introduce
The recent market moves, with Bitcoin hitting an all-time high of nearly $74,000, suggest some exciting DeFi strategies that, based on my assumptions and calculations, could potentially earn returns of 100-300% in the coming months. How can this be? Because as the bull market returns, something is happening;
New tokens are launching at ridiculously high valuations, making airdrop farming increasingly profitable.
The bull market makes traders more hungry for leverage and less sensitive to rising lending rates → pushing up DeFi yields.
After doing some spreadsheet analysis last week, I discovered some strategies that blew my mind and allowed me to deposit a lot of Ethereum. These include LRTs, EigenLayer airdrops, and more.
Time is running out⌛️
But time is running out. The Ethena sharding campaign will end on April 1st, EigenLayer will launch on mainnet in the coming weeks (possibly along with its token too?), and a few other campaigns will end this summer. So, time is running out for a few of them, and if you want to get some last-minute exposure, this is your guide.
Restaking craze
At this stage, you have most likely heard of EigenLayer, restaking, liquidity restaking, and the various protocols that provide this service. I first deposited into EigenLayer to start Farming in the third quarter of last year in anticipation that the $EIGEN token might launch at a massive valuation. I forecast a valuation of $20 billion and received a lot of criticism at the time, claiming I was too optimistic.
Today, with nearly $11 billion deposited in EigenLayer, and more than 30 large applications having pledged security through re-staking, a $20 billion $EIGEN valuation is considered conservative, with some calling for $40-50 billion FDV.
In addition to this, Ether.fi, the largest re-hypothecation protocol with over $2 billion in TVL, recently launched its token $ETHFI, trading at around $4 billion. Since you can stake and receive airdrops as well as EigenLayer points at the same time, it’s clear that despite the large number of people participating in these airdrops, this is still a good strategy from a reward perspective. Here is a list of current liquidity staking protocols that can earn you native points and EigenLayer points:
Ether.fi
Renzo
Puffer
Kelp
EigenPie
Swell
There are other smaller protocols. However, as TVL decreases, so does the expected token valuation at launch, making participating in these airdrops less interesting. So let’s focus on the ones above. Ether.fi has already airdropped 11.5% of the token supply and will airdrop more during the second quarter of the event. The remaining projects have yet to launch their tokens. Before we dive into the best strategies, let’s take a look at the current status of points and corresponding airdrops.
Estimated airdrop return rate
Ether.fi
Ether.fi’s estimate is a bit tricky since they have already airdropped part of the supply and released the token. However, the team has just announced the second season of the airdrop event. Some information:
March 15 to June 30
The longer the staking time, the greater the reward
5% of the supply ($200 million at current prices) will be airdropped
Ether.fi has launched a system called “StakeRank” with 8 levels – by staking for longer periods of time, you can move up the rankings and receive a loyalty point rate increase. Newly deposited Ethereum earns points 10 times faster than old Ethereum, which is fair for new users. Finally, in order to qualify for the Season 2 airdrop, >70% of the points need to be accumulated during Season 2.
50 million tokens are going to be airdropped! The second season of Etherfi points activity has started, "2 steps" will teach you how to participate easily
With around $3 billion in rewards of $200 million, you can actually earn $0.067 for every $1 you deposit. Since Season 1 points are also shareable, $0.05 is probably more accurate. A 5% return equals an APY of 15% over approximately 4 months. While it’s not bad, there are definitely better places to store your ether (or farm via Pendle, more on that later). It seems to me that if you don't have any points from the first season, your points will probably be diluted even if they make adjustments.
Renzo 和 buffer
Image source: Thor Hartvigsen
Renzo and Puffer are the second and third largest LRT issuers with TVL of $140 million and $1.25 respectively. Since the total response of the integral is known, which is not the case for Kelp, Swell or Eigenpie, we can create a valuation model for them with some assumptions. FDV estimates are based on Ether.fi's trading valuation relative to its TVL (approximately 1.5x FDV relative to TVL). Multiplying the current TVL by 1.5x, the FDV for the Renzo token is $2 billion and the FDV for the Puffer token is $1.83. However, with both products growing at a pretty rapid pace, I wouldn't be surprised to see these two products launch at $3 billion+ FDV.
Regardless, considering the current points total and estimated FDV, Puffer’s current Renzo points value is $0.45, $0.0089. Given that 1 Ethereum earns 24 Renzo Points or 720 Puffer Points, it looks like Renzo is the best place to store your Ethereum right now. Remember, on top of that, you can also earn $EIGEN points, which are currently worth $0.20 each. Finally, keep in mind that these values will decrease over time as more points are issued to savers.
Swell, Kelp and Eigenpie
For all three, there is insufficient information available to make detailed estimates. Of the three, I am the most bullish on Swell as they are launching their own Layer2 and have their own LST (called $swETH) in addition to LRT. All in all, I believe that of all the current liquidity re-hypothecation protocols, Renzo is the best choice.
Use links for each protocol:
Ether.fi
Renzo
Swell
Kelp
Puffer
Remember, if you want to maximize your airdrops, simply depositing into the Liquidity Re-staking Protocol is not enough. There are a number of ways to leverage these points, so let's dig into this a little further.
Leveraged Airdrop Mining
This is where it gets interesting. After doing some calculations last week, I had to confer with some DeFi experts to make sure my math was correct. After ensuring this, I started adopting this strategy as it is probably the best risk-adjusted return for Ethereum right now. Before we dive into this, please consider subscribing to On Chain Times if you haven’t already to show your support and stay tuned for more strategies like this in the future.
Renzo and Pendle’s YT-ezETH
We’ve determined that Renzo is probably the best place to store your Ethereum to maximize your LRT airdrop returns. In addition to simply holding Renzo's LRT ezETH (which earns 24 points every day you deposit Ethereum), you can also gain leveraged exposure through Pendle. Pendle's complex mechanics can be quite complex and require a standalone report, but what you should do now is that, in relation to LRTs, Pendle can provide:
Leverage Points and Yield (YT-ezETH)
Fixed income but giving up points (PT-ezETH)
As shown below, you can give up the ability to earn points but earn a flat rate of 63.29% on ezETH for the next 31 days (until expiry on April 25). Alternatively, you can earn 24x leverage and points. Since Renzo offers 2x points on Pendle, which is 48 points of Ether per day, the leverage is 49x for Renzo points and 24x for EigenLayer.
Source: Thor Hartvigsen Renzo’s ezETH on Pendle Finance
So how does this work? You can buy 24 YT-ezETH for 1 Ethereum or $ezETH, both of which earn points. Here is a reference:
Holding 1 $ezETH can earn 24 Renzo points and 24 EigenLayer points every day
Exchange 1 $ezETH for 24 YT-ezETH and accumulate 1152 Renzo Points and 576 EigenLayer Points every day you hold it
The difference is dramatic and looks too good to be true. So what's the problem? Then, the YT-ezETH token has a value of 0 on the expiration date. Prices depend on Pendle market forces but will gradually decrease over time. Therefore, you are betting that the value of the earnings/airdrops you receive will be much higher than what you spent to purchase the YT tokens. You can certainly sell a day or two before expiration, but since there are few buyers at this time, the YT price will drop significantly. General rule; the closer your YT tokens are to maturity without selling, the less valuable they will be. Let's do some math and see if it's still worth it (tl;dr: it is).
Estimated airdrop return rate
Here are the calculations for depositing 10 Ethereum into YT-ezETH on Pendle (thanks to Pendle Intern for bringing this to my attention).
Source: Thor HartvigsenYT-ezETH calculation
If you don't sell any tokens before the YT-ezETH token reaches 0, a deposit of 10 Ethereum (approximately $35,000) will earn a net return rate of $93,960 in 27 days. Realistically (if you sold a few days ago) this would probably be over $100,000, almost 3x that in less than a month. Previously, we estimated the current value of Renzo Points at $0.45. As TVL grows significantly, my model estimates that the points supply will grow significantly, and that the value of Renzo points may eventually reach around $0.19, which is a more realistic target.
In 27 days, you'll earn 324,000 Renzo points, worth $61,560, at $0.19 per point, and 162,000 EigenLayer points, worth $32,400, at $0.20 per point. Keep in mind that there are a lot of assumptions here, and if the points program lasts longer than expected, the payout rates may vary. However, I do think the point valuation is somewhat conservative, which is far from the bullish scenario for this particular strategy. If something about math doesn't make sense, feel free to PM me on X to ask additional questions. Also, keep in mind that this strategy is currently illiquid due to high demand.
Fixed Income Pendle Strategy
You can also play the flip side of this trade by purchasing the PT-ezETH token, which grants a fixed income on the asset but gives up the ability to earn and farm points. To lower gas fees, I recommend depositing into the Arbitrum PT-ezETH market, which offers a fixed yield of 54% for the next 93 days. Beyond that, you can cycle this on Silo Finance, where you deposit PT-ezETH, borrow Ethereum at 26.5% APR, then convert it into more PT-ezETH, and repeat. The math shows it below, but keep in mind that Silo's borrowing rates can fluctuate wildly. With PT tokens, you keep your initial deposit, so the returns you see below are on top of the $35,000 you keep as the market matures.
Source: Thor Hartvigsen PT-ezETH calculation
Another strategy worth looking into is the arbitrage trade by Ethena Labs, where 50% of the liquidity is used to short Ethereum and maintain funding rates while hedging by holding staked Ethereum. You can do this yourself, but instead of holding LST, buy PT-ezETH as a long position to get greater returns. A detailed analysis of this will be provided in a separate report.
panacea
Now let's move on to EigenLayer and LRT. Elixir is a dPOS network that allows users to provide liquidity to order book exchanges through vaults and earn market-making rewards. Elixir recently announced a Series B funding round valuing it at $800 million and has just launched an airdrop campaign that will run until the mainnet launch on August 15th. 0xjaypeg created a great table, shown below, estimating the APR earned on depositing Ethereum and minting $ELXETH based on TVL and Elixir FDV at the time of publication.
Image source: Thor Hartvigsen
You can check out Elixir here.
Free airdrop Farming?
Short on cash but flush with time? Some airdrop farming that doesn’t require locking up a lot of liquidity:
Grass.io (set up browser extensions and earn points)
Hyperlane (Swao back and forth between different chains)
Jumper Exchange (Swap back and forth between different chains)
Berachain (interacting with testnet)
Disclaimer: This article does not constitute investment advice. Users should consider whether any opinions, views or conclusions in this article are consistent with their specific situations, and comply with the relevant laws and regulations of the country and region where they are located.
This article is reprinted with permission from: "MarsBit"
Original author: Thor Hartvigsen
