Overnight Weekly Report 11/11/22

Fellow Overnighters,

Here’s our Weekly Report for the week of November 4 — November 11.

It’s been a tough week for crypto in general; the road has been bumpy and reflects on the need for more transparency within the space. However, we hope to set a precedent for other protocols to follow — we’re doing this by championing on-chain activities and being fully-collateralized. Users can at any point see the collateral for Overnight on-chain and can rest assured that they know where their collateral is deployed.

With that said, let’s dive into our weekly report.

1) Development

Next week, we’re gearing up to launch the USD+/DAI+ pool on Beethoven as part of being a grant recipient — an amount of $50K — from Balancer. This pool boasts of yields on yields as it comprises unparalleled capital efficiency and yield generation.

LPs for the pool would earn the following incentives:

a) USD+ yields

b) DAI+ yields

c) Swap Fee

d) Gauge Pool rewards — paid in USD+

Inferring from d), Gauge Pool rewards being paid out in USD+ implies that your rewards accrued from the pool appreciate passively. This means that despite not having harvested your rewards, they’ll gradually appreciate in value — an inherent advantage of yield-generation.

For the unenlightened, DAI+ (in addition to USD+) is also an Overnight product and as the name inferrs, is pegged to DAI. Users earn yields from the strategies employed by DAI+ by simply holding it.

This week, we launched the wstETH/USD+ Gauge Pool on Velodrome in partnership with our friends over at Lido Finance.

wstETH is a wrapped equivalent of stETH that in turn, represents an equivalent amount of ETH being staked via validators. Staked tokens are locked up for an extended period to provide liquidity for staked ether and earn users rewards from liquid staking simply by holding it. Therefore, the price of wstETH (and steth) appreciates gradually relative to ETH as rewards from liquid staking are accrued.

The capital-efficient narrative of wstETH coupled with USD+ forms an ideal duo on Velodrome. To incentivize emissions for the pool, Lido Finance has provided 2,500 LIDO ($2,664 as of writing) as bribes for veVELO voters. In addition, Overnight will be channeling 100% of the yields generated from USD+ from the pool as bribes.

The races are about to get a +; emissions for the wstETH/USD+ pool commences from the next epoch.

Overnight passes the Optimism Governance vote with flying colors in Cycle 8 of the voting and has received 99.08% votes in favor of the motion; no other protocol has achieved such a tremendous success rate in the subsequent round.

The terms of the grant entail 100% of the grant being used exclusively to incentivize USD+ & ETS liquidity spread between the DEXes: Velodrome & Beethoven.

Liquidity Provisions are about to make more lucrative than ever — this grant will be used as bribes & gauge pool rewards spread between the two DEXes.

For more information on the grant, read our proposal here.

The magic of USD+ is that its peg is made to be war-tested as it can be minted/redeemed on-demand for an equivalent amount in USDC. Any effects on peg on DEXes open the doors for arbitrageurs to step in and profit from the difference thereby enforcing a stringent peg throughout.

In the past, we’ve set up USD+ arbitrage bots on Polygon, and hence, it was only logical to have them on Optimism — this week we’ve done exactly that.

The arbitrage bots have a range of 0.9986–1.0014 USDC and are triggered as soon as such parameters are reached; such a move makes the peg war-tested. This means that users transacting with USD+ on Velodrome will now get even better rates on the DEX!

We would like to focus more on established DEXes with greater liquidity such as that of Uniswap, Quickswap, Velodrome etc as part of our plans to reduce exposure to low-liquidity DEXes.

In accordance, we’ve exited from Cone, Dystopia, and similar low liquidity protocols. This is applicable for the WBNB/BUSD ETS using Unknown (via Cone) & the WMATIC/USD+ ETS using Penrose (via Dystopia).

The collateral is transformed into USD+ and held by the respective ETS. All exit fees are waivered to facilitate convenient redemptions at 0 costs.

We will be launching more ETS in the future comprising high-liquidity DEXes and users wanting to use the ETS are requested to move in their favor as they are launched.

Kindly note that all other ETSes will continue operations as is for the foreseeable future.

This week, we launched the WETH/USDC ETS using Uni v3’s concentrated liquidity and employed the use of Arrakis for more efficient liquidity management. This ETS benefits from OP incentives from Arrakis to give its users more lucrative returns.

Users can buy this ETS on Velodrome via the USD+/ETS Arks v3 pool — this pool is also receiving VELO emissions.

Note that the ETS is at its cap of $200,000 and hence, no more mints for it can be made from Overnight’s dApp (though users can buy it from Velodrome).

We are testing new ETSes on Polygon based on Quickswap’s concentrated liquidity model. The ETSes are wMATIC/USD & wETH/USDC; they will be released once we’re confident of their performance.

We’ve bribed veVELO holders a cumulative $7,500 last epoch for all 3 USD+ pairs; this is thanks to our self-bribing model wherein the yields from USD+ generated from LPs are channeled as bribes to further seed liquidity — TVL compliments APRs.

The breakdown for the bribes among these 3 pairs is as follows:

-USD+/USDC: $4,200

-USD+/LUSD: $1,800

-USD+/ETS v3 Arks: $1,500

Read here to learn more about the self-bribing model being pursued by Overnight on Velodrome

2) Marketing

Overnight’s newly launched ETS boasts of the best of 3 worlds: Delta-Neutral (our hedged strategies), Concentrated Liquidity (Uni v3) & Liquidity Management Solutions (Arrakis).

It is indeed an amazing innovation utilizing DeFi’s most prominent protocols!

3) The Yield-Farmer’s Digest

Returns on Yield-Farming via USD+ pairs are extremely lucrative and are as follows:

vAMM USD+/WMATIC Gauge Pool on Penrose: 65% APR

For those bullish on MATIC, this is an excellent gauge pool and put your idle MATIC to work via Yield-Farming!

vAMM USD+/stMATIC Gauge Pool on Penrose: 81% APR

Staking in this Gauge Pool earns you yields from stMATIC’s Liquid-Staking & APYs from USD+ in addition to inflationary DYST & PEN rewards.

sAMM USD+/USDC Gauge Pool on Penrose: 8% APR

The USD+/USDC Gauge Pool has one of the highest yields on stablecoins on Polygon for those not keen on Impermanent Losses.

Impermanent Losses for this Gauge Pool are low as USD+ is pegged to USDC on Polgyon against its collateral.

sAMM USD+/LUSD Gauge Pool on Velodrome Finance: 23.17% APR

The USD+/LUSD Gauge Pool on Velodrome has the highest yields for sAMM stablecoins on Velodrome and the pool with the highest APRs via LUSD.

By staking in this pool, your USD+ yields are diverted as bribes and continuing to increase the APRs — make sure to check it out!

sAMM USD+/ETS v3 Arks Gauge Pool on Velodrome Finance: 23% APR

The ETS is a Medium-Risk Delta-Neutral Strategy using the WETH/USDC pair on Uni v3 via Arrakis. The ETS trades for a nominal value of 1 USD+ and hence, has little to no Impermanent Losses apart from the risk of a negative rebase.

Both underlying assets within this pool are Yield-Bearing and the yields from both are channelled as bribes to provide more lucrative bribes and hence, greater emissions.

sAMM USD+/USDC Gauge Pool on Velodrome Finance: 11.23% APR

The USD+/USDC Gauge Pool is an extremely lucrative pool; as USD+ is pegged to USDC, the Impermanent Losses for this pool are next to none.

In addition, by staking in this pool, yields earned from your USD+ would contribute to bribes and therefore increasing your APRs.

USDC/USD+ Pool on Swapsicle.io: 12.23% APR

The USDC/USD+ pool on Swapsicle some of the highest APRs on Avalanche. USD+ rebases are used to buyback POPS — the DEX’s native token — thereby creating a positive loop of goodness.

WAVAX/USD+ on Swapsicle.io: 33.48% APR

Earn a 33.48% APR for pairing your AVAX with USD+ on Swapsicle — an excellent pool for those bullish on AVAX!

Closing Comments

With that said, we conclude this Weekly Report; do join us in our weekly AMA on Monday, November 14 at 3:00 P.M UTC where we’ll be answering your questions!

Thank you and till next week.

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