last updated: 9/26/2021
Defi can often feel like the wild west and when you're first getting started, it can be hard to decide which Dapps to start with because there are 100's to choose from.
Choosing where to deploy your capital is not as easy as looking for the highest APY's and ape'ing into a farm that you've never heard of. You have to think about what chain you want to deploy your capital to (ETH, Polygon, BSC, Avalanche, Fanton, etc), how safe the Dapp is, how confident you are in the underlying assets, how sustainable the current APY is, and your time horizon.
Here is where I am currently deploying my capital. I'd consider myself a a very conservative yield farmer and look for risk-off options.
Here are some things I take into consideration when I'm looking for new places to deploy capital.
- I don't usually have a lot of exposure to farm tokens and most of my portfolios goes into stable coin farms, bluechip crypto farms (BTC and ETH), and bluechip defi farms (Matic, CRV, BAL, and very few others).
- To minimize my smart contact risk, I stay away from new Dapps and will usually only think about entering Dapps with more than ~$100million TVL (total value locked). More TLV doesn't necessarily mean a more secure Dapp but it does mean the "market" has a highly level of trust with the platform. I usually also like to see at least 2-3 audits from reliable auditing firms.
- Finally, I tend to be pretty active with my capital allocation. I'll frequently move around my stables to new Dapps so that I'm always earning the best risk-adjusted returns.
(This is not a recommendation. Do your own research and find the best options for your strategy.)
Curv Vault (Borrowing Rewards)
A majority of my Defi wealth is deployed on Curve earning WMatic and CRV as rewards. Both of those assets are 2 that I wouldn't mind holding for the next 5-10 years. Because of that, instead of selling them into stables and re-compounding them into the Curve farms, I deposit them into other protocols.
I take all of the farmed Wmatic and put it into Balancer's WMatic/USDC/WEth/Bal pool that is currently earning 38% APR.
I take all of the farmed CRV and put into QiDao as collateral. I then borrow MIA (Qi Stable coin pegged to $1 USD) and put those MIA into a Balancer stable coin pool earning 20% APR. In addition to the 20% APR, I also get paid 113% APR for borrowing against my CRV on QiDao. This is because they are currently running a borrowing incentives program and encouraging people to use their platform by paying them to borrow.