Weekly Alpha #49 - The Best DeFi Yield Opportunities Right Now
Latest DeFi Alphas Delivered in a Concise Newsletter.
Welcome back to Weekly Alpha — your curated edge in DeFi, tokenomics, and macro shifts before they go mainstream.
In this edition of The Weekly Alpha:
📚 This Week's Intel
🎧 Podcast Picks
🔓 Vesting Watch
🧑🌾 The Best DeFi Yield Opportunities Right Now
📊 Token Watch
🧐 Onchain Analytics
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This Week's Intel 📚
The signal from the noise, this week's developments that actually matter for your DeFi positioning.
I've filtered through the endless stream of headlines, hot takes, and crypto Twitter drama to bring you the stories moving the ecosystem forward. These aren't just news updates; they're intelligence briefings on where capital is flowing, which narratives are gaining traction, and what regulatory shifts could reshape your strategy.
Skip the timeline doom-scrolling. This is your weekly intel drop.
Linea Token Launches at $500 Million Market Capitalization
Linea, an Ethereum Layer 2 network, finally launched its LINEA token after more than two years of mainnet operation, but the token generation event has been marked by significant challenges and disappointing performance. Despite launching at a $550 million market cap, LINEA quickly dropped 20% to $382 million as airdrop recipients sold their tokens, reflecting a broader trend of underwhelming Layer 2 token launches where projects like ARB, OP, ZkSync, and Blast have all fallen 80-90% from their peaks. The launch was further complicated by technical issues, including a 46-minute block production halt caused by a sequencer problem from a large transaction bundle, and widespread difficulties for users trying to claim their airdrops, highlighting the ongoing scalability and reliability challenges facing Layer 2 networks even as they mature.
Read the full the Defiant article
Ethena exits Hyperliquid USDH race, clearing path for Native Markets
Ethena has withdrawn from the race to issue Hyperliquid's USDH stablecoin, citing community pushback over not being a "Hyperliquid-native" project and graciously conceding to Native Markets, which now holds a commanding 92% chance of winning according to Polymarket odds. However, the selection process has sparked controversy, with critics like Dragonfly's Haseeb Qureshi calling it "a bit of a farce," alleging that Native Markets had advance notice and questioning how the newcomer secured over 70% of validator commitments despite having limited track records compared to established players like Paxos and Ethena. The stakes are substantial, as roughly $5 billion of USDC currently sits on Hyperliquid, representing approximately 10% of Circle's business, while Native Markets' proposal promises to funnel half of USDH's interest revenue into HYPE token buybacks and ecosystem growth, though their reliance on Stripe's Bridge platform has raised concerns about potential conflicts of interest and single points of failure.
Read the full Cointelegraph article
Other news
Ethereum Validator Exit Queue Spikes 150% as Kiln Unstakes All Its ETH - read
Optimism Scores Another Big Deal as Ronin Joins Its L2 Stack - read
Consensys CEO Joe Lubin hints at future LINEA perks - read
Starknet’s Grinta upgrade is massive, but arrived with turbulence - read
RWA tokens surge 11% weekly as onchain value peaks at $29B - read
How Hyperliquid hit $330B in monthly trading volume with just 11 employees - read
Tether Unveils USAT 'American' Stablecoin - read
Pendle’s Kinetiq Markets Surpass $1 Billion - read
Polymarket Taps Chainlink to Settle Price Bets - read
Podcast Picks 🎧
This week's audio alpha—handpicked conversations that shaped my thinking and could shift yours too.
I sift through hours of DeFi content so you don't have to. These are the episodes worth your commute, the insights that made me pause and rewind, and the perspectives that are moving markets before they hit mainstream media.
Queue these up and stay ahead of the narrative.
The Rollup: My ENA & HYPE Bull Thesis For 2025: Ryan Watkins - listen
Bankless: One Chart Determines if We're in a Bull or Bear Market - listen
Forward Guidance: The Data Is Screaming Two-Speed Economy - listen
EMPIRE: Ethena Founder: The Next Chapter For Ethena - listen
Bits + Bips: Does USDH Prove DAOs Aren’t Dead? & Why DATs Are Broken - listen
The Rollup: The Biggest Winner from Hyperliquid’s USDH - listen
Vesting Watch 🔓
Token unlocks to watch this week. Expect potential volatility around these dates as new supply hits the market.
ARB (2.03% of released Supply) – September 16
ZK (3.61% of released Supply) – September 17
APE (1.72% of released Supply) – September 17
FTN (2.08% of released Supply) – September 18
The Best DeFi Yield Opportunities Right Now
The DeFi landscape is experiencing a renaissance that feels reminiscent of DeFi Summer, but with significantly more maturity. As I recently shared on X, today's ecosystem features more robust projects, fewer rug pulls, and a genuine economy built around stablecoins that offer far greater stability than the speculative yield farming of previous cycles.
After experimenting with various protocols recently, I've refined my approach to a straightforward strategy: farm governance tokens, take profits when I'm comfortable with my position, then reinvest the proceeds into stablecoins. These funds either go toward earning attractive APY through trusted protocols like AAVE and SKY (formerly MakerDAO), or get deployed into new farming opportunities.
Below, I'll highlight three farms that have caught my attention for their compelling combination of high APY and manageable risk profiles. As always, "manageable risk" is relative to your personal risk tolerance, so please do your own research and never invest more than you can afford to lose.
Three High-Yield Opportunities Worth Watching
SKY Protocol (Formerly MakerDAO) - Staking Yields
MakerDAO's complete rebrand to SKY Protocol represents one of the most strategic moves in DeFi this cycle. I recently upgraded my MKR tokens to SKY, and the decision has already proven worthwhile thanks to the attractive staking rewards now available.
The protocol currently offers two compelling yield options:
14.97% APY on USDS (their stablecoin)
14.25% APY on SPK tokens
I've opted for the SPK rewards rather than the stablecoin yield, betting on continued upside in this bull market cycle. My strategy involves accumulating these SPK tokens and planning to take 50% profits once my position reaches a substantial size.
As an added bonus, you can stake your earned SPK tokens to accumulate Spark points within the Spark ecosystem, creating a potential multiplier effect on your rewards.
Risk Assessment: Low to medium risk given MakerDAO's proven track record and the protocol's established position in DeFi infrastructure.
USDai Pool on Pendle - Pre-TGE Opportunity
The USDai pool on Pendle has emerged as the hottest new market, climbing to the top of the 24-hour rankings with an impressive $25.5M in liquidity on Arbitrum. This momentum signals strong institutional and retail interest in the protocol.
Current Yield: 25.76% APY at time of writing
What makes this opportunity particularly compelling is the dual reward structure. Beyond the generous base yield, participants earn points toward what many expect to be a highly anticipated airdrop. The consistent pattern of USDai pools reaching their capacity limits suggests strong demand and potential upside for early participants.
The key timing factor here is that the Token Generation Event (TGE) hasn't occurred yet, meaning we're still in the accumulation phase for potential airdrop rewards. For those comfortable with pre-launch risk, this represents a classic "get in early" DeFi opportunity.
Access: Pendle USDai Pool on Arbitrum
Risk Assessment: Medium to high risk due to pre-TGE status and smart contract risks, but potentially high reward for early adopters comfortable with protocol risk.
Euler Finance USDC Vault - Multi-Layered Rewards
Euler Finance has become a standout beneficiary of Arbitrum's recent Drip campaign, creating an attractive multi-reward structure for USDC deposits on Arbitrum. The vault currently offers a compelling 11.91% total APY broken down as follows:
4.72% from core lending yield
6.08% in ARB token rewards
0.93% in rEUL rewards
0.23% additional rEUL boost from vault optimization
My Strategy: I treat this as a hybrid play—keeping the USDC earned from lending while actively harvesting and selling the ARB and rEUL rewards. These token sales either get reinvested back into the USDC pool for compounding or diversified across other protocols.
This approach makes sense for my portfolio since I already hold a substantial ARB position from the original airdrop (currently underwater but held for long-term appreciation). Rather than accumulate more ARB exposure, I prefer to capture the yield and redeploy the capital strategically.
Risk Assessment: Low to medium risk given Euler's established protocol and USDC's stability, though users should be aware of smart contract risks and potential changes to reward emissions.
Token Watch 📊
Markets move in whispers before they roar.
Calculated plays backed by fundamental shifts and asymmetric upside.
Position accordingly.
SKY (SKY Ecosystem) - Post-Rebrand Momentum Play
As a long-time MKR holder, I've always appreciated MakerDAO's Ethereum-aligned approach and OG status in DeFi. The protocol completed its major rebranding to Sky on September 18, 2024, and I successfully upgraded my MKR position to SKY tokens, which I've now staked for additional yield.
The Upgrade Opportunity: The migration offers a 1:24,000 conversion rate from MKR to SKY, but there's a critical timing element. With upgrade deadlines creating natural scarcity, holders who fail to migrate face penalties, potentially creating medium-term buy pressure as stragglers rush to convert.
Multi-Layered Value Proposition:
Immediate Yield: As detailed in the opportunities section, staking SKY generates attractive returns through multiple reward streams
Ecosystem Growth: Sky Protocol distributed $1.6M in USDS staking rewards during just its first week, demonstrating strong protocol momentum
Airdrop Potential: Mainnet stakers are likely positioned for future SKY ecosystem airdrops as the protocol expands
Governance Evolution: This rebrand is part of the "Endgame Plan," an ambitious proposal to overhaul MakerDAO's governance and tokenomics
Strategic Positioning: The combination of penalty-driven conversion pressure, robust staking rewards, and potential ecosystem expansion makes SKY a compelling medium-term hold. The protocol's transition from the complexity that limited Maker's scaling to a more accessible Sky ecosystem could unlock significant value for early adopters.
Risk Factors: Protocol transition risks, smart contract vulnerabilities, and dependency on Ethereum ecosystem performance.
Onchain Analytics 🧐
Ethereum's $9.4B Net Flow Victory: The L1 Capital Migration Story
Ethereum has reasserted its dominance as crypto's primary value accumulator, recording a commanding $9.4B in net positive flows over the past three months while every other major blockchain hemorrhaged capital. With $22.3B in inflows against $12.9B in outflows, Ethereum captured virtually all institutional and whale migration during this cycle, leaving competitors fighting over crumbs.
The data reveals a stark winner-take-most dynamic in L1 capital allocation. While Ethereum enjoyed massive net inflows, the rest of the top chains showed neutral to negative flows, with most major competitors including Solana, Bitcoin, and the various L2s failing to achieve meaningful net positive positioning. This represents one of the most lopsided capital flows in recent crypto history.
Source: Artemis Analytics
The flow metrics expose Ethereum's transition from "expensive but necessary" to "preferred institutional infrastructure." At $9.4B in net inflows over just three months, Ethereum is attracting more capital than entire countries' sovereign wealth funds deploy annually. This suggests institutional mandates are driving systematic allocation toward Ethereum's established ecosystem rather than chasing yield on alternative chains.
Unlike previous cycles where capital rotated between competing L1s, current flows indicate institutional preference for Ethereum's battle-tested infrastructure, regulatory clarity, and deep liquidity moats. The concentration of capital flows mirrors traditional finance, where institutions prioritize security and liquidity depth over marginal cost savings or technical features.
When $22.3B chooses to flow into Ethereum despite higher fees and congestion, it signals that the market has made its verdict: infrastructure resilience trumps alternative chain promises for serious capital deployment.
Arbitrum & Base's Stablecoin Surge: The L2 Infrastructure Race Heats Up
Arbitrum One has emerged as the undisputed leader in L2 stablecoin adoption, commanding $9.05B in stablecoin supply with explosive growth metrics that dwarf the competition. With +95% growth over the past year and +4.9% in just the last 30 days, Arbitrum has captured the lion's share of users migrating from expensive Ethereum mainnet operations to cost-effective L2 infrastructure.
Base Chain follows as a formidable second with $4.03B in stablecoin supply and impressive +22% annual growth, while the rest of the L2 ecosystem fragments across smaller players. Linea shows the most aggressive growth at +514% annually but from a much smaller $286M base, suggesting early-stage adoption rather than institutional-grade traction.
Source: Growthepie
The stablecoin supply metrics reveal two distinct adoption patterns: Arbitrum's mature ecosystem attracting serious DeFi infrastructure, while Base leverages Coinbase's retail distribution for steady growth. At $9.05B in stablecoin supply, Arbitrum hosts more stablecoin liquidity than most sovereign nations' M1 money supply, positioning it as critical infrastructure for global DeFi operations.
The growth trajectories suggest L2s have moved beyond experimental phases into production-ready financial infrastructure. When combined, Arbitrum and Base control over $13B in stablecoin supply—demonstrating that the future of DeFi operations has migrated from expensive L1s to efficient L2 solutions while maintaining Ethereum's security guarantees.
This concentration of stablecoin supply creates powerful network effects: more liquidity attracts more protocols, which attracts more users, creating a virtuous cycle that's increasingly difficult for newer L2s to break into.
That’s it for this week.
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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
As always, lots of content, thanks for sharing!