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Defi fueling a crypto bear market

High stablecoin yields could be a hurdle for another major Bitcoin breakout

After Jerome Powell's hawkish press conference, the market's not getting any better, but the crypto industry has another profitable ace up its sleeve. Stablecoin farming is a less risky crypto play. The downside is it could prove to be even more harmful to crypto's momentum.

Crypto Banter by Crypto Banter
January 27, 2022
in Breaking News
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After Jerome Powell’s hawkish press conference, the market’s not getting any better, but the crypto industry has another profitable ace up its sleeve. Stablecoin farming is a less risky crypto play. The downside is it could prove to be even more harmful to crypto’s momentum.

Stablecoins are pegged to $1. They’re algorithmically pegged or simply pegged to commodities, which implies impermanent loss is minimal. And they’re a crypto diamond in the rough when put to good use.

I like to have stablecoin yields that will pay for a risky investment over 1 year or less, if that risky investment goes south. Cover each investment with stablecoin yields 🧠

— Jim, S𐤊i ₿um ⛷️ (@Cryptographur) January 26, 2022

There’s no real secret to stablecoin farming except knowing where to look. Here, we’ll help you find that gem of a strategy!

What’s up, crypto?

The market is undecided in the wake of, first, Powell’s announcement and then the press conference by Jerome Powell. The “hikes soon” tone of his comments makes it challenging for crypto to know which way to go. 

The Fed today: "Soon"

Crypto Devs: "Soon"https://t.co/XqAACU1J5T

— Jimbo NFT Degen (@JimboDegen) January 26, 2022

It’s not a pretty sight. And unfortunately, an indecisive crypto market equates to less excitement by retail investors for hard assets. And we all know the driving force behind every bull run is retail mania. 

Correct. Until we get the average retail investor back into Crypto we don't have enough for a true bull run and true alt season. Unfortunately people will only come back when $BTC is really high which is stupid but that's how it works.

— IncomeSharks (@IncomeSharks) February 18, 2019

If that goes out the window, so will the drive to invest in hard crypto assets because they’re too risky. Of course, crypto veterans know that better than everyone, and so should you.

Stable farming is very important in times like this. That’s why I’m heavy on things like $crv / $veCRV + $HND / $veHND

— FoodFarmer (@rektfoodfarmer) January 21, 2022

That’s how the market works. Thankfully, that’s also a way for you to work (and profit) within the current market. Crypto has blessed us with countless, if not infinite, opportunities to leverage digital assets, and gain an edge without being too overexposed in times of price uncertainty and indecision.

Stablecoin dilemma

Stablecoin farming is a risk-off strategy slowly being embraced by crypto, because it bears fewer risks. Stablecoin yield farming could be the only way to still profit during a market downturn. Even if you consider Bitcoin’s year-to-date (YTD) return, stablecoins seem to be winning.

https://coinmarketcap.com/currencies/bitcoin/

But if better yields drive people to offload their risk-on crypto assets into more stable, where will the next market catalyst come from? There needs to be a strong impulse in the market to turn the tide. Interest rate announcements will likely not happen until March. And if yields continue to be performing better than regular assets, Bitcoin could continue to bleed.

ARK Says Boom In Stablecoins Could Slow Down The Growth Of Bitcoin Itself

Wrote about how ARK says Bitcoin could go to $1 million, but also how there's a growing view among Bitcoiners (like @gladstein) that stablecoins are getting the job done https://t.co/yzmFwxOvM4

— Joe Weisenthal (@TheStalwart) January 26, 2022

Why would users deploy capital to volatility or low-performing assets when stablecoins are as financially rewarding, if not even more?

It’s true that there’s no real hype about crypto when markets dump. And holding stablecoins generates less anxiety. It might sound like a banking commercial, but stablecoin farming lets you sleep like a baby, because volatility and price fluctuations are no longer your concern.

Trending towards the #bearmarket, you absolutely have to adjust your strategy. Panic selling will not help you win. Staking your #crypto for high yield APY on #Celsius, #Nexo, or #BlockFi OR #delegating your crypto for more of the same tokens can help make you $ during down times

— CoinArchipelago ⛩️⭕️✨️ (@ArchipelagoCoin) January 23, 2022

Let’s dive into a few stablecoin strategies that can yield between 20% and 160% on various protocols.

Stablecoin strategy 101

There haven’t been many incentives to explore stablecoin strategies because the market was trending up at speed. Now that things have changed, so should your strategies, and there are plenty to choose from.

Don-key Finance is a copy trading yield farming strategy platform that gets you into the circle. It’s a mouthful at first, but traders can earn up to 600% on stablecoin strategies.

I’ll be pitching a new farming strategy to the community at @Don_key_finance today at 18:30 UTC.

If you get the chance to show up, would be amazing to see you.

I’ve been testing and I’m excited to provide a solid 6 month stable coin strategy that gives a sexy 600% ROI 🙂

— Steve Woody (@STEVEW00DY) January 20, 2022

With Don-key, you’re either creating your own cross-protocol strategy, or copying someone that presumably knows what they’re doing. Either way, stablecoins are stable.

https://twitter.com/KyleWunderli/status/1486475398368010240

Anchor Protocol, on the other hand, redefined the stablecoin annual percentage yield (APR) at 19.95%. You can also use Yearn Finance for a moderate 6.65% APR, but the risk is greater because Yearn Finance uses USDT. For the full list of options read the entire thread here.

A thread about 9 stablecoin platforms that could give you some extra passive income:

1) Anchor Protocol
2) Abracadabra Degenbox
3) Yearn Finance
4) Hundred Finance
5) Platypus
6) Revenant/Creditum
7) Synapse Protocol
8) Orion Money
9) Spectrum bPSI

/THREAD

— Route 2 FI (@Route2FI) January 21, 2022

Then there are the more complex ways of approaching stablecoin farming, expanding across multiple protocols – and using borrowing as well as staking to increase the APR. It’s a bit more complicated, but if you’re feeling adventurous, it’s worth it because it can yield a juicy 160% APR.

A thread of threads with all my guides on:

-DeFi protocols
-Stablecoin strategies (20-160% APY)
-DeFi 2.0
-Financial freedom
+++

This will be an ongoing thread that will be updated every week, so make sure to bookmark it.

THREAD

— Route 2 FI (@Route2FI) November 14, 2021

Platypus Finance is a good example of a single ecosystem stablecoin play, because users are not obligated to create a Liquidity Pair in order to generate a “good” yield. The one interesting aspect of Platypus is that those who own $PTP, the native token of the protocol, get a Boosted APR.

gm fellow degens!
The @Platypusdefi $PTP beta launch is live!!!
Earn crazy APYs (75%-150%) staking your stablecoins & boosting those APYs (125%-250%) by staking your PTP for vePTP rewards
1/7 https://t.co/0trkf5bvZ7 pic.twitter.com/zh4W6UpFGe

— Roger DEFI (fren, fren) (@rogeravax) January 14, 2022

Where to now? Crypto Banter contributor Miles Deutscher has developed and shared two stablecoin yield farming strategies, which can yield between 82% and 200% on AVAX or LUNA. That’s a better ROI than many tokens in the current market. 

Banter wisdom

If blockchain yields turn out to be so rewarding, especially in periods of a market downturn, there is a chance that crypto and Bitcoin could die by its own success. Paradoxically, a blockchain product like DeFi could kill off the very excitement that brought people into DeFi. 

Institutional DeFi is a massive narrative in 2022 and beyond.

Expecting mass FOMO from institutions when they fully realise what they’re missing out on. Just wait until everyone wants a slice of the pie.

Those who get in the right projects early stand to benefit massively.

— Miles Deutscher (@milesdeutscher) January 20, 2022

Innovation in DeFi is happening at a rapid rate. If you are going to go this route, it’s probably better to jump on stablecoin protocols early – today’s yields will continue to decrease as more people see them as an opportunity.

The more institutions enter this space the lower your #DeFi yield…

— ⓟolkad⬡t ₿🅡own (@bitcoin_brown) June 28, 2021

Now is a good time to reflect on your portfolio and dollar cost average into quality projects. If you own stablecoins, you might want to add your assets on liquidity protocols which can yield APRs as high as 80%. Stablecoins could be an amazing opportunity to increase your exposure to additional capital, because it’s not yet known when the hype catalysts for a bull market will arise, and you want to position yourself the best you can! And remember: DYOR, and don’t invest money you can’t afford to lose.

Tags: Anchor Protocol (ANC)BTCDonkey FinanceplatypusStablecoins
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