Weekly Alpha #34 - Summer DeFi plays
Weekly Alpha #34 - Summer DeFi plays
Latest DeFi Alphas Delivered in a Concise Newsletter.
Welcome to the latest edition of Weekly Alpha.
After some time off, the newsletter is back! I've had a lot going on in my life lately, but I have still been really invested in DeFi.
In this edition, I’m going to focus on DeFi strategies for the summer that offer high yield, high risk, and high rewards.
In this edition of The Weekly Alpha:
🗞️ Weekly DeFi News Digest
🧑🌾 Summer DeFi Strategies and the Restaking Narrative
Your Weekly DeFi News Digest 🗞️
In this section, I highlight the week's most impactful DeFi news. This way, you can bypass the chatter on Twitter and concentrate on the essential updates.
Uniswap Foundation postpones vote on incentives
Hackers exploit Chrome plugin to steal millions from Binance accounts
StarkWare launches $1M research fund for ZK Bitcoin scaling
Vitalik Buterin-backed Nocturne protocol shuts down operations overnight
Arthur Hayes unstakes nearly $10M worth of Pendle: Time to sell?
Linea Halts Network after Velocore Exploit
D8X protocol brings novel futures exchange to Arbitrum
Celestia-built Rollkit gets an interchain boost
Summer DeFi Strategies and the Restaking Narrative ☀️
In this section, I want to share three DeFi strategies that you can apply right now for medium to long-term benefits. These strategies involve significant risks, such as smart contract exploits and high volatility. However, they can be relatively advantageous if you want to be exposed to the ETH restaking narrative and potentially earn substantial airdrops.
#1 Karak Network, an EigenLayer alternative 🍑
If you have been active in the Ethereum ecosystem, you’ve probably heard about EigenLayer. Karak Network is quite similar but offers more restaking and staking opportunities.
Karak has its own restaking layer and its own Validation-as-a-Service (AVS) where you can stake tokens like wBTC or stablecoins such as USDC, USDT, or Ethena USDe.
Currently, the network is available only as a private beta (by invitation only) and has a TVL of more than $1 billion.
As you can see on the chart above, Karak Network has a strong network effect. It’s important to mention that they are backed by major players in the ecosystem, such as Coinbase, Framework Ventures, and Pantera Capital, to name a few.
The crucial point to note is that Karak is growing exponentially and does not have a token yet. For point farmers, this presents a potentially huge opportunity to capitalize on Karak.
How to use Karak Network:
Karak Network is currently in beta mode, as mentioned above. If you want to access it, you can use one of the invitation codes listed below.
Once you have access to the app, you can choose your preferred network, including Ethereum mainnet, Arbitrum, Mantle, or K2 (Karak Network).
After selecting your preferred network, you can choose the pool you want to deposit into. Unfortunately, there is currently no way to zap-in.
Now that you've deposited funds into Karak Network, you will start earning restaking points. For example, if you deposit Swell ETH, you can earn 1.5x Karak XP, 3x Swell Pearls, and native staking rewards, potentially qualifying for two airdrops with this strategy.
One thing to mention is that when you want to unstake, there is a 7-day queuing period. If you need immediate access to your funds, Karak Network might not be suitable for you. It's also very important to note that restaking carries significant risks. I know I've already mentioned this, but it's crucial that you understand what you are doing. There are more risks involved than with a simple smart contract wallet, such as bad validator behavior. This caution applies to all the DeFi strategies I share.
#2 Restake with Renzo and Leverage Tokens in DeFi
Renzo is a restaking token built on top of EigenLayer. Instead of depositing directly into EigenLayer, you can use Renzo as a liquid restaking token and earn yield from the beacon chain, along with Renzo points and EigenLayer points.
The current TVL of Renzo is over $4 billion, which is very impressive for a protocol that has been around for such a short time.
You can restake your ETH with Renzo on multiple networks, including Ethereum mainnet, Arbitrum, and Base.
There are currently many DeFi opportunities for ezETH restakers.
One of my favorites is to mint ezETH on Base and then create a liquidity pool between ezETH and WETH on Aerodrome Finance, which has a current APR of 3,796%. This also provides exposure to the AERO token, which you can lock and use for voting bribes.
#3 Simplified Deposits with Summer.fi on Ethereum Mainnet
In terms of TVL, Summer.fi ranks as the fourth-largest protocol on Ethereum mainnet, and the protocol does not yet have its own token. What I appreciate about Summer.fi is its user-friendly interface and the comparatively lower competition among farmers.
A straightforward strategy with Summer.fi is to earn passive income using their high-yield "Earn" feature. You can opt for passive or active management, depending on the time you want to allocate to your position.
Apart from not having a token, it’s an excellent way to diversify from platforms like AAVE and others to mitigate risks, especially if you're considering taking a loan against your crypto. For example, you can use ETH as collateral to borrow DAI for purchasing a new car and then repay the loan while still maintaining your exposure to ETH.
Conclusion 🧠
There are numerous ways to generate passive income in crypto, especially within the Ethereum ecosystem, where innovation thrives. Of course, not all these protocols are battle-tested, so caution is advised. However, in my opinion and based on experience, DeFi offers the highest returns over the long term, surpassing traditional finance by a significant margin.
In the long run, it will become increasingly difficult for traditional finance to compete against open-source code and smart contracts. This is because everyone is exposed to the same risks, and transparency is inherent—there are no closed doors. By conducting thorough research and investing your funds wisely, without blindly chasing the next hot token, you can cultivate a substantial portfolio through airdrops and yield farming. And that's what this newsletter is all about.
Wrapping up for this week, the Weekly Alpha is making its return every week, and next week, I'll also include market insights. This edition was rather brief because I needed to warm up and get back into writing mode.
For daily DeFi updates, follow me on Twitter
None of the information in this newsletter constitutes financial advice. While I personally use most of the protocols that I discuss, it's important to understand that they involve substantial risk. Don’t invest what you can’t afford to lose