Beyond 20%: Exploring the Possibility of Consistently High-Yield ETH StrategiesSustainably achieving annual percentage rates (APR) exceeding 20% on ETH is currently uncommon. However, several strategies can help investors achieve and maintain this target
Beyond 20%: Exploring the Possibility of Consistently High-Yield ETH Strategies
Sustainably achieving annual percentage rates (APR) exceeding 20% on ETH is currently uncommon. However, several strategies can help investors achieve and maintain this target. Crypto KOL Stephen has outlined several strategies capable of consistently delivering APRs above 20%; this article will delve into these methods, analyzing their risks and opportunities.
I. wstETH Strategy: A Cornerstone of Stable Returns
wstETH is lauded as one of the most popular, competitive, and scalable strategies historically. Even during bear market lows, its APR typically remains between 8% and 30%. The core mechanism of wstETH leverages ETH staking rewards (approximately 3%) to offset the cost of borrowing ETH (approximately 2%).
Currently, four excellent platforms facilitate the wstETH strategy: Morpho Labs, Aave, Compound, Growth, and Euler Labs. Through these platforms, the APR ranges from approximately 26% to 46%. Additionally, investors can utilize platforms like Contango to automatically leverage these positions, generating additional yield in the form of TANGO points, OP emissions, and others.
II. Leveraged weETH Strategy: An Engine for Yield Growth
Similar to the wstETH strategy, this approach adds eligibility for various points and emissions, resulting in slightly higher average returns. Investors can implement the leveraged weETH strategy through platforms like ether.fi, Veda, LRT2, and programmatic rewards (such as $LRT2) offered by platforms like EigenLayer.
Three major blue-chip money markets are optimal locations for leveraging: Compound, Growth, Aave, and Morpho Labs. Before considering LRTsquared, EtherFiS4, and Veda points, the APR ranges from 22% to 36%. The actual yield, considering these points, could exceed 50%. It's noteworthy that while Morpho currently boasts the highest APR, the gap between the top three protocols is minimal; therefore, hedging between them often yields the most competitive and consistently high APR, effectively hedging against volatile borrowing rate risk.
III. AERO Farming Strategy: High Reward, High Risk
Compound Growth currently pays users fees for borrowing AERO collateralized by cbETH, ETH, and wstETH. Simultaneously, AERO can be earned through voting on Aerodrome, boasting an APR of approximately 200%. However, with a liquidation loan-to-value (LLTV) of 65%, careful position sizing is crucial. Here are some reasonable position examples:
- Loan-to-Value (LTV) 50%: Relative AERO liquidation increase of 30%, total ETH collateral yield of 100% APR.
- Loan-to-Value (LTV) 25%: Relative AERO liquidation increase of 160%, total ETH collateral yield of 54% APR.
High returns inherently involve high risk; investors must carefully assess their risk tolerance.
IV. ynETH Strategy: An Opportunity with Pendle Competitors
Spectra, a competitor to Pendle, offers ynETH pools presenting market opportunities. With 0 boost, the APR is 33%; with a boost, it can reach 100%. It's worth noting that if Spectra becomes a truly competitive player, holding/locking SPECTRA might be beneficial, so adding some risk exposure for boosted yields might not be a bad strategy.
V. gmETH Strategy: A High-Risk, High-Reward Gamble
The gmETH strategy is somewhat controversial, given past instances of principal loss. gmETH is a "CounterParty Vault," whose value is tied to trader profits on GMX, introducing volatility risk. Investors can implement this strategy on Dolomite; currently, the annual interest rate is approximately 30%, with a historical average of around 20%.
VI. GMWETH (Umami) Strategy: A Hedged High-Yield Option
This strategy closely resembles gmETH but hedges a significant portion of the delta and risk. While the current APR is around 16.5%, historically it's been significantly higher (around 50%), and the average APR is projected to exceed 20% in the mid-term future.
VII. pufETH Strategy: A Long-Term Stable, Lower-Risk Option
pufETH has long been a relatively stable high-yield strategy. This LP (30bps fee tier) historically boasts an APR between 15-50% with minimal rebalancing. While not guaranteed to last forever, it remains a strategy worth considering.
VIII. Other Opportunities: Niche Options
Beyond the strategies mentioned above, platforms like D2L Finance offer smaller but still compelling opportunities. However, caution is warranted when dealing with smaller positions for smaller yields; avoid overstating potential returns.
Conclusion: Diversification and Risk Management Are Crucial
Consistently achieving over 20% ETH yield requires careful strategy selection and risk management. Investors should choose strategies aligned with their risk tolerance and investment goals, conducting thorough research and analysis. A diversified portfolio and close market monitoring are key to ensuring long-term stable returns. The strategies above do not guarantee returns; investors assume all investment risks.
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