How I'm Earning Yield on My ETH

This is not investment advice.

I'm using a blend of safer and more aggressive ETH yield farming strategies, including one that pays higher than the RocketPoolETH Convex pool with (in my opinion at least) a comparable level of risk.

You can see what I'm doing in the paid addendum to this post.

How to Find Opportunities on Your Own

Assessing ETH farming opportunities is a little easier than stablecoin ones. The main questions you should be asking are:

Does this beat the yield I can earn from regular staking?
If it does, is the additional risk worth it?

For example, the Yearn Curve Rocket Pool vault will autocompound your RocketPoolETH position that you would take on Convex. So your APY will probably be around ~11-12% when you factor in the staking yield that rETH and wstETH have.

But now you're adding platform risk from Curve, Convex, and Yearn, on top of the risks of rETH and stETH. If any of those protocols fail, you could lose everything. So is it worth layering on that additional risk for a few extra percentage points? Maybe!

With those questions in mind though, the most helpful places I've found to check are:

Convex
Yearn
Beefy
Rari
Market

You can certainly get more in the weeds from there, but that list will give you a good start. Be careful when you see new, insanely high APRs in ETH denominated terms. If they’re legitimate, they rarely last long, and you can easily spend tons of gas trying to move your ETH around chasing the highest return.

It’s often better to pick one strategy you could stick with for months at a time, sit back, and enjoy your yield.

What I’m Doing

Similar to what I outlined in my stablecoin farming strategy article, my primary interests are:

Not having to constantly monitor everything
Sleeping well at night
Being smart about taxes and getting long-term capital gains
After all that, finding the best yield

So I think about my ETH in two stacks. A more active farming stack where I’m looking for the best yield with less focus on tax efficiency, and a large more passive stack that I just wnat to let sit forever.

The larger stack I currently have in Lido stETH sitting in my wallet. 3.8% is still pretty good, and now that I can use it as collateral in AAVE, I can always borrow against it if I need some liquidity for other things. I also don’t want to introduce too many platform risks for my larger, more passive ETH.

The smaller, more active stack I’m currently farming the cxETH-ETH pool on Polygon. This is a synthetic ETH-pegged asset created by Celsius, which is backed 1:1 with ETH. You can trade cxETH for ETH any time on their site, so I consider it quite a bit lower risk than other synthetic ETH assets. I also know one of the guys at Celsius who helped build it, so I feel quite good about its security.

Since this pool is currently paying 16.5%, autocompounded on Beefy Finance, it’s the best ETH-pegged liquidity pool by far. It’s even better than the RocketPoolETH one on Convex by about 5%.

So I have about 80% of my ETH parked in stETH, and the other 20% farming this cxETH pool on Polygon. I’ll probably keep farming this pool until something better pops up, or until it gets too diluted and the RocketPoolETH option starts paying more.

But this is a strategy I’m happy to let sit and run for months, and don’t feel like I need to constantly check on. Getting that, plus a great return, is a huge win in my book.

If you find anything else though, share it below for the other paying members to riff on!