🧵 Thread

•

Hey y'all! Is "Real Yield" still a thing in the world of crypto? Today, we're going to unveil the truth and see what the real yield from the Derivatives Super Powers looks like. Today's topic is gonna be lit!🧵👇0/25

1/25 The narrative of real yield in the DeFi space shares similarities with dividends in TradFi. The DeFi protocol generates revenue through various means, such as interest on loans or trading fees, and as a staker, it entitles you to a share of that revenue AKA “real yield”

2/25 By definition, the real yields are not generated by the protocol token emissions, but rather are shared entirely from interest or fees in the form of $USDC, $DAI or $WETH. It's important to note that your initial stakes are not inflated and provide the potential for growth.

3/25 The Derivatives Sector The trading of derivatives on decentralized exchanges (DEXs) is becoming increasingly popular in the DeFi space. However, the DEX-to-CEX trade volume is still as low as 2.5%. These DEX are still much underrated among so many DeFi protocols out there.

4/25 The derivatives DEX has potential to grow larger and accrue more revenue. As these platforms gain more users and trading volume, the fees generated are becoming a significant, and becoming a crucial factor in determining the participation in their staking program.

5/25 The Superpowers There're over 60 derivatives DEX with a TVL of $1.35 billion as of Feb 5th, 2023. Out of those, 5 DEXs are covered in this thread. These DEXs are noteworthy in their respective areas. They are @perpprotocol @GMX_IO @synthetix_io @GainsNetwork_io and @dYdX

6/25 $dYdX is the top protocol in terms of TTV, having accumulated over $800 billion since its launch. The fees for trading are among the lowest in the industry. It is also the first mover in the and no surprise that dYdX’s trade volume flips Uniswap’s in some market conditions.

7/25 The dYdX protocol previously paid out staking rewards to the Liquidity Pool and Safety Pool until recent community proposals. The dYdX community, through DIP14 and DIP17, voted to wind down both the Liquidity and the Safety Pool.

8/25 The tokenomics is facing some challenges. Firstly, the current use case for the token. Secondly, there is a high level of inflation and upcoming token mega-unlocks. $dYdX has circulating supply around 148 million from the total supply of 1 billion. token.unlocks.app/dydx

9/25 $GMX is a spot & perpetual DEX on Arbitrum and Avalanche. GMX has a total value locked (TVL) of over $530 million as of February 5th, 2023, making it the highest TVL in this sector. The daily trade volume on GMX was at its highest on November 10, 2022, reaching $1.2 billion.

10/25 The daily trade volume on GMX is around $150 million. The trading fees are allocated to GLP holders (70%), who act as liquidity providers, and to GMX stakers (30%). When a staker stakes GMX, they will receive escrowed GMX (esGMX), multiplier points, and rewards in ETH/AVAX

11/25 Stakers have the option to either vest their esGMX or to compound it for higher APR. The esGMX’s compounding and vesting period work together to decrease the selling pressure, resulting in a high staking ratio up to 79% of circulating supply. The current APR is about 19%.

12/25 $SNX is a pioneer that offers LP and decentralized perpetuals on both Ethereum and Optimism. With nearly $120 million in TVL on Optimism, Synthetix accounts for 19% of the total TVL on the network. Synthetix earns fees through trading of one synthetic asset for another.

13/25 This fee is usually between 0.1% and 1%, with an average of 0.3%. The fees are collected in a pool for SNX token holders to claim through staking on a weekly basis. By staking $SNX, stakers help collateralize the protocol in exchange for borrowing sUSD.

14/25 Stakers are rewarded for their collateral of the system through a share of the trading fees generated. On a weekly basis, stakers who meet the target c-ratio can claim sUSD and esSNX. The current staking ratio is about 65%, and 4% - 15% APR paid in sUSD.

15/25 $GNS is a decentralized synthetic leverage trading platform live on Polygon and Arbitrum. It offers a diverse range of trading pairs across various asset classes, including cryptocurrency, foreign exchange, equities, Exchange-Traded Funds, and commodities.

16/25 Recently the platform reached 10,000 Daily Active Users (DAU) with a daily trade volume exceeding $150 million, thanks to the wide variety of assets available for trading. GNS introduced a single side staking pool (SSS) v6.2, allowing stakers to earn revenue sharing in $DAI

17/25 The trading fees are generated from market order (0.08%), limit order (0.08%) and closing order (0.06%). The fees are distributed to LP (22%), the Gov fund (19%), the Dev fund (19%), and $GNS stakers (40%). 77% staking ratio. 6% APR on the Polygon and 9% APR on the Arbitrum

18/25 $PERP is a perpetual DEX on Optimism. It is among the top Dapps with the most active users. It has achieved more than 21,000 daily transactions from over 50,000 weekly active users. The protocol charges a 0.1% fee on all trades.

19/25 Fees are allocated 80% to liquidity providers, 5% to the treasury DAO, and 15% to PERP stakers. The key strength of Perp is composability. The permissionless nature of Perp protocol enables anyone to create DeFi apps, which can drive increased usage and, higher fee revenue

20/25 Perp’s revenue-sharing program is also known as Lazy River. Stakers can increase their share of rewards by staking more tokens and/or by locking them up for the longest period. Bonus vePERP distributed to stakers, equal to 10% of the weekly trading fees (cap at 25,000 PERP) twitter.com/perpprotocol/status/1603379962718961665?s=20&t=ah4FbmmGUm0EZfg7kPxQzA

21/25 As of February 5, 2023, 15.1 million of PERP have been locked for weekly fee distribution, around 22.9% of the circulating supply! The APR from weekly USDC distribution ranges from 5% to 30% and depends on the lock-up period.

22/25 Comparisons Many protocols have similar incentivized token emission in the form of ve-tokens, which supplements the real yield. This ve-tokenomics reduces the circulating supply over the long horizon and aligns tokenholder interests with the success of the protocol

23/25 Other than that, the above tokenomics are built the same way. We have observed protocols that incentivize users through trading rewards with the aim of acquiring traders. On the other hand, some protocols distribute the entire trading fees only to their stakers

24/25 Perpetual Protocol endeavors to achieve a right balance between the benefits for all stakeholders through its DAO governance mechanism. The allocation of trading fees between liquidity providers, stakers, and the DAO was determined by a voting process.

25/25 As the Perpetual Protocol introduces new markets and expands its ecosystem to passive traders, this will drive more volume, resulting in increased fees and more USDC rewards for vePERP holders. Make sure to visit Perp’s blog to gain more understanding about the vision twitter.com/perpprotocol/status/1618662679039676416?s=20&t=yddxT3ZiyN1dMoVfLHt0sA