Quick note, Yields of the week is now DeFi Frontier as this name better reflects the content that we've started to share in this weekly report.
Welcome to DeFi Frontier.
Every week, I highlight the DeFi opportunities, protocols, and market themes I think are worth paying attention to.
Sometimes that means sustainable yield opportunities. Sometimes it means new protocols, best practices, risk frameworks, or broader trends shaping where capital is moving onchain.
The goal is simple: help you find what’s interesting in DeFi, understand the tradeoffs, and avoid blindly chasing the biggest APY on the screen.
Let’s get into this week’s report.
We’re looking at 30 day real yields this week with minimum of $10M in TVL (powered by vaults.fyi)
Stablecoin Yields
7 day benchmark stablecoin rates from Portals: 2.95%:
Here’s the top yielding stablecoin vaults (real yields) for the past 30 days:
Min $10M TVL
Checking in on Stablewatch to see the 7-day TVL changes.
ETH Yields
7 day benchmark ETH staking rates from Portals: 2.34%
Here’s the top yielding ETH vaults (real yields) for the past 30 days:
Min $10M TVL
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Monetrix
This post from Tom caught my eye for a couple reasons:
I realized I’d stopped doing things like tracking whale accounts. I used to do this all the time on Nansen and sometimes on DeBank, but I’ve stopped and this was a good reminder to stay curious.
The other reason is, as Tom mentioned, this particular whale had a decent amount of capital in a newer protocol I’d never heard of.
Definitely enough for me to take a bit of a closer look at Monetrix.
If you click into the app you see this. The 7 day APY is 17.23% and the 30 day projected is 15.97%:
OK but what is it?
Monetrix is a yield bearing stablecoin protocol native to Hyperliquid. Users deposit USDC to mint USDM, then stake USDM into sUSDM to earn yield.
Why does it matter?
My read of the main pitch for Monetrix is that it removes centralized exchanges from the synthetic dollar model. Instead of relying on CEX custody or CEX hedging, the strategy runs on Hyperliquid’s onchain order book, so positions and risk should be more transparent.
Where does the yield come from?
Yield comes from delta-neutral trading strategies on Hyperliquid, including funding rates, spot lending, maker rebates, HLP yield, and other onchain opportunities. The yield accrues through the sUSDM/USDM exchange rate increasing. To my knowledge, they’ve had much of their success off of delta-neutral HYPE and clipping the very positive funding carry. More on this below.
What are the risks?
The main risks are smart contract risk, Hyperliquid execution risk, strategy risk, liquidity/redemption risk, and the possibility that funding or trading yields decline. There’s also a question of whether the protocol can reliably manage rebalances and avoid ADL or liquidation risks during extreme market stress.
My thoughts
Monetrix is interesting because it tries to take the Ethena synthetic dollar model and make it more transparent by building it fully on Hyperliquid where positions are visible. But the real question is whether onchain execution, liquidity, and risk management can hold up during volatile markets. The upside is a more auditable yield bearing dollar. The downside is that this is still a complex leveraged trading strategy underneath a simple stablecoin wrapper. Personally, something like this still isn’t close to getting me to deposit. I’d want to track their performance for a long time before I’d feel comfortable here. Also, I’d need proof that this can scale and that they can find new avenues that ensure high yields.
And speaking of teams with a long performance track record, I thought D2 Finance summarized it nicely here:
Lastly if curious you can track the original whale address from above on DeBank here
Here’s their top DeFi positions, clearly a Hyperliquid bull:
Sierra PTs and YTs
I wrote up Sierra many months ago because I thought their YT angle was interesting (and still do). Sierra has been quietly running a very strong Pendle campaign for many months now and their PTs have been offering high risk adjusted returns through that whole period. They’ve typically fluctuated between 9% - 10% APY.
And I know what you might be thinking…
Sure there are higher APYs, but the underlying positions are quite low risk IMO:
The last 7 days SIERRA has achieved a 4.61% APY and the speculation on the YT has consistently added a ~5% yield on top. So for the past many months you could have been getting exposure to a fairly low risk basket while earning double the yield by being in the PT. Obviously this compounds risks, but Pendle has a sterling track record at this point IMO.
If this doesn’t get the blood going enough they are about to start doing looping with their PTs so watch for that if you’re into that as well.
And if all of that still doesn’t move the needle for you there’s always the YT side which still looks pretty slept on IMO. I was in their campaign that ended in June, and am meaning to get into this new shorter campaign 🔜 but there’s only 29 days left.
However, this current maturity window for their YTs is supercharged.
Check out what Pendle intern has to say below:
On Venice
If you missed it, Venice (VVV) recently raised $65M at a $1B valuation. Erik Voorhees and the team deserve a ton of credit for building a genuinely useful product.
That said, the raise has sparked a lot of backlash because Venice launched a token first, but this latest round was mostly an equity raise.
So now VVV holders are asking a pretty fair question: what do they actually own if the new investors decided that equity was the best way to get exposure to Venice upside?
There’s a lot of nuance to this debate, but I think this guy Viktor summed up my feelings best:
What do you think? Is Venice double dipping?
This one is wild and if you follow crypto closely you’ve probably already seen this but to bring you up to speed…
The Kast founder decided to do a cute little shit post on their competitor (EtherFi) and it totally backfired in the most violent and beautiful way.
It essentially gave Mike the founder of EtherFi cause to go read the Kast Terms of Service and it turns out, when you deposit assets to Kast you are handing over ownership and essentially selling the assets to Kast. This is a bit of a double whammy because not only do you not own your assets, but a sale would be treated as a taxable event.
Here’s Mike’s post that went viral:
Countless accounts on CT have caught wind of this and amplified it, but one of the best break downs was from the guys at DCo:
The moral of the story?
Don’t throw stones from glass houses.
Good Reads
Castle Labs - The Rebirth of Onchain Options: An Ecosystem View
TLDR (but you should still read it):
Options are already massive in traditional finance, and crypto is starting to adopt them more seriously, especially through Deribit, IBIT, CME, and newer onchain venues.
Early onchain options mostly failed because of thin liquidity, high gas fees, poor UX, weak market maker support, and too much risk pushed onto passive LPs.
The setup is better now: rollups have lowered costs, CLOBs and RFQs are replacing AMMs, and protocols are designing products for specific users instead of trying to be “Deribit onchain.”
Derive is the current leader in onchain options. It evolved from Lyra into a pro trading venue with a CLOB, cross margin, perps, options, and its own OP Stack L2. It currently accounts for the majority of onchain options activity, though incentives help support liquidity.
Rysk is more income focused. It lets users sell covered calls and cash secured puts to earn yield while setting levels where they are willing to sell or buy. This seems like one of the clearest examples of actual PMF because it solves a real asset holder problem.
Aevo evolved from Ribbon into a broader derivatives exchange with options, perps, pre launch markets, OTC, and automated strategies. Options activity has picked up recently, but options now seem secondary to its wider derivatives business.
Smaller protocols like Paradex, Hypersurface, CallPut, Kyan, Ithaca, SOFA, Panoptic, GammaSwap, and Euphoria are experimenting with different options formats, including exotic, AMM native, and short dated products.
Prediction markets are basically binary options under the hood: users get a fixed payout if a condition is met and zero if it is not.
Big takeaway: onchain options may finally be entering a stronger phase, but the winners likely need more than better infrastructure. They need simple products that solve specific user problems better than perps or prediction markets.
Full writeup below:
Will tranching eat looping?
This was a great little writeup on a topic I think is very interesting: tranching vs looping.
My opinion, tranching is just getting started and looping is about to go to another level as DeFi adopts fixed term rates.
Some great comments on this article too.
TLDR (but you should still read it):
Tranching is an early but promising DeFi primitive that makes risk transfer more explicit than looping.
Looping currently drives a major share of lending revenue, with loopers acting like junior capital because they absorb losses first through liquidations.
Tranching formalizes this structure: junior capital protects senior capital up to a defined loss threshold.
Today, tranching TVL is still tiny compared to lending, but it is growing. In TradFi, structured finance is a massive market, which suggests the design space could be much larger onchain.
The key difference is precision. Looping is a blunt leverage tool, while tranching lets protocols define who takes which risks, including permanent impairment, yield variance, and withdrawal stress.
Temporary depegs are usually more dangerous for loopers because they can trigger liquidations. Tranches can avoid some of this through observation periods and cooldowns.
The most interesting overlap is lending against senior tranche collateral, which could add another layer of protection and increase senior tranche liquidity.
Lending against junior tranches is harder because their value can fall quickly once losses approach the junior threshold.
Big takeaway: tranching probably does not replace looping. It expands the toolkit by giving DeFi a more precise way to split risk across different types of capital.
Full writeup:
Yield Trading
Taking a look at the front page of Stablecoin yields and RWA yields this week on Pendle:
Stablecoins
RWA
STRC Update
Movement since June 30:
Saturn: $183.3M (-$1.9M), APY 26.50% (from 27.22%)
Apyx: $361.57M (flat), APY 15.51% (basically flat)
STRCx: $135M (+$7M), APY nudged to 12% (from 11.5%)
Total TVL: $679.87M (+$5.1M)
STRC Update
Light was right…
Here’s the details of the sale:
To me, the most important number going forward for STRC and Strategy is “USD months of dividend coverage”. I feel like letting this get too low is what really made investors lose confidence. It got down to ~6 months and Saylor now has it back to 17.4 months, but I think this needs to always be around 2 years if he wants to stay ahead of future worries:
STRC is in a best place its been in for a few weeks now and we’ll see if this is the beginning of a new trend and a march back to 100 or if there’s still more troubles ahead.
DISCLAIMER: Nothing written in The Edge Newsletter or said on The Edge Podcast is a recommendation to buy or sell tokens or securities. This content is for educational and entertainment purposes only. Nothing shared here is financial advice. Any views expressed in our content are solely the opinion of that writer, host, or guest. Always do your own research. DeFi Dad, Nomatic, and guests may have positions in the assets or other matters discussed in this content.
