How to increase yield with $ATOM in 5 ways
1/ Staking
Staking is the most straightforward approach to generating passive income. It is also highly profitable with a 19% APR.
Additionally, there are more potential chains with an attractive yield, such as:
- Evmos ($EVMOS) 282.68%
- Juno ($JUNO) 61.77%
- Osmosis ($OSMO) 25.9%
Please do your own research before investing.
What are the concerns?
Staking involves two primary risks:
❌ Downtime: If your validator misses some blocks, you lose some of your rewards: your APR falls.
❌ Double Signing: A portion of your ATOM is sliced, and you must redelegate.
Besides that, the unbonding time is around 14–21 days, depending on each chain. It is difficult for investors to recover capital when something goes wrong, Terra (LUNA) is an example.
If the validator is offline for an extended period of time, slashing will appear.
Here is the percentage of each slashing incident.
- Doublesign: 5%
- Downtime: 0.01%
The worst-case situation is that you lose 5% of your staked ATOM.
Tips: Only stake with high-quality, experienced validators.
2/ Liquid Staking
Current Issue: When you stake your assets, they are frozen until you un-delegate them.
Solution: Liquid staking enables you to stake your assets while maintaining their liquidity.
That implies that you continue to earn 19% APR, but you can use ATOM elsewhere to generate even higher yield.
What are the obstacles?
❌ Same risks as traditional staking
❌ + Liquid Staking Provider’s smart contract risk
Who are the top liquid staking providers right now?
✅ Stride
Status: Mainnet
Stride is a blockchain (“zone”) that provides liquidity for assets that have been staked. Stride allows you to generate staking and DeFi yields across the Cosmos IBC network. Stride is launched on Sep 6th.
At launch, $ATOM, $OSMO, and $JUNO are supported. Stride token’s full airdrop details will be available soon!
✅ pStake Finance
Status: Mainnet
Persistence is a specialized Layer-1 built on Tendermint that powers an ecosystem of DeFi dApps designed to boost the liquidity of staked assets. Recently, pStake integrated with Binance Smart Chain, and the plan continues to expand to Solana and Avalanche. The TVL pStake is $18.54m.
✅ Quicksilver
Status: Testnet
Quicksilver, as a sovereign Cosmos-SDK zone, is not subject to the limits associated with previous approaches to liquid staking.
Quicksilver instantly and effortlessly onboards any Cosmos-SDK based zone in a permissionless manner using interchain accounts and the Liquid Staking Module. Early Q3 22, the project will launch.
✅ Lido Finance on Neutron
The Lido DAO Forum has provided a framework for the deployment of a cross-chain Lido implementation on Neutron to offer liquid staking to the Cosmos ecosystem. It suggests deploying Lido’s smart contracts on Neutron, from which stakes across all onboarded blockchains may be controlled with minimal trust.
More detail is here: https://candelaresearch.medium.com/lido-participates-in-the-interchain-competition-for-liquid-staking-97ed83d14b3a
3/ LP providing
Utilize your ATOM in an LP pool with Osmosis.
Currently, the ATOM/OSMO pair has a 23% APR. This is the highest TVL in Superfluid Pools.
This implies that you contribute liquidity to the exchange, enabling others to transact without difficulty.
You can gain benefits by doing the following:
✅OSMO incentives: OSMO inflation includes a portion that is distributed to LP providers.
✅Trading charges for AMM clients
There are many Superfluid Pools for users to choose from if the holder has any assets that they want to farm or add LP.
What are the risks?
❌ Smart contract risk
❌ Impermanent loss
4/ Lend ATOM
A decentralized lending platform like Kava or Umee is where you can lend your ATOM.
The APR/interest fee for lending/borrowing ATOM on Kava is as follows.
What are the risks?
❌Smart contract risks
❌Risk of passing up more lucrative opportunities
You don’t have to be concerned about the counterparty’s ability to repay your loan because the borrower’s position must always be over-collateralized.
5/ Mint stablecoins
Inter Protocol ($IST) allows you to secure your ATOM and mint the stablecoin $IST.
The stablecoin’s price is equivalent to USD.
The stablecoin can then be used in other protocols, such as Osmosis LPs, to earn additional yield. This is just a theory, because the project is still in the development phase.
✅Set up a Vault:
Make a vault, print IST, and keep your Cosmos assets while transacting in the $10B+ interchain market.
✅Convert to IST:
Use Swap, the native Inter Protocol AMM, to buy and sell IST, or use the Parity Stability Module to directly buy IST with other stable tokens like USDC (PSM).
✅Increase your ATOM or BLD:
By enabling you to mint IST against your upcoming staking rewards, Boost improves your staked Agoric BLD tokens. Then you can swap to ATOM or keep BLD to re-stake BLD.
What are the risks?
❌If the price of ATOM drops, your ATOM will be liquidated.
❌Smart contract risks remain the same.
The post is all done now. Because the Cosmos ecosystem is still new, there will likely be a lot more opportunities to increase yield in the future. Candela’s team will update with new announcements from projects in Cosmos’ ecosystem.
