As markets heat up, stable farming is regaining its allure as an attractive alternative to traditional options like treasury bonds. With yields picking up, stablecoin pools offer the potential for strong returns, though they come with increased risk compared to traditional fixed-income investments. For those willing to navigate the complexities of DeFi, this can be a rewarding endeavor.
Personally, I look for pools with sufficient Total Value Locked (TVL) — a solid baseline for me is $5 million or more, for implicit security reasons and to not have the yield diluted too easily — and a risk premium that justifies the exposure (at least three times the unlevered Aave lending yield, which puts us around 13% APR). My strategy revolves around finding medium-term opportunities, as I'm not looking to constantly shift positions. That said, diversification is still essential — putting all your eggs in one basket isn't wise in any market.
With that in mind, let’s explore my personal top picks for parking your stables and earning attractive yields right now.
1. Pendle Finance
Pendle is particularly appealing in bull markets, where locking in high yields is often easier. As more stablecoins enter the market and compete for users, the likelihood of incentives increases, which could benefit Pendle users by offering more opportunities for rewards.
You buy the PT token at a discount, redeemable 1:1 for the underlying asset at expiry. However, the volatility until redemption is the main caveat. Until the PT token expires, its price can fluctuate, meaning an early exit could result in a loss.
Pendle, with its substantial TVL, has proven to be robust and reliable over time, but this volatility makes it better suited for those with a longer time horizon.
1.1 Pendle USDE Pool
USDE offers a reasonably safe asset with solid backers and sufficient collateral, though the collateral might not be highly liquid. In a worst-case scenario, liquidation might lead to slippage and losses, but a complete value wipeout is not expected — more likely, you might see a small depeg of a few cents.
The current offering of 14% fixed until March (about a 6% total gain) is competitive, and as of now, the pool has around $12.5 million in TVL. This option appeals to those seeking stability with a decent yield, but keep in mind the liquidity risk. Furthermore, if the market really takes off, the APR might increase further and you could find yourself "stuck" in the pool until expiry.
1.2 Pendle USD0++ Pool
With $310 million TVL, USD0++ is a fiat-backed stablecoin that stands out for its strong safety profile. The current offering is similar to USDE, with 14% fixed yields until the end of March, totaling about 6% gains over that period. With a $9.7 million TVL, this pool is also similar in size, and the same considerations for early exit apply.
However, bear in mind that USD0++ is the USD0 liquid bond, which has to be redeemed for USD0 and can incur some spread which has to be factored in.
2. Aave GHO Staking
Aave's GHO stablecoin offers GHO stakers a rewards program of up to 14% APR paid in GHO, but it comes with strings attached. You'll need to engage in activities that benefit the Aave protocol in order to capture most of the yield. Additionally, the 20-day cooldown period before unstaking is a consideration — during this time, no rewards are earned. Furthermore, you stake in the safety module, meaning that if there is an exploit on Aave, your funds might be used to make everyone whole again.
Given the medium-term commitment and the lock-up period, this option is less flexible but could be appealing to those already active in the Aave ecosystem. The GHO staking pool boasts $117 million in TVL, and Aave has been a DeFi juggernaut for years.
3. Curve Finance sDAI/sUSDE Pool
We’ve already touched on USDE, but Curve’s sDAI/sUSDE pool is worth mentioning as well. This pool offers a composite yield — around 11% vAPY (variable, based on trading activity), along with the underlying yields of sUSDE and sDAI, respectively, which might boost the yield beyond 15%. Additionally, you earn 30x Ethena Points, which will likely earn you an airdrop in the future. After discussing USDE and Ethena before, Spark's sDAI is considered quite safe, and the same can be said for the battle-tested Curve as a protocol.
4. Hyperliquid
Although not strictly a stable farm, Hyperliquid’s HLP vault is worth considering due to its USD-denominated structure and reliable returns. The protocol offers yields of around 10-18%, though this is variable and can drop depending on market conditions. The pool boasts $190 million in TVL, and Hyperliquid is considered relatively safe. However, the vault might incur short-term losses, although historically it has followed an "up-only" trend.
Overall, over the long term, it should perform well, but investors should brace for potential fluctuations.
5. Aerodrome USDC/MAI Pool
For those willing to take on a bit more risk, Aerodrome offers a tempting 18-23% APR on USDC/MAI pairs. Though niche with a $15 million market cap, MAI has a good track record and has held its value well over time. Still, with its relatively small size, MAI is inherently riskier than more established stablecoins.
Aerodrome’s $7 million TVL and variable yields reflect the higher risk and reward profile, making it a suitable pick for those with a higher tolerance for volatility.
On top of that, Extra Finance offers leveraged yield farming on that pool, potentially boosting yields to over 50%, but increasing risk significantly (complicating setup, introducing additional protocol risk, liquidation risk, and dependency on borrowing rates).
6. LFJ Stable Pools
LFJ (formerly Trader Joe) on Avalanche offers stable pools with yields consistently between 10-20% over last few weeks. It achieves such competitive yields through additional AVAX rewards as part of the Boost Campaign. By now, LFJ is a battle-tested and quite reliable project, and one of Avalanches flagship DeFi protocols.
Crypto stable farming offers exciting yield opportunities in today’s market, but it’s crucial to weigh the risks carefully. Whether you’re looking for steady gains in more battle-tested protocols like Pendle, Curve or LFJ, or you're ready to take on some risk in options like Aerodrome, diversification remains key.
As always, consider your risk tolerance, diversify appropriately, and ensure you’re comfortable with the implied liquidity of your assets and properly monitor your positions.
