Discovering the Next DeFi Yield Meta

Key Insights

• DeFi has historically had a Yield Meta defined as an onchain yield opportunity that can offer high APYs at scale.
• We view MakerDAO and Ethena as the two protocols most likely to become DeFi’s next Yield Meta.
• Between Ethena and Maker, Maker has greater upside potential for the yield it can offer through SubDAO farming.
• We are forecasting the APY of SubDAO farming to be around 15% in our base case and 30% in our bull case.

What is the Yield Meta?

DeFi's short history primarily highlights the creation of onchain financial primitives and investment opportunities centered on token speculation. However, crypto historians often overlook a vital part of the ecosystem: the generation of onchain yield opportunities. DeFi yield is usually associated with relatively low APYs from activities like liquid staking or onchain lending. However, past cycles show that specific large yield opportunities can create a wealth effect, sparking an ecosystem around those yield sources, such as Curve veTokenomics or more recently farming EigenLayer points.