Airdrop Farming Update July 2024 Part 2: Stablecoins

In our last post on airdrop farming, we covered the extensive area of restaking, and opportunities like Pendle, EigenLayer, and Symbiotic that generate a massive annual return on ETH. This article will focus on the wide range of opportunities available with stablecoins, from earning a high yield in USDC to generating points for future multi-billion dollar airdrops.  

Many opportunities exist to earn 10+% on stablecoins across various DeFi ecosystems. In traditional markets, the risk-free rate is the APY earned on US Treasury Bills, which are considered the safest assets. In crypto, the closest metric to this is MakerDAO’s DAI Savings Rate, the amount earned by DAI lenders. It currently sits at 8% and has been at this level for nearly a year, so we will only focus on opportunities higher than the DSR. 

The first intriguing stablecoin opportunity is with Elixir, the orderbook liquidity protocol. Elixir sources liquidity for trading pairs on decentralized exchanges, reducing reliance on centralized firms and increasing orderbook depth. With a nearly $1 billion valuation, Elixir is planning an airdrop later this year. Users can deposit stablecoins into various pairs on exchanges like Vertex and Orderly and earn potions, which will eventually be converted into Elixir L1’s native token. Depositing ETH earns 50% more potions, but the ETH remains locked for a couple of months, offering a unique opportunity for increased rewards. 

Though general-purpose L2s have become incredibly unpopular lately, as evidenced by the Blast and ZKsync airdrop recipients dumping their tokens upon distribution, one more major L2 may release a token at a high valuation: Scroll. Indeed, this L2, which aims for complete Ethereum alignment, innovative cryptography, and is supported by Vitalik Buterin, is currently running a points program, rewarding users for activities like holding assets on the chain, providing liquidity on DEXes, and lending on money markets. Ambient Finance, the leading Scroll DEX, is backed by big names like quant trading firm Jane Street and introduces extreme capital efficiency through its Uniswap V3-style model. By LPing on a USDC/USDT pair, users can earn points for both Scroll and Ambient simultaneously. For those who want to double-dip even further, providing liquidity on Kelp DAO’s rsETH earns points for Scroll, Ambient, Kelp, and EigenLayer simultaneously. Though Scroll does not have the highest yields for DeFi activities, many hope the number of points on several protocols makes up for it.

Though not technically airdrop farming, Optimism and Arbitrum have ongoing token incentive programs to reward users of their protocols. Arbitrum’s long-term incentives program runs until September and allocates around $30 million to various protocols and trading pairs. DEXes like Trader Joe, Timeswap, and Curve have ETH, BTC, or stable pools with 20% or more APYs primarily denominated in the ARB token. Similarly, Optimism’s Superfest is distributing $2 million OP through July and August to several protocols, many of which have their airdrop campaigns for double-dipping on points.  

While there is undoubtedly more risk than in traditional markets with these stablecoin farms due to smart contract risk and black swan events, the potential rewards of 20%+ APYs may be worth the risk for some. This offers a compelling opportunity to maintain a relatively stable portfolio while accruing rewards in new and exciting tokens. These opportunities may not last, and as points programs wind down, we may see parity between available opportunities in traditional finance and DeFi. However, for the time being, airdrop farmers who put in extra effort will be rewarded heavily for their knowledge.

By Lincoln Murr

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