One of the questions i get all the time is how can i get the highest yield on my $ETH bag i’m just holding? so this article aims to do just that.
Basically this is the highest yield on just eth that i’ve found in all of Defi so there’s a few different ways to go about getting your yield on ETH but they all go through the Lido Eth2 staking mechanism.
So with these strategies using lido finance and a couple other protocols you can safely earn up to about 19% or 20% APY on your ETH.
If you’re not familiar with lido basically it allows anyone in Defi to deposit ETH that will go towards the ETH2 validation process so you basically just stake your ether and you can forget about it there’s a ton of tvl locked here and this protocol was audited and it’s been out for a while so it’s pretty secure as far as Defi goes.
There’s about 333000 Eth staked here which is about a 1.3 billion dollars and you can see here that the apr on just this staking process alone is 5.7%.
Definitely stay tuned because as I mentioned the 5.7% apr is not actually the highest you can achieve through using lido so I’m going to walk you through that in just a bit but i do want to highlight the mechanism that lido uses to get a yield on your ETH and how the tokenomics actually work.
Basically when you stake your ETH you receive stETH or staked ETH in return and this staked ETH will always be worth exactly the price of Ethereum so if you deposit one ETH you receive one stETH back at any point in time whenever you deposit it.
so you might be wondering well how am i actually getting that 5.7% APR on the staked ETH if the value is always going to be worth one ETH? the answer is that this token is actually a rebasing token it rebases every day, so if on day one you put in one ETH you receive one stETH a year later you’ll have about 1.057 ETH or 5.7% increase on the ETH that you deposited
This is not like the old pump and dump rebasing tokens, this is a legitimate mechanism that actually works and just to kind of prove that, you can see here I have the coingecko page of ETH and the stETH and you can see they’re basically identical in price, that’s because this is a very liquid market, you can trade ETH and stETH on curve and uniswap and you can really do this at any point in time so you’re able to stake your ETH and then have it unlocked whenever you’d like.
That’s a basic view of the mechanics of stETH i would recommend you read through this whole page, there’s ton of great information I’m really just giving you the basics of what you need to know.
Now, if we head over to curve we can see that there’s a stETH/ETH curve pool and you can see that this curve pool receives a base apy of 2.99% from trading fees, this is very important, so when you stake in this pool you’re going to be depositing either ETH or stETH and you’re going to receive a token “crvstETH” that gives you a share of the entire pool, that means you’re basically going to be owning a 50-50 percentage of ETH and stETH.
And because you’re going to be holding a 50 50 ratio of stETH and ETH that 5.7% APR we saw in Lido is going to be cut in half so we would be getting 2.85% from lido + 2.99% from curve up until now.
now by providing liquidity to this curve pool you can see to the right the rewards, there’s a base level return of 1.63% in curve tokens and that can be boosted to 4.09% if you have curve to lock up and staked in the dao, and there’s also the lido tokens itself which give you an additional APR of 12.9%.
so in total through the curve pool you could actually be earning up to 22.83% yield on this stETH pair and it doesn’t stop here.
if you’re saying well i really want to stake my ETH and receive a 6% return or more but I don’t really have an interest in the curve or lido tokens there is option that allows you to compound your rewards by liquidating your CRV and Lido tokens for more ETH and stETH automatically, here you can see i’m on the
Yearn auto compounds and maximizes the yield on any asset that you stake in their vaults what’s really great here is there’s actually a crvstETH vault where yu can deposit those lp tokens into Yearn, Yearn will basically aggregates all of this value and every so often it sells the LDO and CRV reward tokens and then compounds that back into this pool so you’re always going to be receiving more crvstETH tokens which means you’re always going to be growing your ETH position.
You can see they have 336 million dollars of value in this pool so it’s clearly a very popular strategy and for a good reason, through this strategy you’re able to earn 14.78% APY currently on your stETH which really is phenomenal.
What’s really cool about Yearn is you actually don’t have to go through any of those steps before, you can just zap into this protocol and it will convert any of the 5 assets into crvstETH and start earning that yield in seconds.
This is a really convenient and easy way to start earning about 15% apy on your ETH i haven’t yet seen a return that high on safe protocols and if you just want to hodl ETH this is a great option that is pretty secure as far as defi goes.
I do want to point out another option and that’s harvest.finance this strategy is a bit riskier because you’re interacting with harvest which is new and a bit less reliable i would say of a protocol than something like Yearn or Curve but you can see here that you can actually deposit that crvstETH token onto their vault and receive about a 13.55% or so APY.
Much like Yearn, Harvest.finance generates that apy by harvesting the curve and lido rewards, selling them for ETH and then compounds them back into your crvstETH position, they’re also distributing a very small $Farm reward which is their native protocol token.
One last option that came up recently is cream.finance launched its own ETH staking service and it allows you to borrow against your position at 45% collateral ratio, that means if you have $1000 in staked in cream ETH2 service you can borrow up to $450 dollars against it, you can use that loan to buy more ETH and stake it again in the cream ETH2 contract, this strategy is still new and definitely DYOR before aping into cream and margin trading.
None of this is financial advice btw.