Welcome to Mid-Week Market Check!
Every Wednesday, I’ll show you what I’m seeing in the crypto market as well as opportunities to earn yield using various onchain strategies.
Each Mid-Week Market Check will include 3 sections:
Market Pulse — trends and observations in the current market
DeFi20 Tracker — measuring the DeFi20 Index performance against the broader market
Yield Spotlight — attractive onchain yields & how they work
Last Wednesday, we got news that Kraken is postponing their IPO. Their reason was essentially that market conditions were so poor that it was worth waiting
It’s understandable – major crypto assets are still down 40%+ since their 2025 peak
BTC -44%
ETH -56%
SOL -63%
But will the bear market go lower?
The most important asset to look at when trying to gauge overall market health is, of course, BTC.
Last week, I showed that BTC had a difficult journey ahead of it, but a rebound is not out of the realm of possibility.
A major bright spot was the continued outperformance of some major alts – notably ZRO and MORPHO.
So, how have these tokens performed since last week’s update? As of Tuesday night, their uptrends are still intact.
And now, a couple other DeFi20 tokens are catching my attention for potential short-term rallies:
CFG could start its next leg up soon
VIRTUAL’s strength hasn’t been as pronounced as the others, but strength around AI tokens may soon drive momentum
But before we dive into the DeFi20, let’s take another look at BTC.
This week, in addition to looking at the patterns of price relative to the “rainbow” moving averages, we’ll also look at the MACD – another indicator I watch to determine strength.
Like any other indicator, the quality of the MACD completely depends on how it’s used. I look for the following criteria to determine whether a dip is for buying:
13 and 21 EMAs must both be positive (the closer to 0, the better)
13 EMA must be lower than 21 EMA
13 EMA moving up faster (or moving down slower) than 21 EMA
On Monday, that’s exactly what we got with BTC, and it stayed steady throughout Tuesday as well.
To make this a high-quality signal, BTC must also be in an uptrend. That way, it provides a buy signal to “buy the dip” in a bullish environment.
So, this isn’t a perfect signal, as BTC is still in a downtrend – meaning the moving averages are still inverted with the longest-term one (the purple line) at the highest price.
With that being said, this combination of a MACD “buy signal” with BTC in a downtrend is rare, and it shouldn’t be ignored.
Like the rest of the market, the DeFi20 Index is down over the past week.
This is partially due to unfortunate timing; last Tuesday night (exactly a week ago) marked the local top for the overall market:
BTC is down ~5%
ETH is down ~7.5%
Altcoins (the market excluding top-10 assets) is down ~3.3%
DeFi20 Index is down ~9.2%
It’s a positive sign that altcoins in general are outperforming BTC and ETH, but unfortunately the DeFi20 Index is not – this is inevitably going to happen some weeks!
Leaders & Laggards
VIRTUAL Breakout Soon?
While VIRTUAL isn’t in an uptrend, its daily chart is showing an even more bullish setup than BTC. Not only is the MACD in a similar pattern, but the price has put in 3 straight higher lows and lower highs:
Also contributing to my bullishness on VIRTUAL is the price action of TAO (Bittensor’s token) – the top AI crypto asset by market cap (excluding LINK, which isn’t a pure-play on AI).
TAO has gained lots of positive attention after NVIDIA CEO Jensen Huang mentioned that decentralized AI networks like Bittensor will play a role in the advancement of his industry. However, it was even rallying before that – always be aware that price follows narratives are a result of price action, not the other way around!
Huang made those comments on March 20th – since then, price has rallied ~25%. But it’s up almost 100% in just 2.5 weeks since its March 7th low. His comments were just fuel for the existing breakout.
The VIRTUAL token has historically been a leader during broader AI rallies, and I believe this time will be no different – if TAO continues its strength, VIRTUAL should follow.
Notable Uptrends: HYPE, ZRO, MORPHO, CFG
MORPHO has everything going for it: not only is it in an uptrend with a solid bounce off the purple MA, but the MACD has shown strength for the past couple days:
ZRO also continues to show significant strength.
As I pointed out last week, it’s one of the few tokens that has not fallen below its 2025 lows this year. Over the weekend, it had a very strong bounce as it approached the purple MA, and it shot right back above the entire MA range.
ZRO’s MACD has also not only flipped into the “light-red” category, but it’s now green – meaning its 13-day EMA has crossed above its 21-day EMA. That means it’s already in the next phase of its rally, once again outpacing a majority of crypto assets.
I didn’t post any analysis on HYPE last week, but it certainly belongs here as well. The chart speaks for itself!
Unlike many other assets, HYPE hasn’t even come close to testing the purple MA, and only briefly fell below the yellow MA (the most important one, as I pointed out last week).
CFG is also showing potential as it looks to bounce off the purple MA – the most long-term of the group. The last time it fell to that level, there was a huge price spike (which I’ll touch on in just a minute).
Another notable development is that its MACD is also on the verge of following the same pattern as other leaders. It has not flipped to the lighter red color yet, but it’s close.
It’s also had two massive spikes in the past month, which I believe are mostly due to illiquidity. However, this could also signal that a large buyer is accumulating tokens, and while both spikes had large retracements, the pattern of higher lows and higher highs remains intact, so this is worth watching.
Every week, I look through 50+ DeFi apps for yield opportunities. With DeFi’s move towards a more sophisticated, institutional userbase, the variety of yields is growing larger by the day. Some examples are:
Plain lending/staking yields
Leveraged versions of those same lending yields
Liquidity provider (LP) fee yields
Multi-strategy vaults (like an onchain fund-of-funds)
AI agent-driven strategies
Highly-active, professionally-managed strategies such as funding rate arbitrage and option spreads
Today, we’ll be looking at a unique RWA yield, market making vaults, and how to earn yield on BTC and gold.
But before we dive into this week’s yield spotlight, I want to bring up a sobering series of events that shone a light on the risks inherent in DeFi.
USR Depeg – What Happened?
Over the weekend, a prominent yield-bearing stablecoin – Resolv’s USR (which I covered in this article) – had an unusual incident over the weekend.
It was unusual because it affected USR’s value without touching the underlying collateral. From a code perspective, Resolv was, and still is, functioning correctly – this allowed it to pass 18 audits without this vulnerability being detected. The problem lies in the fact that this wasn’t a code issue, but an issue with the architecture of Resolv’s protocol.
So, if there’s nothing wrong with the code, and the collateral remains safe, how did this happen?
The attacker used a vulnerability in Resolv’s architecture that allowed new USR tokens to be minted against collateral that didn’t exist. Overall, ~$80M worth of uncollateralized USR was minted against only $200K in USDC collateral. This led to contagion across 18 vaults on Morpho.
Essentially, it was printing money backed by nothing.
The problem was made worse when some major vaults on Morpho continued to issue USDC loans against wstUSR (which stands for wrapped staked USR, but for simplicity's sake these can be looked at as “regular” USR tokens).
Meanwhile, the price of USR was plummeting in real-time as DeFi users realized what was going on.
Naturally, lots of opportunists took advantage of this massive arbitrage – they bought the discounted wstUSR on secondary markets, deposited it into Morpho, and borrowed as much USDC as possible against it.
But how did these loans get approved if USR’s price was crashing?
The answer to that question lies in the type of oracles that these Morpho vaults use to gather price data.
The specific type of oracles used in these vaults are called hardcoded oracles.
As opposed to traditional oracles which stream real-time prices, hardcoded oracles are designed to keep borrowers safe during temporary price depegs by not accounting for sudden, significant price volatility.
There’s an important tradeoff here: lenders risk facing bad debt in legitimate downward price spirals, while borrowers are protected from unnecessary liquidations due to fleeting volatility.
The problem is, the lenders often don’t realize this extra risk. For example, if a stablecoin depeg turns out to be more than just a temporary fluctuation (as it did with USR), you end up with a market that shows a value of $1.13 for an asset that’s trading at $0.63. This is a recipe for bad debt and contagion.
So, what now?
Resolv has posted an onchain note to the culprit asking them to return a majority of the funds; they can keep the remainder as settlement to avoid further legal action.
Earlier today, they also noted that over $77M (almost 80% of the pre-depeg market cap) has been redeemed for the first cohort of affected wallets. That cohort is now almost fully redeemed.
Meanwhile, the protocols and curators that were hit the hardest are in ongoing conversations with lenders who have faced damages.
Fluid is reimbursing depositors with loans from their community and is receiving support from Resolv to cover pre-depeg USR loan originations.
Gauntlet, the curator of some of the most-impacted Morpho vaults, is also working with Resolv to reimburse losses. Based on the update from Resolv this morning, it sounds like most of this has been taken care of.
To wrap this section up, this should serve as a reminder that DeFi is still maturing. Many of these apps don’t have any type of insurance such as FDIC to offer to depositors, and all parties involved in any financial activity need to be aware of all risks involved, such as the hardcoded oracle risk.
With the bad news out of the way, let’s turn to some interesting opportunities to earn yield across DeFi.
Stablecoin Yields
App: YieldNest
Blockchain: Ethereum
Primary Asset: ynRWAx (tokenized real estate)
Deposits: $7.66M
APY: 11.2%
Many RWA vaults focus on government, corporate, or private debt, but YieldNest offers a unique vault completely backed by real estate.
Specifically, this vault receives income payments on 4 Australian properties whose most recent assessments were completed in 2024/2025:
New South Wales properties:
Maclean/Yamba lot of 155 homes valued at $125M+
Katoomba lot of 122 apartments and 90 hotel rooms valued at $171M+
Sydney properties:
Pymble lot of 4 townhomes valued at $15.2M+
Vaucluse lot of 2 penthouses valued at $11.5M+
While this is a unique and interesting product, it brings risks inherent in any other real estate/long-duration investment.
Primary risks to know
Liquidity risk – the fund is not designed for short-term allocation; however, the ynRWAx token can be traded on secondary markets where they may incur slippage (Curve ynRWAx pools have millions of dollars in liquidity)
Early exit risk – property owner sells before the intended maturity date, typically due to unfavorable market conditions (meaning they’d sell at a loss)
Counterparty/issuer risk – it’s the curator’s job to mitigate this; this vault was created in collaboration with Kimber Capital, a licensed and insured fund manager, and holds quality assets in tier-1 markets
FX risk – the ynRWAx itself is denominated in USD, but payments on the properties are made in AUD; ynRWAx holders absorb any losses associated with AUD/USD fluctuations
Market making vaults
Many synthetic asset markets, such as perps DEXs (e.g. Hyperliquid), use community-pooled collateral (typically USDC) to back underlying assets.
Any of these marketplaces have two main parties: the traders and the “house,” or the market makers.
The traders, of course, place the trades.
The market makers supply the liquidity used by the traders.
Essentially, these community collateral pools serve as “market making vaults” and serve as the counterparty to traders on their respective apps. As a result, when you deposit into these pools, you’re the “house;” you make money during volatile market action that results in traders getting liquidated. For more information, see my article covering this topic here.
Right now, two such “market maker” vaults are offering double-digit APY.
App: Lighter
Blockchain: Ethereum
Primary Asset: USDC
Deposits: ~$93M
APY: 11.5%
Lighter, built on the Ethereum network, is one of the largest perpetual futures DEXs in the industry. In less than a year, the app has already generated over $1.5T in volume and almost $60M in fees.
Lighter’s LLP is also based on USDC, and it runs various managed strategies to efficiently manage overall liquidity. Depositors can choose to specifically take part in any combination of strategies to take on various levels of risk. One unique feature of Lighter is that you must stake Lighter’s LIT tokens in order to deposit into the LLP.
App: Avantis
Blockchain: Base
Primary Asset: USDC
Deposits: $77M+
APY: 10.4%
Avantis is the Base network’s primary perpetual futures DEX; over the past year, it’s generated $17M+ in fees and $70M+ in volume.
Depositing in Avantis’ LP Vault is more straightforward – it features a one-click deposit method, and deposited capital earns fees generated from trades and liquidations.
Primary risks to know
Withdrawal risk – if a large amount of vault assets are withdrawn, remaining assets become more vulnerable to losses if traders make large profits in aggregate
Auto deleverage (ADL) risk – in the case of sudden major price moves, LP positions may not be executed in time for them to retain a positive account value; many perps DEXs use these vaults as a “bailout fund” for such trading accounts, resulting in potential losses for depositors
During times of low volatility, traders tend to have relatively flat PnLs in aggregate, which also decreases returns for LPs
Volatile Assets: How to earn yield on BTC and gold
Generally, there are 2 main ways to earn high native yield on non-stablecoins
Looping strategies (went over examples on ETH and SOL last week)
Liquidity providing (LPing) strategies – we’ll focus on this method today
And by “native” yield, I mean:
Yield is paid in the same asset as your position (e.g. earn BTC on your BTC position)
No use of derivatives (e.g. funding rate arbitrage, PT/YTs, options, etc.)
Last week, I went over a couple examples of ETH and SOL looping strategies, so this week we’ll focus on how to earn with LPs.
Most DEXs allow anyone to provide liquidity by depositing assets for other people to trade. So, if you deposit ETH and USDC into Uniswap’s ETH/USDC pool, you’ll earn trading fees every time someone swaps those assets.
While LPing has become its own class of onchain “science” with its own set of tradeoffs and optimization methods, LPers have earned a significant amount of fees in aggregate. For example, over the past year, almost $1B has been earned by Uniswap LPs.
Trading fees are paid out to LPers in the tokens within each given pair. So, in a WBTC/cbBTC pool, fees are paid in (essentially) BTC on both sides of the pair. This simulates an actual BTC-denominated yield, and is the only reliable way to earn more than 1-2% APY on non-yield-bearing assets like BTC and gold.
So, let’s look at where you can provide liquidity to earn yield on BTC and gold.
App: Orca
Blockchain: Solana
Primary Asset: WBTC, cbBTC
Deposits: $1.3M
APY: ~3.4%
The ideal scenario for generating LP yield is finding a frequently-used pool with relatively low deposits. Orca’s WBTC/cbBTC pool, which contains two forms of BTC – Bitgo’s WBTC and Coinbase’s cbBTC – fits both criteria.
Over the past month, this pool has generated ~$3.7K in LP fees, which is ~$44K annualized. So, at the pool’s current AUM of $1.29M, that’s an annual return of 3.4%. That may not sound like a lot, but relative to many native BTC yields (most are under 1%), this is a solid opportunity.
App: Fluid
Blockchain: Ethereum
Primary Asset: PAXG, XAUt
Deposits: $4.3M
APY: ~0.7%
This pool, which contains 2 forms of tokenized gold – Paxos’ PAXG and Tether’s XAUt – currently contains $4.3M in deposits, with ~$2.5K in fees distributed to LPers over the past month.
At that rate, annual yield would be under 1%, but we have to consider that volume has been very low recently. In fact, March is on pace to be the lowest-volume month for this pool since last September. And the lower the volume, the lower the fees.
If volume picks up again, you could see months that are similar to October and January, which generated over $20K combined in fees for LPers. At $10K/month, assuming the deposit amount stays the same, the pool would generate ~2.8% in yield. Like the BTC pool, this may sound low – but earning yield on gold has never been possible, which makes this an interesting opportunity.
Primary risks to know
Depeg risk – if one of the assets in the pool depegs, arbitrageurs will buy the low-value token and drain the high-value token, leaving the pool full of depegged assets
Increased deposits – New LPers flood the pool during times of high volume in anticipation of high yields, which ends up diluting the yield
Low volume – if volume is low for an extended period of time, fees (and APY) could be close to zero
That’s all for this week’s Mid-Week Market Check!
Would love to hear your thoughts on the markets, DeFi20, or yield opportunities down in the comments below. Or, feel free to email me at [email protected].
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