DeFi Llama Tutorial: How To Make Money With DeFi Llama
https://www.youtube.com/watch?v=Xx8HT9OW63o
Transcript:
The DeFi space offers highly rewarding opportunities. There are always multiple ways to earn more crypto or increase your holdings. There’s a ton of DeFi protocols, tokens, pools and all of that. Instead of going to every single website opening every single DApp or protocol you can use a tool like DeFi Llama.
By using DeFi Llama you can sort through all of these opportunities and projects without opening every single site or platform by itself and instead looking at a list of the most profitable opportunities the best projects and everything like that so if you want to learn how to make money with defilema find those opportunities and then invest in them then you should keep watching defilema is a tool that aggregates all the information about DeFi protocols projects coins nfts and much more under just one dashboard
which makes it one of the best tools to research the DeFi space. Using DeFi Lama will make it much easier to find projects or opportunities to make profits because everything is organized in categories or sections so you just need to navigate through those to find what you want.
You can use filters, you can sort everything by tvl or other important metrics so whether you want to find the highest yields to generate interest over your own crypto or just find short-term opportunities then you should consider taking a look at it if you are wondering whether investing in DeFi is worth it when compared with traditional finance then you can check the API trends chart and you can compare those APYs with traditional finance APYs with an average or specific products that you are interested in.
However you do need to keep in mind that there are multiple ways to make money in DeFi so the APY trend or the APY percentage on that graph is not always the only factor that you should consider. It is still a good way to get a feel of the market trends and see whether or not the APYs are increasing or decreasing.
To find where the highest APYs are coming from in terms of the protocols you can take a look at the spot APY distribution. This can help you pinpoint the best opportunities or the best provider for those DeFi investments. You’ll find most of the money making DeFi opportunities under a section which is called yields. Some of the examples are pools, long short strategies, delta neutral, leveraged lending, borrow, stablecoin pools and projects.
You can also check out Ethereum staking pools on the Ethereum liquid staking section or dive deep into NFTs but also find airdrops or projects that might launch airdrops. Of course you can also use it to find and identify the underlying protocols that allow you to earn money with those DeFi opportunities and then you can take a look at those individual protocols if you want to do so because sometimes the data might not be 100% updated on these aggregator sites when compared to the actual protocol since rates can change slowly or very fast depending on the asset pool or anything else.
The pools section will present all of the pools available and in default view they are usually sorted by TVL which is total value locked however there is a bunch of different filters and ways that you can sort all of that data to find different pools for your investment preferences if you just want to see what are the most rewarding pools you can for example sort them by APY and it will show the highest APY pools.
However be aware of the risk that a higher APY can represent depending on the underlying tokens or assets that are part of that pool. If you have a target APY then you can use the APY filter to set a minimum or maximum APY. For example if you just want to see pools that have an API up to 30% you can set that as a maximum and only see those pools as a generic guideline to filter out pools that have a very high APY and might be more risky.
You can also do the same for TVL and show pools that are only above a certain TVL number or value and you can also use that as a way to gauge the risk levels and I would say TVL is probably a better measure of risk than APY is. There are also other filters that you can use that will better present that information and show you stuff without you having to set specific numbers for example for the APY or TVL.
To do that you can use attributes and the first one is stable coins that will only show stable coin pools. Then you have single exposure that will show pools that only have one token in them. No IL will show you the pools that have no impermanent loss. Million dollar will show pools with at least one million dollar TVL. Audited will show pools from audited projects only.
No outliers will remove pools which are considered outliers based on their geometric mean of APY values. Stable outlook will show pools with stable or up outlook only. High confidence will show pools with high predicted outlook confidence and potential airdrop will show projects that don’t have a token yet and might airdrop in the future.
A lot of these attributes will be very useful to filter out pools that might be risky but the criteria you use for the search is really up to you. You can look at those as some recommended presets that someone has already come up with and they are good guidelines.
You can also use categories to only show pools associated with liquid staking, lending, DEXs, CDP, yield, derivatives, wheeled aggregator, liquidity manager and algo stables. You can also select the projects you want to see by using project and this includes all the protocols you can choose from Lido, Justland, Camelot, Aave or others.
You can also select the chain you want to use to avoid high fees for example with Ethereum or use a chain associated with high quality projects. And of course you can also select the actual tokens you want the pool to include if you already have some in mind. Now that you’ve found these pools you can click on them or on the tokens to see more information about that pool.
There will be a graph of TVL and APY and also a place where you can check out the audit. If you want to go to the protocol front end or the DAP to start earning some rewards then you just need to click on the arrow icon and it will open up that DAP on a new page where you can find your pool. After that the steps are usually the same when it comes to interacting with these decentralized applications.
You will need to connect your wallet, select the funds you want to invest, approve the transaction and that’s it. If you only want to invest in stablecoin pools there’s an easier way to find them instead of just using filters and that’s by going to the stablecoins pool section. The advantage being that the prices of the assets that are on that pool won’t fluctuate when compared with regular currencies like the US dollar.
The stablecoin pool section still has the same filters and sorting options so it would be pretty similar to how you can sort the other pools on the pool section that I’ve mentioned. Now let’s take a look at the delta neutral section. This is where you can find opportunities for delta neutral strategies. The Neutral Strategy is a strategy where the goal is to maintain the portfolio Delta at or near zero and the portfolio Delta is the sensitivity of the portfolio value to changes in the price of an underlying asset considering the delta neutral strategy FUSDT DAI and DAI
you would lend FUSDT borrow DAI and then farm DAI and that’s why there’s two DAI on that pair so let’s say you have one thousand dollars of FUSDT which is a stablecoin pegged to the value of the US dollar. First you would lend FUSDT or provide it as collateral on Granary Finance which would earn a supply APY of 7.
86% according to this example. Second you would borrow DAI against your FUSDT collateral with the max LTV which in this case is 80% and you would have a borrow APY of minus 3.65 which is the interest you would need to pay for that loan. Third you would use the DAI you’ve just borrowed to farm on a cryptos in this case and you would earn 316.
59% so if we calculate the strategy APY it would be 7.86% which is the supply APY minus 3.65% which is the borrow APY for the loan times 0.80 which is the LTV of that loan plus 316.59% which would be the farm APY and then multiplied by 0.
80 again for the LTV of that loan because you are using assets that you’ve got from that loan and the result would be 258.21% APY. So this would be the APY for the entire strategy. We are already considering how much we need to pay for that loan, how much you would earn for lending and also how much you would earn for farming. Given that you’ve invested $1000 you would make a total of around $2582 after an entire year and end up with a total of $3582 which is pretty good if the APY throughout that year would stay stable and always have the same number or value. Now let’s take a look at the long short strategies. A long
short strategy is a strategy where you take both long and short positions on different assets in order to profit from the difference in prices. So let’s take a look at an example where we have long USDC and short USDC USDT. So the trader is taking a long position in USDC and a short position in the USDC USDT trading pair.
USDC is a stable coin pegged to the value of the US dollar while the USDC-USDT is a trading pair that represents the exchange rate between USDC and USDT, another stable coin pegged to the value of the US dollar. Let’s say a trader wants to execute a long short strategy using USDC-USDT trading pairs. The trader would take a long position in USDC on a DeFi protocol such as Compound or Aave.
This long position would earn yield through the protocol which can be added to the overall APY on the strategy. At the same time the trader would take a short position in the USDC USDT perpetual contract on a centralized exchange like Binance or OKEx. The short position would be used to edge against the potential losses in the long position.
If the price of USDC were to decrease relative to the price of USDT, the trader would profit from the short position in USDC-USDT and have a loss from the long position in USDC and vice versa. The funding rate on USDC-USDT perpetual contract would also be a factor in calculating the overall APY of this strategy. If the funding rate is positive the trader would earn funding from the short position which can be added to the overall apy of the strategy if the funding rate is negative the trader would pay funding on the short position
which would reduce the apy of the strategy now let’s take a look at leveraged lending. This is a strategy that will allow you to earn higher yields on your deposited assets by borrowing additional assets against your collateral which is usually in the same coin and then you would redeposit those borrowed assets back into the same pool.
So you would earn more because you would earn on your initial deposit plus the funds you just borrowed. Now there’s an example where a user deposits $1000 into a pool with a supply API of 9% and borrow API of 3% and the maximum LTV of 75%. So the first step would be to deposit the $1,000 as collateral in the pool.
Then the second step would be to borrow $750 from the same pool using the deposited collateral as security. The maximum LTV of 75% means that the user can borrow up to 75%. The maximum LTV of 75% means that you can borrow up to 75% of the value of the deposited collateral. Then you would deposit the $750 that you’ve just borrowed on the same pool meaning that instead of having just one thousand dollars you would have one thousand five hundred and fifty dollars in that pool which is 1.
75 times the original one thousand dollars then the apy you would earn is called the loop apy and this is calculated by the sum of the supply APY on the total deposit amount and the borrow APY on the borrowed amount. In this case the loop APY would be 9% times 1.75 plus 3% times 0.75 which would be 18%. This means that you could earn an annual yield of 18% on your deposited collateral and borrowed funds.
This is twice the supply of 9% that you would have earned without using any borrowed funds. You can then repeat these steps multiple times and increase the leverage each time by borrowing more and then repositing the borrowed assets back into the same pool just like before. If you want to just borrow or find the best yields for lending then you can use the borrow section because it shows both the borrow APy but also the supply apys as well.
You can sort by borrowed to see the most used protocols which are usually the safest to use as well. Aave, Compound and MakerDAO are usually at the top but it depends on the assets that you want to provide as collateral and other filters that you may want to use during your search.
DeFi Lama has an integrated notification system which is very useful if you use DeFi often. So if you do a search you have your filters already set up, your tokens, you can then click on the bell icon and the new page on the all app will open up where you can change the criteria and set how you would like to get notified and where once a new opportunity pops up and gets added to that previous list that already includes your filters you can get an email you can post on Discord, Slack, Telegram or even post on Twitter automatically which is very useful.
You can find all the projects under the project section and you will also be able to find different dApps for Liquid Staking, Lending and other categories but most of the time you would be better off by just using the previous sections to find opportunities which are already labeled for those specific categories.
Ethereum liquid staking is a new way for Ethereum holders to earn staking rewards while still maintaining some liquidity but instead of Ethereum it would be represented by other tokens. Traditional methods of staking or illiquid staking require you to lock up your funds to earn staking rewards and that way you are also contributing to the security of the blockchain.
However when you lock up your funds to earn staking rewards your tokens are illiquid which means that only after the staking period can you use them again or spend them to buy something, meaning they cannot be used to any other purpose while they are being used for staking. But with Ethereum Liquid Staking you can delegate your Ethereum to a staking pool and received liquid staked Ethereum in return one of these tokens would be STETH but it is just an example it depends on the protocol that you are using for liquid staking you can use this section to find the best protocols for Ethereum liquid staking and some of those
will even allow you to do liquid staking for other tokens as well however the selection is still a bit limited. You can also analyze different metrics like APY, TVL and others to analyze the health of these protocols. Lido, Rocketpool and Anchor are three popular options that usually appear on the top of the list once you sort by TVL.
So they can be good choices but of course there can be new protocols that come up in the future that might end up being better than this. Another way to earn is by participating in airdrops. You can use Defilema to find potential and recent airdrops and you might want to participate on those because you will earn free tokens.
An airdrop is like getting free money but instead you get rewards paid in a certain token or cryptocurrency for completing a certain task such as using a new web or website airdrops help product creators get more recognition when they create something new that doesn’t have a lot of eyeballs yet and so by giving away free tokens they expect people to try their app website or new DeFi project in return sometimes to get airdrops you might be required to complete certain tasks or interact with the product in some way there are also some great tools to research NFTs if you are into them or
good at flipping them for profit you can find NFT collections and see what the floor price is, what is the total supply and how much of them are available for sale. You can also see what’s happening on NFT marketplaces by looking at the volume and the trade. On the earnings subsection you can find what are the names of the NFT creators, companies or people who have created the NFT collections.
If most of the collections are successful you can typically expect that once you buy NFTs from that creator you will be profitable once you sell them later on. Now let’s mention some important NFT metrics since they are different from most of the other sections mentioned before. So you have mint earnings which refer to the total amount of money earned by the creator of an NFT from selling the NFTs during the initial minting process.
When the NFT is first created the creator can set a price for it and sell it to buyers and the total amount of money earned from those sales is the mint earnings. This metric is useful for understanding how much money the creator made from the initial sale of the NFTs. Then we have lifetime royalty earnings and this is the total amount of royalties earned by the creator of an NFT over the lifetime of the NFT.
Royalties are payments that the creator receives whenever the NFT is resold by someone else. For example, if somebody buys an NFT for $100 and then sells it for $1000, the creator may receive a percentage of that $900 price increase as a royalty payment. The lifetime royalty earnings metric is useful for understanding how much money the creator has earned from ongoing sales on the NFT. Then there’s also royalties for 30 days which is the total amount of royalties earned by the creator of the NFT
on the past 30 days. It is similar to the lifetime royalty earnings but only looks at a shorter time frame which can be useful if you want to see which NFTs are performing well recently. Lastly, there is the total lifetime earnings which refers to the amount of money earned by the creator of the NFT over the lifetime of that NFT including both mint earnings and royalties. This will tell you how much the NFT creator has earned as a whole from that NFT.
That way you can gauge the economic success of the NFT project and the creator financial performance and even create a profile for them so that way you know what NFTs are usually profitable and from what creator. As you can see DeFi Llama is one of the best tools to find DeFi opportunities but also research new DeFi projects.
If you prefer easier centralized options that are more convenient where just deposit your funds and you earn passive income over them then you can check out the video on the card or on the description as well but I will also link it on a pinned comment. Are you bullish on DeFiFi have you already been investing in it what are the protocols that you use the most do let me know in the comment section down below and if you want me to cover other useful DeFi tools you can also mention those on the comment section as well hit the like button if you enjoyed this video and subscribe for more content like this and don’t
forget to check out the crypto playlists for more useful crypto tutorials and guides thanks for watching and i’ll see you in the next one bye
