Dive Into DeFi: Don’t Forget About ETH DeFi, On The Binance Smart Chain

I am expecting to see both ETH Defi and BSC Defi continue to grow, and I am not trying to pick favorites. I think every BSC portfolio should have a healthy allocation to Ethereum and its related projects.

By
Ben Antes
on
March 7, 2021
Category:
Dive Into DeFi

Introduction

I’ve had a major focus on Ethereum DeFi plays lately. I thought I’d spend this week focusing on the various ways to gain exposure without leaving the BSC ecosystem. I think it’s important to steer clear of total blockchain allegiance, but I still am not moving over to Ethereum given the higher gas fees. So my plan? Build liquidity positions that have exposure to Ethereum and various ETH DeFi projects. In my mind, this presents a win/win scenario in which I can utilize BSC’s low gas fees while not limiting my positions. 

Ethereum

One of my goals is to hold a substantial amount of Ethereum. This can be accomplished in a few different ways on Binance Smart Chain. 

  • Provide liquidity to an ETH/BNB liquidity pair. Pretty much every AMM has it available, and APY’s are generally around the 50% range. 
  • ETH/BETH is another interesting liquidity pair offered by both PancakeSwap and Bakery. It’s sort of a triple earning position via trading fees, BETH earnings, and yield farming rewards. This pair also negates most of the impermanent loss risk while capturing a great return. 
  • Investors can also lend their tokens to earn interest on BSC. Using a protocol like Venus through a yield optimize can capture close to a 10% APY. Using BETH instead of ETH can boost that return to nearly 20% at the time of writing this article. 

YFI, UNI, COMP, and SUSHI

This basket of ETH DeFi projects are the ones that I am looking to hold and are all available in some form on PancakeSwap.  

  • YFI/BNB currently earns a 62% APY.
  • UNI/BNB is sitting at just under 40% APY.
  • COMP/ETH is currently capturing a 43% APY.
  • SUSHI/ETH is leading the pack with an APY of over 70%

If you drop all of these LP pairs into a yield optimizer you can generate a boosted return and set your Ethereum Defi portfolio on autopilot. 

My Positioning

I am a bit torn on how to spread my funds throughout all the available pairs and lending options. As I have said in previous articles, one of my goals is to limit my BNB exposure if possible. You will probably find this pretty difficult to do on BSC, which I do see as a feature rather than a bug. Nonetheless, I do want some of my liquidity to be BNB free as total exposure will leave you… well… exposed. 

I was really trying to tackle this conundrum prior to writing this article and am going to share what I decided to go with. As always, take some time to think about this before you attempt to do the same. I’m largely following a strategy that makes me feel comfortable, which is worth just about nothing. 

BETH/ETH

I have a bit of a fascination for this pair and am allocating about 25% of my dedicated ETH exposure to it. I can generate a fairly good return and limit my exposure purely to Ethereum. 

ETH/BNB 

I can’t help but enjoy gaining exposure to the two leading DeFi chains in a single pair. The 50% APY is also nice. 

YFI, UNI, COMP, and SUSHI

I am allocating about half of my dedicated ETH DeFi exposure to this group of pairs as previously described. I personally like that only two of them have BNB exposure allowing my portfolio to have a bit of added diversification away from BNB itself.

Finally, I am avoiding lending for now, as the yields are not quite as high. I really prefer to provide my liquidity to trading pairs rather than lending markets. That is simply a personal preference of mine.

Summary

I am expecting to see both ETH Defi and BSC Defi continue to grow, and I am not trying to pick favorites. I think every BSC portfolio should have a healthy allocation to Ethereum and its related projects. I am looking forward to seeing new liquidity options appear on BSC as the community continues to grow.    


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Ben Antes

KCrypto is BSC News' Financial manager and one of the four founding team members. KCrypto self-proclaims himself as a yield farming "guru" who finds himself researching the latest De-Fi projects.

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