Going beyond stablecoins

Would Idle ever consider spicing things up by offering its yield and risk-adjusted strategies for high cap altcoins like AAVE, ALGO, LINK, ETH, BCH, LTC, etc.

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Personally I think that there is plenty of good work still left to be done on ethereum blockchain, where most defi is happening right now and where the ecosystem is well developed. So I would advise against expanding outside of eth ecosystem for now.

I picked those coins because they seemed to have the highest yields from a variety of sources. More research would have to be done on yields and risk…perhaps the coins beta?

Hey @Instigator928, thanks for bringing this to the attention of the Idle community.

In order to implement new assets, we can start by analyzing the most liquid ones that are already supported by protocols implemented in Idle (mainly Compound and Aave).

Here below you can find the current value locked in Compound and Aave (V1 and V2). It’s an overview of the market share for each asset compared to the total TVL.

Compound (M$) Asset market share [%] Aave v2 (M$) Asset market share [%] Aave v1 (M$) Asset market share [%] Total (M$)
USDC 1590 83.51% 182 9.56% 132 6.93% 1904
ETH 2348 72.67% 364 11.27% 519 16.06% 3231
WBTC 1797 74.29% 238 9.84% 384 15.87% 2419
DAI 1982 91.63% 84 3.88% 97 4.48% 2163
USDT 336 60.98% 95 17.24% 120 21.78% 551
UNI 196 82.35% 24 10.08% 18 7.56% 238
0x 187 97.40% 1 0.52% 4 2.08% 192
COMP 151 100.00% 151
LINK 379 33.36% 757 66.64% 1136
YFI 33 44.59% 41 55.41% 74
BAT 58 92.06% 1 1.59% 4 6.35% 63
SUSD 6 75.00% 2 25.00% 8
TUSD 6 9.23% 59 90.77% 65
MRK 13 18.06% 59 81.94% 72
REN 8 15.69% 43 84.31% 51
SNX 12 26.09% 34 73.91% 46
BUSD 10 17.86% 46 82.14% 56
Compound TVL (M$) protocol market share [%] Aave v2 TVL (M$) protocol market share [%] Aave v1 TVL (M$) protocol market share [%] TVL in Comp and Aave (M$)
Total 8645 69.61% 1456 11.72% 2319 18.67% 12420

We can calculate the current Idle’s potential market share as the sum of the market shares of the tokens already implemented by IDLE (WBTC, USDC, USDT…) in comparison to the total lending market size. Current market potential: 57.2%

With ETH implementation (development is already in progress) we might reach 83.2%.

This means that we are maximizing the returns with a very effort-efficient solution: with only one integration, we enable Idle to potentially attract billions $ worth of crypto assets.

Following the effort/efficiency tradeoff, we see that by implementing LINK we might add an additional $ 1B potential volume, and reach 92.3% of the market size.

I have discarded AAVE because the APY is not shown on the Aave website, despite the TVL being worth $ 1B.

This analysis suggests ETH and LINK are the most interesting assets to attract more TVL.

If we change the perspective and analyze the “protocol returns”, it would be interesting to look at the market size factor in terms of APY * potential TVL.

The “Potential Revenue Factor" ” is calculated with the following formula:

(Compound TVL + Aave V1 TVL + Aave V2 TVL) * best APY across Compound and Aave

Even if I take into account the Aave V1 TVL, the APY is negligible as that protocol will be dismissed, so we expect that the majority of its TVL will be driven to V2.

Compound (M$) APY [%] Aave v2 (M$) APY [%] Aave v1 (M$) APY [%] Potential Revenue Factor
USDC 1590 8.57% 182 14.82% 132 N.A. 282
ETH 2348 0.17% 364 0.32% 519 N.A. 10
WBTC 1797 0.45% 238 0.06% 384 N.A. 11
DAI 1982 10.65% 84 13.65% 97 N.A. 295
USDT 336 8.29% 95 13.84% 120 N.A. 76
UNI 196 1.36% 24 0.17% 18 N.A. 3
0x 187 0.80% 1 0.04% 4 N.A. 2
COMP 151 1.84% N.A. 3
LINK 379 0.01% 757 N.A. 0
YFI 33 0.02% 41 N.A. 0
BAT 58 2.38% 1 0.13% 4 N.A. 0
SUSD 6 2.51% 2 N.A. 0
TUSD 6 14.22% 59 N.A. 9
MRK 13 0.00% 59 N.A. 0
REN 8 0.13% 43 N.A. 0
SNX 12 1.24% 34 N.A. 1
BUSD 10 16.79% 46 N.A. 9

The Potential Revenue Factor shows that the most profitable assets are the ones already supported by Idle (USDC and DAI). ETH can contribute to revenue generation too, while LINK implementation impacts only on TVL but not on projected returns.

Do you agree with the following approach or are there other ways to evaluate asset opportunities? Keen to hear more feedback on this!

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Impressive analysis. I guess I was just potentially attracting the public into the Idle store with high market cap spicy token yields to better support the currently offered items that offer high TVL. Another type of spice attraction might be for those who buy potentially 100x low market cappers that are such a pain to stake. Try Staking FIS.
Sounds like Idle is in good hands.
Instigator928

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