How does Sturdy stack up with comparable lending protocols?
Backtesting Stablecoin Lending Yields Over Q1 2023
As a lending/borrowing protocol, Sturdy aims to offer best-in-class yields to those providing liquidity. The difference in how lenders earn yield is sets Sturdy apart from other platforms in the lending market, replacing algorithmic interest rate-based yield with a yield generated from staking borrowers’ collateral. It’s the best of both worlds, where borrowers don’t incur interest payments and lenders see higher yields than what competitive interest rates could offer. Here we’ll be quantifying the returns for lenders, taking a look at how much you could have earned since the start of 2023 by lending each asset on the platform. Yields on Sturdy are “real yields”, and don’t need to be artificially boosted by native token rewards to stand out amongst the field. The idea here is simple: Use a yield comparison tool to show the results of lending $10,000 since the beginning of 2023, including multiple assets and platforms to show how Sturdy stacks up.
A few notes on the process used in this evaluation:
All data is from stable.fish, an extremely useful site for yield farmers to compare opportunities. Stablefish uses real deposits on the platforms it tracks for reliable information on historical yields.
Aave and Compound have been chosen for comparison as they are the two most well-known DeFi lending platforms and provide a solid benchmark. Radiant was also included as a newer entry to the lending space that integrates omnichain lending.
$RDNT token rewards aren’t included in this comparison, and while those rewards can certainly make the platform more attractive, yield paid out in stablecoins is widely considered to be superior. Sturdy is also currently offering token rewards to lenders through its Liquidity Mining Program, which is similarly not included in this evaluation.
USDC
As you can see all the parameters for each platform in this backtest are identical. $10,000 in USDC liquidity is provided on the first day of 2023 across all four platforms. On three of these platforms lenders will have accrued ~$50 in yield over 100 days, for a YTD ROI of .5% which extrapolated to a whole year would be 1.825%. However, for a Sturdy lender, yield over the same period comes out to $259, 5x greater than the other platforms. The YTD ROI here is 2.59%, which comes out to 9.45% annually.
USDT
USDT yields followed a somewhat similar trend, as Sturdy came in comfortably above other options. A Sturdy user lending USDT since the beginning of the year would have netted $153 thus far, a 1.53% YTD ROI, and that annualizes to 5.58%. The main reason USDT yield is lower compared to USDC on Sturdy is utilization rates. USDC has been frequently borrowed above the 80% threshold this year, meaning lenders are getting an extra boost from interest rates kicking in. USDT utilization has varied widely over the first quarter of 2023 but typically remained below the interest threshold.
Back to the comparison. Aave comes in 2nd on the USDT list, as it would’ve netted a lender $108 so far this year. The YTD ROI comes out to 1.08%, equal to 3.9% annualized.
DAI
For the third and final stablecoin in this analysis, DAI, Sturdy’s dominance continues. $230 would have been earned thus far in 2023 off of that $10k in liquidity provided, 2.3% YTD ROI, and 8.4% for the annualized figure. The other yields on display here are significantly lower, with 2nd place being claimed by Radiant at $66 earned YTD.
Why Lending Yields Matter for Borrowers Too
No matter which stablecoin you are looking to lend Sturdy has best-in-class yields to offer. On the other side of the platform, borrowers are able to take out loans interest-free (except in high utilization periods) allowing them to farm more effectively. Attractive yields bringing more lenders to the protocol also means deeper liquidity for borrowing and leverage. That’s the Sturdy difference, creating a positive sum lending and borrowing market.
An analysis of the stablecoin market in Q1 2023 would be incomplete without mentioning the major depegs that occurred in March. The closure of Silicon Valley Bank caused some uncertainty around the reserves USDC held there, which echoed across the stablecoin sector. Since borrowing on Sturdy uses stablecoin-denominated assets (stable LP tokens like FraxBP) as collateral for loans, users are more insulted from liquidation due to stablecoin volatility. In fact, only two borrowers were liquidated on Sturdy throughout the whole week of the depegs.
In Summary
Yields on Sturdy were significantly higher than other lending protocols in Q1, for all 3 stablecoins backtested. Looking at USDC and DAI, Sturdy offered ~5x more yield than the runners-up, and ~1.5x more on USDT as well. The aforementioned Liquidity Mining Program is still active, so if you’re interested in earning $STRDY rewards on top of already best-in-class yields now is the time to get lending.
Lend, borrow, and leverage on the Sturdy App → https://app.sturdy.finance/
Join the BrickGang over on Discord → https://t.co/nKQPT6lGzf
