Hey folks, so if you’ve been following me for some time, you’ll know that I spend a quite a bit of time looking for the best yields, especially if they’re on major altcoins or stablecoins. If you go through many of my previous articles especially on stablecoin yields, you’d probably notice that many of the different strategies with high yields rarely last very long — a curse of usually having either low liquidity, boosted time-limited incentives, or simply unsustainable yields. Take into account the stablecoin pool LUSD-USDT on Beefy.finance for instance:
19% APY is fantastic, yet there was extreme volatility over the last 30 days — a range from 12 to 76% APY in just a 24 hour period!
In today’s article, I’m going to be doing a deep dive into Cian Protocol, and why despite having 10s of millions of dollars of TVL in some of their strategies, the APR rates have barely flinched — in some cases slightly increased:
As I’ll go into further, Cian’s strategies are not only extremely transparent, but they’ve managed to build a product that only has exposure to some of the biggest protocols — all the while maintaining some of the best returns on the market.
Let’s dive in shall we?
In a nutshell, Cian is an automated leveraging protocol that utilizes liquid-staked derivates and sometimes flashloans in order to maximize returns on natural yield-bearing assets. With each strategy there is a different pre-set amount of leverage, where generally the yield-bearing token is put up as collateral and then borrowed against for more of the yield-bearing token. Repeating this process several times effectively leverages the yield that the token can earn.
What yield-bearing tokens are we talking about?
$ETH → $wBETH, $wstETH, $stETH, $rETH
$MATIC → $xMATIC
$AVAX → $sAVAX
Each of these bluechip tokens naturally produce yield once staked to help validate their respective networks. In the case of $xMATIC, $xMATIC is a liquid staked derivative from Stader which once staked, can currently earn greater than 5% APY:
Through Cian’s 6x MaticX/Matic recursive staking strategy, this APY is essentially leveraged up, earning the user almost 2x the yield:
The great thing about Cian in particular is that all of their strategies are extremely transparent, and technically you could do these strategies yourself — the big advantage being that Cian executes all these strategies automatically with one click. Take their leveraged staking wstETH/ETH strategy on Optimism for instance:
$wstETH is essentially put up as collateral on Aave, DeFi’s largest and most stable borrowing/lending protocol, where it then gets borrowed against for more $ETH, and then swapped again for more $wstETH. Repeat this process roughly 6.5 times (.5 because you can generally never borrow as much as you supply), and your normal 3% APY you’d be earning from staked $ETH gets leveraged up to roughly 10% APY:
Leverage naturally always comes with its own set of risks, but with Cian in particular, there’s a few things to take note of.
Smart Wallets and Vaults — In full transparency, the reason why I hadn’t gotten into Cian before was because I thought that I was giving up custody of my funds. However with Cian, this is not the case. In order for Cian to automate all these functions, they’ve created a “smart wallet” that essentially performs all of these functions automatically on your behalf, yet still technically controlled by your own personal wallet’s signature. Through a process known as EIP-2612, your non-smart wallet is essentially authorizing these smart contracts from the smart wallet to be executed — an authorization that needs to be constantly renewed whenever winding up or winding down your strategy.
With Cian, a unique wallet is spun up for each specific chain strategy that you want to pursue — a wallet that is essentially just a group of smart contracts designed to execute the designated strategy.
Liquidation— Even though each of these strategies only utilizes tried and tested liquid stake derivates from OG teams, as we’ve seen in the past, there’s always a possibility of black swan events or massive sell offs that can disrupt the prices of even the most resilient LSDs. For instance in 2022 prior to the merge, Lido’s $stETH was temporarily trading at nearly a 7% discount as Celsius was selling off of its position of more than 250 million $ETH. This may have provided a great buying opportunity for $ETH, yet for anyone that had a leveraged position of $stETH, they most likely got liquidated as their collateral all of a sudden became worth less than their borrowed capital.
All that being said, some of Cian’s strategies have ‘Liquidation Protection’ which doesn’t completely remove the risk of losing funds in a depeg, but will automatically exit your position prior to you getting liquidated:
Rates are subject to change — The final consideration that I'll list is that borrowing and supply rates on any lending platform can always be subject to change, as can the amount of yield that you can earn off of natively staking $AVAX, $MATIC, or even $ETH. Despite being the largest altcoin with the most amount of liquidity, $ETH validation can still be significantly volatile, which can greatly effect the amount of returns you get for staking:
As of right now, Cian does not have their own token, but as they’ve stated repeatedly, they will have an airdrop at some point, so this might be an added incentive to enter one of their strategies sooner rather than later:
It’s still speculative for when an airdrop might take place, but I’d recommend you start checking out their Zealy questboard or their Grand Adventure to start earning some Voyage points.
By far, Cian continues to offer some of the most consistent rates in DeFi, and I personally plan on keeping my strategies open for some time, especially with the tokens that I don’t plan on selling any time soon. Planning on entering one of their strategies? I’d suggest their 6x Recursive $MATIC strategy as I’m crossing my fingers to be one of the lucky 10 people that can win $100 dollars of $SD:
And as always, thanks for taking the time to read this and be sure to follow me on twitter (https://twitter.com/CryptosWith) to get all my latest updates. Also, looking for a gift for your Crypto-loving/hating friend? Give them a REKT journal to cheer them up!
Disclaimer: This is not financial advice and this is for educational and entertainment purposes only. Please as always, do your own research and find what investments are best for you. Cheers everyone!
