The extended crypto bear market has seen different products affiliated with the sector record significant losses. Despite the market conditions, different products in decentralized finance (DeFi) space are recording impressive returns for investors.
In this line, according to data compiled by Bolide Finance, most DeFi yield aggregators have posted positive returns during the first and second quarters of 2022. Most companies posted high results in January, with Acryptos leading at 12.55% followed by Beefy Finance at 8.43% while Autofam is third at 2.43% and Killswitch stood at 0.31% returns.
Yield aggregators are able to use different DeFi protocols and strategies to maximise their profits. They are non-directional in that they are not as affected by the downturns in overall crypto prices. The yield farming process requires investors to lock up or stake their funds, usually in return for a variable or fixed ROI.
At the same time, as of July 2022, Beefy Finance recorded 0.99% while Acryptos had a return of 0.62%. Autofam and Killswitch registered returns of 0.53% and 0.08% respectively.
Beefy Finance is a multi-chain yield optimiser, which operates across 16 chains with a focus on safety and efficiency. Acryptos similarly is a multi-protocol operation.
Elsewhere, the returns have been replicated under the DeFi farming segment, with PancakeSwap leading with returns of 314.37% in January, followed by Elipse at 35.40%, while Biswap ranked third at 32.22%. During the first month of the year, Mdex had returns of 19.53%, while Nomiswap stood at 0.25%.
In July, Pancakeswap had returns of 179.08%, followed by Biswap at 16.82%, while Mdex was third at 9.79%. Ellipse and Nomiswap had returns of 5.15% and 0.96%, respectively.
For lending platforms, Dforce topped as of January at 8.11%, followed by Venus at 4.63%, with Liqee ranking third at 2.73%, while CREAM Finance stood at 0.95%.
Investors changing strategies
The Bolide Finance research attempted to explain some of the drivers behind the impressive returns by the DeFi platforms despite the crypto winter. According to the research report:
“Generally, the yield farming sector has remained strong over 2022 as investors look to change their strategies, preferring to trade less, hold their coins, and earn a stable yield until the crypto winter passes. Overall, the DeFi sector seems to be maturing and responding to market changes and investors’ needs much faster than most staking methods.”
Notably, the DeFi space allows investors to take a long-term approach to navigating the bear market.
Investors do have to bear in mind that this is still an essentially unregulated sector with very little comeback if funds get locked up or operations blow up. It would be good sense to use multiple yield farming operations rather than just one, simply because the future of any of these cannot be guaranteed.
Yield farmers like Acryptos make a big deal of their high level of security and governance – e.g. they pioneered the concept of the governance vault in yield farming. This is partly to help reduce the risk that funds can be caught up in issues with other platforms – e.g. the SYRUP exploit of PancakeSwap.
Malicious activity still remains the most conspicuous threat to any yield farmer, so investors are encouraged to do their research on the security protocols in place, and as with every other investment, make sure you diversify some of that risk.
