If you read this every week, you may have noticed I’ve been writing about yield a bit less over the past two months. That’s been intentional.

As animal spirits started returning, I figured the newsletter should follow what I’m personally most curious about. It felt a bit strange to keep hammering yield while tokens were going up 2x or 3x in fairly short order.

So lately, I’ve been tracking tokens I’m bullish on and trying to learn about newer opportunities in the open. Here’s some examples:

I could still be wrong, but this increasingly looks like the early stages of a new bull market and there’s a lot happening. I wrote plenty about yield through the bear market and the sideways chop we’ve hopefully just come out of.

But I also don’t want to lose track of what’s happening on the yield side.

So this week, I wanted to check back in on the yields and see what’s actually standing out since I last looked.

Here’s what I'll be taking a closer look at:

sUSDe quietly back up to 4.8% APY

I won’t harp on this too much, but it’s hard to overstate the effect Ethena can have on DeFi rates when it really gets going.

I noticed this last cycle. When the basis trade was in full swing and Ethena’s yields started climbing, it became a black hole for capital. Other protocols either struggled to compete or moved further out on the risk curve to keep up.

It also pushed lending and borrowing rates higher across DeFi. In my opinion, that created some pretty perverse incentives and a lot of short term thinking.

I think both Ethena and DeFi have matured since then, so I’m not necessarily expecting things to get quite as whacky this time around.

Still, Ethena could soon be offering high yields at serious scale again. If that happens, I expect some version of the Ethena Effect to return.

That’s why I’ll be keeping a close eye on it going forward.

This is the exact page I’m tracking:

As you can see, they haven’t turned on the equity basis trade yet, while the crypto basis is still yielding just 4.2%.

The equity basis could be particularly interesting because I think it has room to scale as onchain stocks gain adoption. And if crypto gets frothy again, the crypto basis trade can put up some pretty serious numbers too.

All this to say, I don’t think the Ethena Effect becomes the all encompassing black hole it was last cycle. But I still expect it to have a major impact on rates across DeFi once again this cycle.

Lastly, this news just dropped as I was writing this, but EtherFi and Ethena are teaming up:

Growi is the top 30 day real yield on DeFillama at 55.83%

As I mentioned in the opening, it’s been a minute since I looked at DeFi yields. So I went to DeFillama and filtered by Stablecoin, $10M + TVL, and 30D yield.

GrowFi was the top of this list at 53.83% APY 👀 (Axis is #2, more on them in a minute):

Every fiber of my being is trained to reject a number that high, but I decided to look a bit closer. The team was familiar and I noticed they followed me on X, but I still wasn’t sure what they actually did.

Their website had no docs which was a bit of a red flag, but more of this made sense when I started asking about them in our Inner Edge TG.

I should have noticed on DeFillama right away that Growi is a vault managed on Hyperliquid:

Some insights from smart people in our Inner Edge TG:

And then a bit more detail about their mean reversion strategy:

Without doxing anyone, the people who wrote the above are usually highly critical and very good at finding the weaknesses and risks in just about any protocol.

So apparently their performance is legit:

What I would really like to see, in the absence of a documentation page is writeup on their OpSec practices. I see that their strategy is automated, but not sure where to go to learn more about guardrails, or where the security risks lie in this arrangement. But maybe they have this somewhere and I just missed it. Other than that, Growi is seemingly quite impressive, but I would have to do more digging and ideally meet the team before depositing funds.

Axis has returned 22.55% real yield over the last 30 days.

The second name at the top of DeFiLlama’s 30-day yield rankings was Axis. Axis is a sponsor of The Edge Podcast, but even I had to do a double take when I saw the yields. They’ve really been killing it:

Axis has averaged a 22.55% APY over the past 30 days, which is pretty nuts.

As I mentioned in the tweet above, we recently spent around 40 minutes talking with the founder of Axis. If you’re curious about the team and want to do some extra due diligence, you can find all the links to the podcast below:

We did a deeper dive on the risks and strategies Axis employs in an earlier report right here.

Also, the team put out their own article on risk recently which I thought was very thorough:

That said, with anything in DeFi you need to do your own due diligence and make sure you’re comfortable with the risk/reward 🫡

This one is pretty self explanatory, but check out what Superform is doing with Aave.

This is pretty wild to see, but something I’m pretty excited about.

Hold SPCX and generate 32.87% APY 👀

I saw Ethan DeFi mention this and thought it worth sharing:

Btw, if the goal is mainly to go long BTC with some leverage, there are plenty of ways to do it.

You can use perps, but then you’re managing funding and liquidation risk. You can use options, but options aren’t for everyone. Another route is Toros Finance.

Toros has been building tokenized leverage products for years. Its leverage tokens are probably most useful when you’re bullish over the short to medium term and don’t want to actively manage the position yourself.

For example, BTCBULL3X gives you roughly 3x long exposure to BTC through a single token. Toros handles the underlying position, rebalancing and unwinding for you.

It’s a much simpler experience, although funding costs, fees and volatility decay still matter underneath. This is leverage, after all.

These aren’t “hold forever” tokens as they explicitly warn on their site that volatilty decay can eat away at your position over longer periods of time so you should read up on this and be mindful about it. However, if you think there is some short to medium term bullish price action these can make be fairly user friendly ways to get leverage.

PAXGy targeting 3% APY.

This will make every goldbug purist physically ill. Paxos has launched a yield bearing version of Gold:

I think there’s a huge cohort that will reject not only tokenized gold, but the idea of lending that gold out to generate yield.

That’s ultimately where the yield is coming from here, and it introduces a very different risk profile than simply holding gold.

Here’s a calculator they have on their page:

Under this image on their site there is some fine print that’s really important to these calculations:

The main risks here from their own FAQ:

7 day benchmark stablecoin rates from Portals: 3.97%:

Here’s the top yields on stablecoins (real yields) for the past 30 days:

7 day benchmark ETH staking rates from Portals: 2.32%

Here’s the top yields on ETH & BTC (real yields) for the past 30 days:

Here’s a snapshot of the front page of looping this week from yieldz.io (30d APY):

Taking a look at the front page of Stablecoin yields and RWA yields this week on Pendle:

Stablecoins

RWA

Thanks for reading!

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.