Get Over 20% APY on your BTC with DeFi
All thanks to Curve, Synthetix, and REN.
I started 2020 curious about Bitcoin. Like, isn’t that halving thing happening again soon?
What even are cryptocurrencies?
So I learned about BTC, and then I dug even deeper into learning more about the rest of crypto. And after discovering Ethereum and Decentralized Finance, Bitcoin has just been boring in comparison.
I can . . . HODL it. And there’s nothing new ever happening. Fun.
But recently, there have been some great initiatives to put BTC on ETH, so hang on, because this is going to be a long one.
Bitcoin, but on Ethereum
Bitcoin and Ethereum run on completely different networks. Before, there was no way to lock up your BTC in any of the DeFi protocols on Ethereum.
But now, there are ERC-20 tokens on the ETH network that are pegged to Bitcoin. This allows BTC to be used in so many applications!
And in our case, we’re going to use BTC to earn some trading fees by pooling your BTC.
Providing liquidity
Remember that 20% APY I mentioned? Take a look at number 5 and 6 on the list.
That 20% return comes from providing liquidity on Curve Finance.
If you’re new to liquidity pools, you provide two or more tokens to a big liquidity pool of those same tokens on an exchange.
When people make a trade against the pool, the trader pays a fee. Then, that fee gets proportionally distributed to contributors of the pool.
Now, Curve Finance is unique: their pools are optimized for exchanging similar assets with low slippage.
For example, most of Curve’s pools are comprised of different stablecoins. Their unique use case and low fees make them attractive to traders, so liquidity providers (LPs) not only earn good trading fees, but they suffer very low impermanent loss as well!
But now, Curve has come out with new pools for the different Bitcoin ERC-20 tokens: renBTC from Ren, wBTC, and sBTC from Synthetix.
Incentives for providing liquidity
The thing with trading, though, is that not every day is going to have the same amount of volume. In fact, the returns on Curve are at 4% right now — it could rise, and it could sink.
But, it’s still potentially possible to realize 20% APY through the other tokens from Synthetix’s BTC Yield Farming Pool incentive. You can read the announcement here, but here is a summary:
What are the incentives? (On top of earning trading fees!)
- REN and SNX tokens, bundled in a token called BPT
- BAL tokens, a governance token for Balancer Finance. Gained through the REN and SNX rewards being held in a Balancer pool*
- CRV tokens, a governance token for Curve. Gained through providing liquidity on Curve*
*Tokens yet to be launched, as of the time of this writing
Who are the incentives for?
- The incentives are for anyone providing liquidity to the sBTC pool on Curve.
How long will this incentive last?
- It started on June 19, 2020, and it will last for 10 weeks
It’s a great incentive, especially if you want to speculate on the unreleased tokens (especially after the drastic rise of COMP). I personally think they’re great projects, so yes, I’d like some of those tokens.
That said, this incentive come with a lot more risks than just holding BTC. You have to trust that the smart contracts from Curve, Synthetix, Ren, and Balancer are secure. You also have to trust the custodians for wrapping BTC, be it BitGo for wBTC or Ren for renBTC.
If you accept those risks, though, then let’s get started!
Getting started
Start your research: Curve Finance site / Curve Finance FAQ / Synthetix site / Synthetix litepaper / Ren website / Ren litepaper / Balancer site / Balancer whitepaper
What you need: ETH for gas
Optional: ETH for converting to one of the BTC tokens or BTC to wrap
There are three assets in the sBTC pool: renBTC, wBTC, and sBTC. You only need one token to deposit into the pool. It will automatically split your one deposit into all the other tokens.
Also, there is a small bonus for depositing the token with the smallest balance in the pool. If you‘re interested in getting that bonus, then check the check Currency Reserves at the bottom of curve.fi/sbtc.
1. Wrapping BTC
(If you already have one of the required tokens, skip to 2. Depositing into the Curve pool)
I used Curve’s interface for this, as it provided wBTC, which was the lowest asset at the time. If you want to get renBTC, use RenBridge.
- Go to curve.fi/ren, which is the Ren pool. Connect your wallet.
- Click on the Swap Bitcoin message on top. Once it’s loaded, select how much BTC you’d like to turn into wBTC. There are custodian fees and network fees for wrapping, so it won’t be 1:1.
3. Click the Swap button. A BTC address for you to deposit into will appear at the bottom. This address will be different for every transaction; if you’re swapping for a second time, do not deposit to the first address!
3. Send the amount of BTC you specified to that address. It will be approved after 6 network confirmations, which took a while.
4. Once the 6 network confirmations are done, you’ll see a Resubmit button appear. This will push the ETH transaction. Pay for the gas, and you’ll see the wBTC in your ETH wallet.
2. Depositing into the Curve pool
- Now, go to curve.fi/sbtc/deposit. This is a different pool now.
Choose how much you want to deposit, and click on the Deposit or Deposit and Stake button. For less hassle, choose Deposit and Stake.
2. You’ll have to approve two transactions: one to allow the contract to access your funds, and one to actually deposit. Turn on infinite approval if you’d like to.
If you only Deposited, you can view the breakdown of your liquidity at curve.fi/sbtc/withdraw.
Optional: Staking in Minter
If you didn’t Deposit and Stake, here is how to manually stake in Mintr.
- Head to mintr.synthetix.io. Connect the same wallet that you used in depositing to Curve.
- Click on the tab called “LP Rewards” and look for Curvepool sBTC.
3. Approve a transaction to allow the system to access the Curve LP tokens that you own.
4. Once that’s done, you’ll see a dashboard like below. Choose Stake Tokens, and you’ll have to approve a transaction to carry out the action.
5. Once you’ve staked in, you can check the dashboard again to see your accumulating BPT rewards (SNX and REN).
There is no expiration date for rewards, so claim at any time you like.
And if you’d like to view your returns in a portfolio manager, I highly recommend Zapper.
Final thoughts
I’ve been following BTC on ETH for a while, but nothing was compelling enough for me to wrap my BTC until this incentive.
I earn trading fees, and I can also get some other tokens? 🤯
I’m excited to be doing something more with my BTC, and I really like the experience of BTC on ETH. I managed to finish folding laundry, and those 6 network confirmations still weren’t done by the time I got back!
I can’t wait to see how BTC on ETH develops further.
If you found this helpful, feel free to send some gas money to hackingmoneyph.auth.eth.
Things in crypto and DeFi are always changing. Please double-check the original project for updates since this was written.
Disclaimer: This is not financial advice. Please always do your own research on different protocols and the risks involved with them. Only invest what you can afford to lose.
