How to Farm Stablecoins

Most tokens aren't accepted as collateral on AAVE. So for many of the popular DeFi, Gaming, and other projects, you don't have an obvious source of liquidity for your assets without selling them.

To start, we have to cover the pros and cons of where the yields are coming from.

I covered this in depth in my "How are the APRs so High?" article, but there are a few common sources of stablecoin yield:

Incentivized liquidity is when a protocol will pay you in their native token for helping supply liquidity to their trading pools. For example, the Curve 3Pool, which contains USDC, USDT, and DAI, is currently only earning 1.55%, but sometimes ranges as high as 10%. Why is your yield so much higher there? Because you're getting paid in CRV tokens.

Your APR from sources like 3Pool isn't based on what people are willing to pay to borrow. It's based on how valuable CRV tokens are, and how many other people are supplying liquidity to 3Pool.  

Right now on AAVE, I can get 1.91% interest on my USDC if I supply it for other people to borrow. This is what we might consider the true yield on USDC right now, since it's based on what other people are willing to pay to borrow it.

Blue Chip Lending Protocols

This is typically the lowest and safest stablecoins yield. It's uncomplicated, you don't have to monkey with it, but it's also going to be quite low return. The benefit is you can set it and forget it. It's not based on giving away tokens you have to periodically sell to compound your earnings. It's not going to cost you a bunch of gas to get it se... See more

Niche Lending Protocols