Well things got nasty last week...Bitcoin’s critical support was broken & RED filled
the charts, across all coins. Extended Bear Trap!? Or are we actually in a BEAR market!?
There aren't too many souls who can tell you the answer to that question!
But it’s not all doom and gloom when the markets are going down. Huh? What
do you mean...well find out in give or take 5 minutes. Because it’s time for Chico Crypto!!
How do you take that bearish frown and turn it upside down!? Well Chico Crypto wants to
let you know there are ways to make money in downturns, and it’s by SHORTING the markets….
Ughh just kidding!! Chico Crypto is not a shorter...contributing to the market's declines!
I believe in crypto and shorting the markets, is for those who don’t believe….
So how do you hodl true to the crypto ethos, yet make money when the markets are bearish?
Well in the OLD days, during the last run in 2017,
you could only keep your value stable...by going into blockchain based stablecoins….
But now...since Decentralized Finance, Defi has come to the markets, you can earn YIELD on
those stable assets through DeFi applications! Last week I posted a cashout plan, and in it I
slightly dove into some Yield DeFi tactics & I asked if the community wanted to see more.
The two most upvoted comments on that video?? Y'all want some more...so here it is.
And this centers around a just launched DeFi platform, which creates a brand spanking new
financial instrument market in DeFi, never before. That DeFi platform is pendle finance.
With the rapid development in DeFi, numerous yield-generating assets have been created.
Pendle looks to create the next layer of DeFi on top of these assets, allowing for
the tokenization of yield, such that users can trade and hedge based on their risk appetites.
They currently supports two yield-generating tokens: aUSDC from AAVE and cDAI from Compound.
So how do they tokenize yield? Well you take the yield generating tokens, and deposit them
to the Pendle smart contract. It then splits them into two tokens the ownership tokens,
which represent your claim, and the future yield tokens, which is that future yield tokenized.
How do they create markets for future yield? Through AMMs, automated market makers.
Users are incentivized to add that future yield liquidity, to
a yield token and stablecoin AMM pool. For adding their liquidity,
they receive a portion of the swap fees, and other rewards like Pendle tokens.
So since there is a swapper, an AMM...a person can get access to their future interest yield right
away by swapping their yield tokens for say USDC!! And then, at the end of the contract expiry date,
they can still claim their yield bearing tokens, cdai or aUSDC!
So, I could try and explain this, but the best way to figure it out,
how to get a farming to earn yield is by doing!! So let’s begin right away with Step #1
The first step we will take is going to the tried and true compound finance & we have
to supply the stablecoin Dai to their protocol...which alone, on compound,
is earning a healthy 2.50 percent APR. Make sure you have Dai in the wallet connected to Compound,
and enter the supply amount. I’m doing 1000 for easy Math’s sake for this video...once
the transaction is confirmed you will see the cdai, compound dai in your wallet.
What that cDAI now represents is a claim to the dai, in the compound pool. Which accrues
interest there, the 2.5 percent APY but make sure not to slide over the bar for collateral,
as we are not allowing our cDAI to be used on compound...we are
taking that cdai over to the core of this strategy. Pendle Finance….
Here, you may arrive at the dashboard, but I’m gonna switch over to the MINT function of the app,
and then we want to switch to the ytcdai/usdc pair. It should read our cdai tokens about 46500
of them, which reperest the 1000 DAI plus interest claim on compound.
We now want to MINT yt-cdai and ot-cdai, and we will do the MAX….which makes us just above 46500
each. may need a token approval...wait for that, and then click Mint Now!
So now let’s explain what just happened. Pendle is the first DeFi platform, to allow to buy or
sell the future interest on your lending positions from Compound and AAVE. It’s a smart contract that
breaks up the lending positions into two tokens, the ownership tokens and the future yield tokens.
So now let’s go back to our dashboard. We can see the two types of tokens, equal amounts,
but there is also an expiry date. What is up with that!? It ends in December of next year.
Well that represents the yield date...which has a lot to do with what Pendle offers.
It allows you to lock that future yield, on the set expiry date by selling your YT tokens….
At the dashboard and clicking on the 3 dots, you can see there is a swap function.
Clicking on that it takes us to an AMM, automated market maker swapper, for just 1 pool, the ytcdai,
USDC pool. You can swap the yield tokens, and receive your future yield early...all
around 183 bucks of it, which makes up the implied 15.19% percent return for Pendle you see..and you
still have the ownership tokens….representing the claim to the compound cdai and it’s 2.5 percent.
Sounds great huh! Unlocking future yield early? Well here is the caveat.
Backat the app and clicking on the redeem portion of Pendle.
Let us read what it says. “ Redeeming will convert OT and YT back to the underlying tokens.
Before expiry, both OT and YT are required for redemption. Yes you need equal amounts of both,
to get the underlying cdai out...before the expiry date...but after the expiry date, all
you need is the OT tokens. So back at the swapper, you could get your interest swapped and locked in
for the future right now...you just have to wait for the expiry date, to get your original cdai.
So now where is the good yield coming from Chico? Well the good yield comes to those who FARM and
FARM early. So let’s get farming with both our tokens YT and CT. Beginning with the future yield
tokens. Back to the app...we can see their is an LP APR of 490.75 percent...how in the heck
do you get that? Well you have to add to their liquidity pools. We are going to the YTcdai,
USDC pool...which allows people to get their future yield early. You do this by clicking
liquidity…..here for double sided liquidity, you just click max on your YT position,
and it will automatically put the amount of USDC amount...then click add liquidity now.
Wait for the transaction to confirm...but you can also add single sided liquidity,
just YT tokens or USDC….which is pretty cool. But back to the dashboard,
you may need to refresh, it will show your YT-cdai USDC LP position...wait it says zero?
Well that small yield amount isn’t a big portion of the pool, to see a position with
the smaller amounts lets just to the next step, which unlocks the high APRs...staking
my LP, tokens. From the dashboard, click on the 3 dots within your LP position, and click
stake. We can now see my balance...click max, to stake the full amount...and just click stake.
Wait for it to confirm, and now that future yield, and USDC in the LP token,
is earning that huge APRs of over 490 percent. (staking LP tokens to earn high APR)
Back at the dashboard, the LP position is gone, as it's in a staking contract...but
we do now have a claimable Pendle rewards vesting, which has turned
green...which represents when we can claim our returns...and this epoch ends in just over 5 days!
So earning high APRs with the YT tokens putting them to farming work...but our ownership
OT tokens. What can we do with those? Well clicking onto FARM, we can see there are
sushiswap OT liquidity pools...yeah we can go and LPfarm over there, with our OT tokens.
Clicking on the correct sushiswap link for our pair, it will take us right to the sushiswap
to add the liquidity, clicking on max for our OT tokens, will automatically fill in the amount of
USDC we need. Click confirm adding liquidity, and wait to confirm...again you may need to refresh
the LP pair on sushi, to see your position, but if the transaction is confirmed, it is there.
Why is this important!? Well Pendle is actually a really new platform, only launched on the mainnet
last week. June 17th...during their announcement they said “Dual Rewards (PENDLE + SUSHI) in the
sushiswap Onsen will be live later this week! Yeah soon with Sushi, for the OT tokens and
Liquidity provided, you are going to get the SUSHI rewards...double rewards are coming….and
by the time this video drops, they might already be here! Which means an even Higher APR,
across your assets...cdai earning yield, yt-cdai earning HIGH yield, ot-cdai earning LP fees,
and soon sushi rewards to boost APR….the first time in DeFi...this is possible,
and it will only grow into the future. Cheers I’ll see you next time!