⚡DeFi Strategies When the Market Slows Down
Plus Jupiter's JLP, Jito fees climb, and more
The Dynamo DeFi newsletter covers trends, on-chain analysis and tools in crypto each week. Be sure to also check out my YouTube for more regular content.
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📈Trends and Narratives
DeFi Strategies When the Market Slows Down
There are few things more exhilarating in crypto than when the market is in “up only” mode - everything is pumping day after day, you feel like a genius. Good times.
As we all know, the market cannot be in “up only” mode forever. Eventually, the fun comes to an end - either for a brief moment or for quite awhile. Things have definitely quieted down in the past month and it seems more people are losing money - while I don’t believe it’s over, it’s helpful to have different strategies to deploy in different markets, so you can make more - or lose less - during the harder market periods.
One idea for a strategy during a quieter market is to watch protocols that are actually making money. This isn’t hard to find—go to DeFiLlama’s Fees/Revenue page.
In early 2023, before the market had gained any sort of confidence, two protocols did extremely well - Rollbit and Unibot. They had two things in common:
First, they were somewhat new / shiny tokens.
Second, they were protocols that people were actually using, and they were making money.
Here’s Unibot as an example:
Unibot gathered lots of attention as the summer of ‘23 went on - lots of people were using the Telegram bot and the company was making money.
During the same time period, Bitcoin wasn’t doing much at all:
The lesson in here is that protocols that are new-ish and make money can become attractive investments during quieter market periods. For context, here are the top 20 protocols by fees over the past 7 days. The large number of fee-generating protocols on Solana in particular stand out:
How to Capitalize
Study DeFiLlama’s Fee page. Take note of what’s trending. Sometimes, it’s better to take action inside the protocol instead of simply buying the token. Chances are, there’s a good reason people are using it.
Understand where the fees are coming from and whether they are being incentivized. If you blindly chase ‘yield’ without doing your due diligence, you probably are the yield.
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🔢On-Chain Analysis
Jito Collects Nearly $10M in Fees in 7-Days
Jito, Solana’s largest liquid staking and largest DeFi protocol, has been on a tear with fee collection recently. Over the past 7 days, Jito collected over $9M in fees, the 7th most of any crypto protocol or chain. Jito’s fees have been notably higher than other liquid staking providers due to it offering MEV-powered stake rewards.
🚜Farm of the Week
Jupiter’s JLP Pool
Jupiter Protocol made a name for itself this year as being the best UI in crypto. They’ve since built out additional features beyond a simple swap mechanism - including a perp DEX, a launchpad and more.
Perp DEXes need liquidity and liquidity needs incentives. The Jupiter team has come up with a way to do just that with the JLP token.
How it Works
You can buy & sell the JLP token like any other token on Jupiter’s Perp Page. Currently, the APY is around 55% and can fluctuate - a few weeks ago, it was over 100%.
Risks
You’re betting against traders - if traders have a big win, your position size could go down.
You’re still taking on price risk with this basket of assets - BTC, ETH and SOL could go down. However this comes with the opportunity to profit if these coins go up.
🛠️Tool Spotlight
Track Trending Coins on Socials with Santiment
Social media can be a good way to keep track of what’s trending in the crypto market, but if you’re reading the increasingly clickbait-filled Twitter feed it can be difficult to separate the noise from the signal. Santiment puts numbers to social trends to give you an objective measure of which coins are generating buzz.
📅Key Events This Week
Macro Events
📊Treasury Sec Yellen speaks - May 21st
📊FOMC meeting minutes - May 22nd
📊Nvidia Q1 2024 earnings - May 22nd
Token Unlocks
🔓 PYTH (141.67%) - May 20th
🔓 AVAX (2.49%) - May 22nd
🔓 ID (4.29%) - May 22nd
🔓 BICO (0.75%) - May 24th
Launches & Updates
Note that these launches are mostly unvetted by the Dynamo DeFi team and this isn’t an endorsement of any of them.
🚀 Ziliqa network upgrade - May 20th (Source)
🚀 Opulous first MFT airdrop registration - May 20th (Source)
🚀 Kryza exchange token burn - May 20th (Source)
🚀 Infinext waitlist launch- May 13th (Source)
🚀 Aleph Zero MOST bridge launch - May 21st (Source)
🚀 Chiliz Dragon8 hardfork - May 21st (Source)
🚀 Autonolas new product launch - May 21st (Source)
🚀 White coffee cat airdrop - May 22nd (Source)
🚀 Fetch.ai ASI launch - May 24th (Source)
🚀 Energy web crowd loan airdrop - May 24th (Source)
That’s all for this week. For more frequent content, follow me on Twitter and YouTube.
Until next time,
Dynamo DeFi