number of really cool products out there that are generating rewards on top of the interest you’d already be earning from liquid staking. The following is a list that I’ve compiled, but before I get into it, I thought it responsible to highlight probably the biggest risks:
- Due to market pressures, there’s a chance that some token derivatives can depeg, especially if tokens once staked are in lockup (i.e., $ETH). Besides their bad loans, one of the fall outs from the Celsius collapse was essentially because there was a run on $ETH withdrawals — Celsius had a great deal of tokens staked with $stETH, and because they were selling off a lot, a depeg occurred which caused a significant price drop.
- For some of the strategies I’m going to highlight, the interest (or at least part of it) might be in some lowcap altcoin, which ultimately means that you’ll have price exposure outside of the token that you have via liquid staking.
With this being said, let’s dive into some of the different options:
$ATOM — 16.8% APY liquid staked + 32.2% APR via liquidity pool
If you check out Stride, there’s actually a few different tokens (i.e., $OSMO, $JUNO, $STARS) for which you can apply this strategy and earn even higher APRs, but being the flagship on Cosmos, I’m just going to talk about $ATOM here.
On Stride, you can currently liquid stake your $ATOM tokens to earn 16.8% APY:
Once staked, you’ll receive $stATOM in return, which you can then take on either https://frontier.osmosis.zone/ or https://app.osmosis.zone/ to currently earn an additional 32.55% APR via there ATOM/stATOM liquidity pool:
Please keep in mind that although this strategy is relatively low risk for impermanent loss, you will still have exposure into $STRD.
$ETH — 5.32% APR via Liquid Staking + 15.22% APR via liquidity pool
On Stakewise.io users can both stake and farm their $ETH derivatives for 5.32% and 15.22% respectively. The derivatives available Stakewise are $rETH2 and $sETH2, which can the be placed in either an ETH/sETH2 or rETH2/sETH2 liquidity pool through via Uniswap V3:
Quite recently there’s been chatter that instead of $rETH2 and $sETH2, they’re going to switch to a one token model, but alas, this hasn’t happened yet:
$MATIC — 5.76% APR via Liquid Staking + at least 28.91% APR via leveraging
I can’t write an article about Liquid Staking and not talk about Stader — who has rapidly become the number one place for staking many of the biggest marketcap coins such as $MATIC. On Stader you can currently stake your $MATIC at 5.76% APY in their token derivative, $MaticX. From here, there are a ton of options that you can use to either borrow or lend, leverage (both borrow and lend), yield optimizers, vaults, or liquidity pools — -all with some really nice looking yield rates:
The one that I’m personally most excited about and can possibly bear the highest returns is a relatively new strategy on app.0vix.com. Although there’s significant risk with $VIX price exposure (a token that hasn’t exactly been priced in yet), you can currently earn very high APRs for in $VIX for both lending and borrowing, meaning that you can leverage up your returns pretty high:
$AVAX — 7.20%APR via liquid staking + 12.54% via Liquidity Pools
With $AVAX, currently you can liquid stake on Benqi Finance earning approximately 7.20% APR, while receiving $sAVAX in return. Quite recently, Benqi and Echnida Finance have entered a joint incentives program which has led to increased LP rates on Echnida:
A risk to keep in mind with this strategy is that none of your returns are paid out in native $sAVAX, so you would have complete price exposure into the $Qi and $PTP altcoins.
Other Liquid staking options
There’s quite a few other liquid staking options for other major altcoins such as $BNB or $FTM, but for efficiency sake I’m not including them here. If you’d like to read more about these options and find out how to leverage your gains earning 20%+ APY returns, I recommend you read my article I wrote about liquid staking a couple of months ago, because for the large part, the best-earning strategies haven’t changed.
Thanks for taking the time to read this and be sure to follow me on twitter (https://twitter.com/CryptosWith) to get all my latest updates.
Disclaimer: And as a final reminder, this is not financial advice and this is for educational and entertainment purposes only. Please as always, do your own research and find what investments are best for you. Cheers everyone!
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