Transcription
There's something that happened over the past couple years that most DeFi investors don't even know. And while every single DeFi investor is paying attention to this one number right here, total value locked in DeFi at $85 billion, or maybe they're paying attention to the overall crypto market cap at a little over $2 trillion, right? Well, they're not paying attention to the amount of stable coins that are coming into the market.
Stable coins are slowly and surely growing, literally year-over-year. You can see that they currently make up for $322 billion right now. And when we look at this chart of market cap over time, this represents the amount of money that is actually parked in stable coins. Uh, because these stable coins are fully collateralized, which means that this market is growing. And if we look at inflows as well, you could see that historically we are seeing greater inflows than we are seeing outflows. That is another huge indicator that stable coins are going to be a huge narrative in the coming years.
So, in this video, I want to show you a couple different stable coin opportunities. Now, I've hand-selected each of these because I want to show you examples of different types of stablecoin opportunities as well, so that way you can take something away and understand the different risks of stablecoin uh pools within DeFi space.
So, the first place we're going to take a look at is Aave. Now, Aave has been in the news recently. Some of you are wondering, is it okay to provide my capital over on Aave? And ultimately, I just want to say that Aave was not exploited, right? A party within the ecosystem was exploited, but that does expose you to bad debt. Now, in this case scenario, there was no bad debt because it's been fully covered by contributors in the DeFi space. Uh, however, that's not always going to be the case. So, of course, that is a risk, but I still feel completely comfortable parking my money over on Aave, especially especially Ethereum mainnet. But, as you can see, you can get about 3.3% by supplying something like USDC right now. You get about 3.2% over on USDT. You get about 5.9% over on USDE. Now, keep in mind USDE is fully collateralized. Uh, so that's also a pretty solid stable coin, but these are going to be lower risk opportunities.
The next thing that you can do is head over to something like Morpho. Now, Morpho is very similar to Aave. They have markets that you can lend out assets on and whatnot. Um, that's cool and all, however, they also have vaults. These vaults essentially have a curator. And as you can see over here, it kind of outlines exactly what the vault does. So, in this case, the Centur vault provides secure risk-adjusted returns by lending against top-tier collaterals from Bitcoin wrappers to staked ETH and yield-bearing stable coins. Right? So ultimately, they are lending in these isolated markets for the most part, but there's a manager behind that vault and you can kind of choose uh what your exposure is so that way you can make sure that you are comfortable. So if we were to look strictly at stables, really the highest yield that we could get over here is going to be something like 9 to 10%. Now, in all honesty, that's great, but these are markets that do not have a lot of liquidity in them. I mean, for example, this one only has $140,000 worth of deposits. This one over here has $8.89 million worth of deposits, but still only 700K of liquidity. So again, the risk that you're taking is bad debt within the lending market.
Now, the cool part about Morpho is they have isolated vaults, meaning that uh instead of everybody lending to the same exact kind of market, uh you can choose what exposure you want. If we were to go back to these vaults and just select something like this one right over here at 6% or so, uh your exposure is to the lending markets of wrapped staked ETH, wrapped Bitcoin, uh wrapped ETH, wrapped Ether, E, so on and so forth, right? That is your exposure. Ultimately, you're earning yield on your USDC, but that's the market that you're exposed to in the markets that you're lending in. So, people are borrowing the USDC that you're lending out against these markets right here.
Another opportunity is going to be Pendle. Now, Pendle is a yield trading platform. In other words, you can kind of bet almost on yields, is essentially what you're doing. Uh, but what that allows you to do as an investor is lock in fixed yield positions or variable yield positions. The thing is, variable yield positions uh are essentially trading. There are upsides to them, but I'm not going to cover them in today's video. Comment Pendle right below this video and I'll be happy to make something around that. But there's some yields over here like USDA doing about 9.6%. Now, one thing you always have to look at with these stable coins is what are they backed by? USDA is backed by the GPU industry, which is a volatile industry. If that comes tumbling down, you will have exposure. So ultimately, you need to dive into the individual stable coins and you can use JKI, you could use chat to do this and ensure that the ones that you are investing into have actual dollars to back them or you're comfortable with the collateral that is backing them.
And by the way, while we're on the topic of risk, that's one of the main things that we dive into in my free 4-day mini-course to make sure that you have your head on straight when it comes to investing into these pools. And by the end of the seven days that you're enrolled in this course, you will have a clear on-chain cash flow plan that you are ready to implement. And of course, you'll have access to JKI as well as my team throughout the entire process. Link is going to be at the top of the description.
Now, there's plenty of opportunities over on Pendle, but just keep in mind you do have to lock up your capital to get these fixed APYs. For example, if we want to lock in a 9% return over on SUSDAI, this has a 37-day maturity date. So 37 days from now it will mature and we will get our uh initial deposit back plus the yield that we generated over here. This one's 156 days. So again, there are some pros and cons here, right? Uh, obviously the con is if you're investing into a stable coin that maybe has uh incident, right, something like USDA, it might be harder to exit your position. Yes, there are markets where you can go and exit liquid and ultimately take a little bit of a haircut. However, you're still taking a haircut and then periods of volatility, that haircut is going to be higher. But the pro here is this is exactly what you're getting over the course of 156 days. Of course, this is the annualized number right here. So, you have to equate it for the 156 days, but you're locking in a yield, so you don't have to constantly switch positions.
Another vault is going to be the GUSDC vault over on Gains Trade. I actually have about 9 grand of my own capital in this vault. Um, but ultimately, you are taking on exposure to uh people trading on Gains Trade. You're taking the other end of the trade, meaning that you're essentially trading against traders. If traders win, then you are paying them out from this vault. Traders lose, then they are paying out this vault, and then all while doing that, of course, you are accumulating fees that the traders pay. Uh, so again, if you're going to deposit into a counterparty vault, we would typically recommend uh to our clients that you stay deposited for at least like 3 to 6 months. And the reason why is because there will be streaks where traders come in and they win for a month, maybe two months straight. Uh, but then there will be times, the majority of the time, where traders are actually losing their money. And these are especially great vaults to run in times like right now where uh we're bearish and we're assuming that we're going to go down over the course of the next 6 months or so. Uh, and traders, you know, obviously think that they're the smartest people in the world and they're going to make a bunch of money and they end up losing money and paying out this vault basically, and of course paying fees while at it.
There's also going to be some positions over on Camino. Now, these are leverage lending positions that I'd be looking at. So for example, with USDG, again, always look at these stable coins, make sure you're comfortable with them. Uh, because I will be completely frank, deployed into all these positions. I am not even invested into all these different stable coins. I'm sharing what comes across my desk. But basically, what you're doing here is you're taking leveraged exposure to lending markets. You're essentially lending out an asset like USDG and then you are borrowing something like PYUSD. The benefit of these is these are both stable coins, right? Uh, so you're capitalizing on the difference between the interest rate. In other words, if you can lend USDG at 5%, but then you can borrow another derivative of USD at something like 3%, then you have a spread because then you can go and take that borrowed capital and lend it out and just kind of loop that process and go over and over and over again. That's what's happening right over here. You lend out USDG, you borrow PYUSD, you re-collateralize that PYUSD, and then you use that to borrow more um uh what do you call it? PYUSD, and then you repeat the process. The benefit of that is Camino does it for you by just turning up this leverage notch. You most definitely do not want to go all the way up. Uh, but this is a 14% yield right now at max. I would recommend something like probably targeting 9%, which is going to be lower leverage over here, just because if there's a depeg event in PYUSD or maybe uh there's a big buy behind USDG or maybe there's a little bit of a sell-off in USDG, you don't want to be exposed to that and get liquidated because it is not fun.
And you also have the same type of positions over on Jupiter under their lend section. And they also have a multiply uh product. And ultimately, one of the strategies that our clients have been running is supplying sUSDC and then borrowing USDC. And the max net APY you could get here is about 12%. That's if you have 9.8x leverage, but again, we would not recommend that. We would typically recommend something like 6x leverage or so, but you're still getting about 8% there. Now, again, the basis of this is you can get 5.2% for supplying sUSDC and you can borrow normal USDC for 4.3%. So what you're essentially doing is you are supplying that sUSDC. You are borrowing USDC at a lower rate. You're converting that USDC into sUSDC and then repeating the process, except the platform does it for you.
So again, these are the stable coin opportunities that came across my desk. If you guys have any questions or have any direction the content you want me to make on this channel, comment it right down below. And if you guys want that dedicated Pendle video, just comment Pendle and I'll be happy to keep you updated when I actually make that video.
And if you're looking to dive into the deep end of the DeFi ecosystem and you're a little bit worried about what might come next, then of course take the GPS Foundations course. It's completely free. You have my AI co-pilot along the way to help you out with any questions that you may have. And at the end of it, assuming you complete your homework, which is very simple, takes like three minutes, then you will have a human reach out to you by the end of the course, and they'll be able to discuss the next steps with you.
Anyways, hope you enjoyed, and I'll see you guys in the next one. Peace out.