How Much Are Ethereum Whales Actually Making on DeFi?

Ethereum whales are undoubtedly driving the decentralized finance (DeFi) movement by depositing millions of dollars into decentralized liquidity pools to earn interest. 

Most are using yearn.finance, a set of automated money robots that do the work for them. All they have to do is deposit their money into a “vault”, and wait while these smart contracts move the assets between liquidity pools to generate the highest interest - like a very smart savings account. 

But the actual calculation of yield percentages are not transparent, which makes it hard to discern how much yield farmers are actually making. Stated APYs (annual percentage yields), which have been said to exceed 1000%, are misleading because they are usually based on expected return, given the rate is sustained for an entire year. But farming for any particular reward often only lasts a few days to weeks, with projects reducing the reward over time. 

The yCRV Vault 

There are many different vaults to pick from on yearn.finance, each with its own base asset and strategy for making returns on investments. The most popular one is the yCRV vault, which we look at here. The yCRV vault leverages yCRV, a tokenized basket of DAI, USDC, USDT, and TUSD, and farms the CRV tokens plus trading fees.

Below we look at three Ethereum whales’ yVault performance over time, using this yVault ROI Calculator our COO, Matt Bridges, created. The data is using a subgraph from thegraph.com built by one of the yearn.finance developers. 

1. The largest whale has $40.6M in the yCRV vault, generating $500K in returns in the past 3 weeks. 

Below is a screenshot of the largest whale’s return on investment. This person invested a total of 38.5M yCRV tokens in the yCRV vault, which equates to USD 40.6M (1 yCRV = $1.06). On the x-axis are the block numbers on the Ethereum blockchain. This person started investing money on block number 10,750,000, which was validated on August 28th. Since then, they have made $497,395 in returns. 

2. Up to over $97M in investment at one point, and made $847K in the past 3 weeks. 

This whale had a balance of 92M yCRV around September 2nd (block number 10,780,000) which is worth USD 97,705,449. They have currently accumulated 799,194.51 yCRV or USD 847,145.64 in earnings since August 28th. This represents a simple return of 2.17%, annualized at 40.46%. 

3. Built up to $10M in deposits, left with $177K after 3 weeks. 

This person gradually deposited over USD 10.9M, before selling on September 12th (block # 10,850,000) and taking home 167,165 yCRV, or USD 177,194. 

What are the risks involved with investing in yVaults? 

The risks of yVaults are actually pretty slim because no capital is at risk. Even if the price of Curve dropped to zero, people would just not accrue any returns, but they wouldn’t lose their money. The only way they could lose their money is if the underlying asset loses value - or in the case of stablecoins, loses its peg.