Original title: Navigating Solana's Top Yield Farming Opportunities

Original author: David C, Bankless

Original translation: Deng Tong, Golden Finance

Investing in stablecoins or Solana's native liquidity staking token may not be as exciting as searching for the next breakthrough token, but it can provide a reliable way to make money.

Stablecoins provide price stability, while LST allows you to earn basic staking rewards while maintaining liquidity.Through DeFi platforms such as Kamino, Drift, and Save (formerly known as Solend), you can put stablecoins and LST to work to increase your returns through yield farming strategies.

Whether you prefer passive, low-risk returns or are willing to take on higher risk for greater rewards, this article breaks down the best yield opportunities in leading stablecoins like USDC and PYUSD, as well as Solana’s leading LST, to help you find the best match for your risk profile.

USD Stablecoins

Solana’s stablecoins have seen explosive growth in this market cycle. While USDC dominates on the chain, a unique phenomenon compared to Tether’s USDT, Paypal’s PYUSD has experienced explosive growth following its recent launch, fueled by rewards from DeFi protocols.

These stablecoins offer a relatively low-risk option for yield farming when used in DeFi protocols like Kamino, Drift, and Save (formerly Solend). Whether you’re looking for a steady income or a higher risk-reward option, these assets are essential choices for those aiming to hedge against market volatility and earn a steady return.

USDC

Kamino

Kamino Finance offers a variety of yield options for USDC holders, with its main pool treasury currently offering an annual interest rate of about 3.5%, which is lower than its historical 6-9% range, but still reliable for passive, low-risk returns. For higher returns, Kamino's altcoin pool offers an annual interest rate of about 7.5% for USDC, and the JLP (Jupiter Liquidity Provider) pool offers an annual interest rate of about 6.6%. Its centralized liquidity strategy makes it an ideal choice for users who want to balance risk and higher returns.

Drift

Trading protocol Drift also allows users to earn yield by lending USDC. While yields here are modest at around 3-4%, well below previous highs, they offer a stable, low-risk opportunity for those not seeking aggressive risk. Additionally, Drift’s insurance fund offers much higher yields, currently around 15%, derived from fee income from trading, borrowing, and clearing, but is riskier as it acts as a backstop for the protocol to remain solvent.

Save  

Algorithmic lending platform Save offers 4-5% APR on USDC lending in its main pool. The platform also has other permissionless pools that are not deployed by the protocol, such as its JLP/SOL/USDC pool, which currently offers an annual interest rate of 8.5% for those willing to participate in riskier liquidity strategies.

PYUSD

Kamino

PYUSD is a new entrant to the Solana ecosystem, but it has quickly gained momentum due to Kamino’s aggressive yield strategy. While the initial yield was as high as 30%, it has since stabilized at around 7%, the highest of the Kamino main pool stablecoin vault. Kamino has also just added PYUSD to the JLP (Jupiter Liquidity Provider) pool, which offers a higher yield than its main vault at around 8.5%.

Drift

The Drift lending vault offers a slightly higher yield of around 10%, making the platform an attractive option for PYUSD. Additionally, on its insurance fund, Drift offers an annual interest rate of around 18.5%, but keep in mind that this comes with a higher risk.

Save

Save’s main PYUSD pool yield is currently around 12% and appears to have increased recently, while Drift and Kamino’s yields are declining. If this trend continues, Save may be the best platform for users who want to use PYUSD without taking on additional risk.

LST Yields

Liquidity Staking Tokens (LSTs) are an important part of Solana’s staking economy, allowing users to stake SOL while retaining liquidity for use in the broader DeFi ecosystem. The three largest LSTs by market cap on Solana — JitoSOL from MEV-enhanced liquidity staker Jito, mSOL from well-known Marinade Finance, and JupSOL from Jupiter Exchange in partnership with Sanctum — offer base yields of ~7.5%, ~8.12%, and ~8% on staking rewards, respectively, with additional opportunities to amplify these returns through DeFi, particularly on Kamino.

For each of these LSTs, additional yields can be earned through Kamino’s main treasury or leveraged strategies. The main treasury offers passive returns on top of base staking rewards, while leveraged yield strategies offer higher returns for those willing to take on more risk.

JitoSOL

Main Vault Yield:

Kamino’s main vault for JitoSOL offers a modest yield of 0.04%, adding passive income to the base staking rewards. This option is suitable for those seeking stable, low-maintenance returns.

Leveraged Yield:

For users looking to maximize their yield, Kamino’s leveraged yield option for JitoSOL offers higher yields, currently up to 10.5%. The strategy uses leverage to amplify returns, but if these derivative assets decouple, risk increases compared to just holding LST.

mSOL

Main Treasury Yield:

Kamino’s mSOL Main Treasury offers a 0.11% yield, slightly enhancing the base staking rewards with passive DeFi returns. This vault is great for earning extra income while holding mSOL for the long term.

Leveraged Yield:

For those who are not afraid of risk and want to increase returns, Kamino’s leveraged staking strategy for mSOL can push yields up to around 14.5%.

JupSOL

Main Treasury Yield:

JupSOL yields 0.02% on Kamino’s main treasury, providing a small additional return on top of base staking rewards. While the yield is low, this provides a steady source of passive income for JupSOL holders who want to sleep easy at night.

Leveraged Yield:

Kamino’s leveraged JupSOL pool has the highest yield at around 14.7%. By leveraging staked JupSOL in DeFi, users can earn significant returns, a strategy that is ideal for those who want to maximize staking returns while taking on higher risk.

Summary

In summary, stablecoins and LST on Solana offer a variety of yield farming opportunities, allowing users to grow the most mature or stable assets based on their risk tolerance.

PYUSD currently offers the highest yield opportunity among stablecoins, especially on platforms like Drift, with APYs as high as ~18%. In terms of liquidity staking, JupSOL and mSOL currently have the highest leverage yields at ~15%, offering impressive returns for those willing to take on the risk of leveraging a leveraged strategy. Be sure to monitor these vaults, though, as their yields can fluctuate regularly.

Whether you choose a lower-risk stablecoin vault or a higher-risk LST farming strategy, there are plenty of opportunities to put your assets to work in Solana’s DeFi ecosystem.

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