With the constant uncertainty of the crypto markets, it’s always good to have safe options for yield in your back pocket.

Yes, catching the next 100x is cool, but steadily earning digital internet money, even in downtimes, should be a thought on every trader's mind.

Despite popular belief, steady real yield from sources within crypto is possible, you just have to look in the right places.

Let’s take a look at some protocols and yield strategies to give you ideas for the stables and blue chips portion of your portfolio.

Yield protocols

Yield protocols include simple yield aggregators that leverage multiple pools to give users automated vaults. The category also includes more novel products that take existing tokens and pools and create new asset classes – like Pendle.

Whether I’m looking for automated yields or novel strategies, yield protocols are my go-to.  

Pendle

Pendle Finance leverages yield-bearing tokens to create derivatives representing the token's principal value (PT), and the rights to its yield (YT).

The protocol is live on the Ethereum, Optimism, BNB Chain, Mantle, and Arbitrum networks.

I personally love Pendle because the team has successfully created a pseudo-asset class using crypto. Pendle provides a breath of fresh air during a time when it seems like forks and copycat protocols are outpacing projects with real innovation.

How Does Pendle Work?

Using Pendle, yield-bearing and staked assets, like gDAI (Gains Network staked DAI), can be decoupled to produce a PT token, representing the value of DAI (more specifically, the gDAI peg to DAI), and a YT token, which guarantees holders the yield generated from staked gDAI.

The price of the two tokens (PT & YT) adds up to the price of the underlying asset.

• PT + YT = Underlying asset

Consequently, the higher the YT price, the lower the PT price, and vice versa. Additionally, Pendle relies on liquidity providers to supply assets and support market creation.

Each PT & YT vault has a maturity date. Since PT holders are promised the asset at a discount, Pendle gradually increases the market price of PT, while reducing the price of YT until the maturity date (resulting in YT being worthless).

YT holders earn yield rewards throughout the life of the token, in exchange for a depreciating asset.

PT traders earn fixed rates from appreciation, and YT traders must then either (1) buy YT low and sell it high, or (2) hold YT to receive rewards greater than the principal paid for the YT token itself.

In addition to buying PT and YT tokens, you can also provide liquidity for any of the assets on Pendle.

If you want to learn how this works behind the scenes, check out our Pendle 101 guide.

To better understand Pendle PT and YTs and their APYs, here’s a cheat sheet:

Pendle Yield Strategy

Pure yield Maxi

The purpose of this strategy is to make profitable trades on YT and direct profits to the liquidity pool as PT (for a fixed rate and swap fees). Since YT is much cheaper than the principal, you can get leveraged yield exposure (until you decide to sell, if YT price experiences positive price action before maturity).

Strategy

1. Buy YT when the long yield APY is positive.
2. If the long yield APY turns negative before maturity, sell YT and zap into the liquidity pool using PT.
   1. Or if the first thing you notice is that the Implied APY is much higher than when you bought it, you can sell it, and zap into the pool using PT.

PT-Leaning Strategy

The purpose of this strategy is to take advantage of the YT volatility and boost profits by locking them into a fixed rate with PT.  All while providing liquidity to get a boosted rate from Pendle.

Secure a fixed rate while maintaining exposure to a variable rate to diversify your sources of yield.

Strategy

1. Buy PT & YT (of the same token).
2. When the Implied APY rises, sell YT.
3. If the fixed rate rises above the underlying APY buy more PT (using profits from the YT sale) and hold until maturity.
   1. If the PT fixed rate is more than the fixed rate at the time of buying PT, then sell PT for a profit before maturity.

You can also split your stack 50/50 and allocate the first half to one of the above strategies and the other half to staking or holding the asset with the underlying protocol to receive yield from the original source. This way, you can further diversify your sources of yield.

Additionally, if you hold assets with active points programs like ezETH, or USDe you can use Pendle to earn points, boosted rewards, or a mixture of both.

Here’s USDe as an example:

Sandglass

Sandglass is literally Pendle but on Solana. With Sandglass you can trade PT and YT tokens for Solana assets like jitoSOL and mSOL.  

The team behind Sandglass are the same developers of Lifinity, the most capital-efficient DEX on Solana (by volume/TVL) –at the time of writing this.

At present, Sandglass is in beta and offers support for the following assets:

• mSOL
• jitoSOL
• bSOL

Yearn Finance

Yearn is a yield protocol offering vaults with varying underlying yield strategies. The protocol is probably the earliest example of a yield aggregator, next to Beefy Finance.

Yearn is live across EVM blockchains like Ethereum, Optimism, Arbitrum, Polygon, and Gnosis.

I use Yearn to hold stablecoins in between taking profits and rebalancing my portfolio. It's a great place to park stablecoins for a few weeks or months while I do research or wait for the perfect entry.

Some of Yearn’s products include:

• V3 Vaults: Yearn’s latest product, featuring vaults with more integrations and better automation.
• Juiced Vaults: Vaults with boosted yields from liquidity mining events.
• Vaults V2: V3 vaults predecessor.

How does Yearn Work?

Similar to yield aggregators like Beefy Finance, on Yearn you can pick vaults based on a single asset or a trading pair you’re interested in providing liquidity with.

Using Yearn’s V3 vaults as an example, the platform features single-deposit vaults and traditional trading pairs.

Depending on the assets you’re holding, you should start your search with vaults that support those tokens. Other than that, you should be looking for the best stablecoin vaults (on the blockchains you’re currently using).

Yearn Yield Strategy

Some of my top picks on Yearn for stablecoin vaults across blockchains include:

Optimism

• USDC.e Vault (Vault V2)
• DAI Vault (Vault V2)

Both vault strategies use the ‘Aave Optimizer’, which supplies the stablecoin to Aavev3 to generate interest and earn OP tokens, and rewards. Earned tokens are then harvested, and sold for more USDC which is deposited back into the strategy.

Arbitrum One

• AaveV3 USDC Lender (V3 Vaults): Supplies USDC to Aave V3 to generate interest and earn any applicable rewards. Earned tokens are harvested, and sold for more USDC which is deposited back into the strategy.
• USDC-A yVault (V3 Vaults): Uses the AaveV3 USDC Lender and USDC CompoundV3 Lender Vault strategies.

Ethereum

• yvYearn-Ajna DAI Harvester Vault (V3 Vaults): Supplies the juiced Yearn vault token to DAI staking contract to auto-sell and compound any $AJNA token rewards.
• DAI Vault (V3 Vaults): Uses the Spark DAI Lender and Aave V3 Lender strategies.
• USDC Vault (V3 Vaults): Uses the Compound V3 Lender, sUSDC (DAI savings rate), and Aave V3 Lender strategies.

• DAI Vault (Vaults V2): Uses the ‘Strategy Lender Yield Optimiser’
• USDC Vault (Vaults V2): Uses the ‘Strategy Lender Yield Optimiser’
• USDT Vault (Vaults V2): Supplies USDT to AAVE v3 to generate interest and earn rewards, which are harvested, sold for more USDT, and deposited back into the original position.
• Curve MIM Factor Vault (Vaults V2): Supplies MIM to the 3LP3CRV pool to generate interest and earn rewards, which are harvested, sold for more MIM, and deposited back into the original position.

Derivative Liquidity pools (LPs)

Derivative protocols allow users to long and short assets using leverage via virtual AMMs (vAMMs). To support this trading activity, protocols require LPs to provide assets.

However, these liquidity pools are confined to an index consisting of the assets available for trading on the platform (i.e. BTC, ETH, SOL). This essentially turns the pools into “crypto index funds”, as they comprise multiple assets, all with differing weights, that each comprise high liquidity or are often considered blue chip.

You can benefit from the increased speculation during uncertain times and harvest that volatility by entering the liquidity pool.

If traders lose, LP tokens increase in value. However, if traders win, the liquidity pool is used to settle the PnL (if protocol fees can't cover losses), which may decrease the price of the LP token.

Also, losses are amplified when shorts win, as the protocol has to pay out traders in addition to the vault losing value from downward price movement.

Still, other derivatives protocols take a different approach to liquidity provision, by splitting assets into distinct pools or offering stablecoin insurance vaults -to act as counterparty risk for traders.

Let’s explore the makeup of each protocol liquidity pool and its associated mechanics.

GMX (GLP Token)

GMX is a derivatives protocol on Arbitrum and Avalanche, most known for it’s GMX & GLP token flywheel and early rapid revenue growth.

The GLP token is the LP token for GMX V1. The GMX team hasn’t detailed plans for sunsetting GMX v1 yet, but they will likely make announcements when GMX v2 undergoes more development.

You can buy GLP and stake it to receive rewards in Escrowed GMX (esGMX) and wETH. esGMX can be staked for rewards –similar to GMX tokens– or you can vest esGMX over one year to become actual GMX tokens.  

To buy GLP you must use one of the whitelisted assets in the index. GLP’s index consists of the following assets:

• ETH
• wBTC
• LINK
• UNI
• USDC.e
• USDC
• USDT
• DAI
• FRAX

Similarly, GLP can be sold to redeem any of the whitelisted assets.

Before selling or buying GLP, you should take a look at the index assets to determine whether they are at a sufficient level. Since traders use different assets simultaneously, asset weights can fluctuate and deviate from the target values.

When weights fluctuate, GMX imposes higher fees on LP deposits that bring the pool farther from its target weights, and lower fees for deposits that help bring weights closer to the target.

For example, if the pool has a small percentage of ETH but is fully supplied with assets like DAI and USDT, then ETH deposits will incur low fees, and DAI and USDT deposits will incur higher fees. You get paid for balancing the pool.

What affects token price?

• Trader PnL
• Index asset prices

Rewards

• Swap & borrow fees

Alternatively, you can automate GLP earnings using Pirex’s Vaults.

At present, the GLP pool will net you an ~8% APY on a basket of assets.

GM Token

With the introduction of GMX V2, the protocol is switching its liquidity provision model to isolated pools, so users can provide liquidity in the form of a single asset pair instead of a basket of tokens as with GLP.

Trading pair pools consist of the long asset and the short asset (i.e. wETH and USDC), while the stablecoin spot pairs consist of pairs like USDC-DAI and USDC-USDC.e.

However, there are two types of markets:

• Fully backed markets: Markets like ETH perpetual where the open interest is restricted to the total amount of ETH and USDC tokens in that pool. This ensures that all profits are fully backed.
• Synthetic markets: Certain altcoins like DOGE, and XRP are backed by ETH-USDC. To avoid a scenario where the trader payouts exceed the value of the ETH-USDC pool, GMX uses the ADL (Auto-Deleveraging) feature which closes profitable positions when a predefined threshold is met.

There may be a spread for some long/short tokens which would result in a spread when buying/selling GM tokens as well.

To keep the pools balanced, GMX imposes a positive or negative price impact depending on whether your purchase improves or reduces the balance of tokens in the pool.

Staking tokens in GM pools on Avalanche or Arbitrum will grant you the base APR (from the trading and swap fees), and extra incentives in wAVAX-USDC GM tokens or ARB airdrops respectively.  

I suggest making deposits to meme coin GM pools like DOGE, and WIF or pairs with high trading activity like SOL, BTC, and ETH.

What affects token price?

• Fees from leverage trading and borrowings will automatically increase the price of GM tokens.
• PnL from traders are positively correlated with the price of GM tokens.  

Rewards

• Borrow fees

Jupiter Perps

Jupiter is the leading swap aggregator on Solana. The protocol recently released a Perp exchange as part of its product suite, allowing traders to open long and short positions on SOL, ETH, and BTC.

Liquidity provision on Jup Perps is facilitated via the JLP token. JLP is an SPL (Solana Program Library) token, which means you can use any token on Solana to swap for JLP.

Since its release, JLP has been one of my favorite holds. Jupiter is the lifeblood of the Solana ecosystem. The majority of trades are routed through Jupiter, which has allowed them to gain significant attention for Jupiter Perps and become the largest derivatives protocol on Solana overnight.

Although Jupiter is built on top of Solana, without Jupiter’s presence, the chain would not have scaled as it did.

By holding JLP you’re essentially betting on the future of Solana and its primary liquidity layer (Jupiter).

The tokens backing JLP include:

• SOL
• ETH
• wBTC
• USDC
• USDT

JLP increased ~115% over 9 months, from November 2023 to July 2024.

What affects token price?

• Trader PnL
• Index asset prices

Rewards

• Swap & borrow fees (75% of all perpetual trading fees)

Drift

Drift is the 2nd largest derivatives protocol on Solana, behind Jupiter. The protocol offers vaults that support various operations on the platform like vAMM backstop vaults, and insurance fund staking vaults.

My favorite product is the USDC Insurance Fund Staking Vault, which acts as counterparty risk for the assets available on Drift, including SOL, wBTC, USDC, USDY, and more.

To protect against leveraged losses from traders, Drift employs an insurance fund. The USDC insurance fund pays out losses for all perp markets on Drift.

However,  when the losses in the particular market are greater than the token balance of that market in the Insurance Fun, the losses incurred will be socialized among the following participants:

• Perpetual Traders: paid for pro-rata (by base amount) by all open positions
• Lenders: paid pro-rata (by token amount) by all lenders

Since exchange fees are collected in USDC, they will be pooled in the USDC pool, and in turn, the USDC pool will backstop the allotted portion of bankruptcies in each perpetual market (for trades settled in USDC).

I recommend the USDC insurance fund vault. Although most bankruptcies are settled using the USDC vault, it happens to be the best-performing vault. In 3 months, the USDC insurance vault has yielded 8.65%.

What affects token price?

• Premiums collected from liquidation, trading, and borrowing fees (positive)
• Bankruptcy settlements (negative)

Rewards

• Premiums collected from liquidation, trading, and borrowing fees

It’s also worth mentioning that Drift has a unique position in the Solana ecosystem because there are various projects that leverage its infra to create new products.

For instance, SuperStakeSOL automates looping (leveraged lending) using SOL and LSTs on Drift’s money market.

Gains Network gTokens

Gains Network is a derivatives protocol on Polygon and Arbitrum. The protocol offers gToken vaults that act as counterparties to trades, depending on the collateral (DAI or USDC).

When overall PnL is negative (before dipping into gToken vault funds), the vault starts to create a buffer to protect stakers' funds.

The assets staked in the gToken vaults make up 100% of the collateralization and the over-collateralization layer makes up anything beyond 100%. It’s important to note that the over-collateralization layer doesn't make the gToken price increase.

When the over-collateralization kicks in, a percentage of trader losses is diverted to a pool where users can buy and sell GNS (without slippage) for the owed asset, OTC. This effectively creates a secondary market to account for two scenarios:

• Undercollateralized vault: GNS is minted and sold for the asset, OTC. The asset is then used to replenish the vault. A maximum of 0.05% of the total supply of GNS can be minted every 24 hours (18.25% per year).
• Overcollateralized vault: Users can sell GNS without “paying any slippage that would occur on an exchange or affect the GNS price.”

At present, Gains offers three gTokens:

• gETH
• gDAI
• gUSDC

To receive rewards you must buy the underlying asset (i.e. USDC, ETH, or DAI) and deposit it to the corresponding gToken vault.

GDAI launched in December 2022 and since then it’s grown 21% on Arbitrum, and 17% on Polygon.

Since gUSDCs launch in January 2024, gUSDC grew 9% on Arbitrum, and 6% on Polygon.  

What affects token price?

• Trader PnL

Rewards

• Trading fees

Yield-bearing Stablecoins & RWAs

Ethena (USDe)

USDe is a yield-bearing stablecoin developed by the Ethena Team. USDe generates its yield from three sources:

1. LSTs (wETH, wbETH, bETH): Ethena holds various LSTs
2. Reserves (ETH & BTC): Ethena holds BTC and ETH in its reserves
3. Funding and basis spread earned from the delta hedging derivatives positions: When minters provide assets to mint USDe, Ethena opens corresponding short derivatives positions to hedge the delta of the received assets.

Ethena noticed the mismatch between supply & demand for BTC & ETH, which has resulted in a positive funding rate & basis spread for traders that short this delta exposure.

Users can stake USDe to receive claimable rewards in USDe.

International Stable Currency (ISC)

International Stable Currency (ISC) is a flat coin on Solana, backed by the following assets:

• VWRA (Vanguard FTSE All-World UCITS ETF USD Acc)
• IB01 (iShares $ Treasury Bond 0-1yr UCITS ETF USD A)
• AGGU (iShares Core Gl Aggregate Bd UCITS ETF USD Hgd Acc)
• SGLD (Invesco Physical Gold ETC Fund)
• USD (United States Dollar)

Similar to tokens like USDY, the protocol directs the returns generated from its reserves back into the token’s value.

However, ISC has grown 8.97% over 9 months, outperforming USDY by nearly 5%.

You can swap for ISC on Solana using Jupiter’s integration with Phantom, or by accessing the Jupiter front-end. It’s also worth noting that ISC is gearing up for an airdrop 👀.

LandX

LandX is a real-world assets (RWA) protocol for commodities like corn and soy. The platform offers two main products:

• xTokens: Tokens representing 1kg in farmland (of a specific commodity)
• cTokens: Derivatives tracking the price of commodities

Each xToken has a corresponding cToken. The current commodities supported include:

• Corn
• Soy
• Wheat
• Rice

When you buy xTokens and stake them, you earn the yield from an actual farm (like ones with dirt and stuff) with each of your tokens representing 1kg of farm yield revenue. Rewards are distributed in the corresponding cToken, which can be swapped for other tokens.

xTokens seem to be more favorable, because, in addition to token price appreciation, holders accrue yield, from actual yields lol.

Also, at present the xSOY token has grown by ~5% while the cSOY token is down ~16%, from November 2023 to July 2024.

Users should read up on the agriculture and commodities industry and LandX’s documentation to understand the ins and outs before investing in commodities.

Finding More Sources for Yield

Here are some great resources to find more yield vaults:

• DeFiLlama Stablecoin: https://defillama.com/yields/stablecoins
  • More Sources for Stablecoin Yield Alpha
    • Stable Fish: https://stable.fish/rank
    • Yield Rodeo: https://yield.rodeo/
• DeFiLlama Leveraged Lending Opportunities: https://defillama.com/yields/loop

Closing Thoughts

There will always be a division between aggressive traders and passive yield farmers, and you likely know which category you fall into. But the thing we have in common is that we’re all on the hunt for profits.

Interestingly, protocols like Pendle and Sandglass (“Pendle on Solana”) offer the best of both worlds by allowing you to speculate on products that inherently accrue value or grow in value over time.

Other products, including derivative LPs and yield-bearing stablecoins, represent highly passive exposure to blue chips plus proven sources of yield.

Additionally, protocols like LandX provide access to commodities, which may attract farmers seeking diversification and a hedge against traditional securities.

Regardless of your strategy, you should remember two(ish) things:

1. Even if the majority of your portfolio is meant to catch maximum gains, it’s never a bad idea to keep a portion of your stack in safer-yielding options mainly centered around stablecoins.
2. You’ll never lose by taking profits… and then using the funds to farm on safe mode.
   1. P.S. Always stay aware of smart contract risk, because there’s always a chance you can get focked :).