Why Yield Farmers Love Mero

The hunt for yield is ever present in DeFi today. In a world of nearly countless different pools, numerous chains, and unique risk profiles, choosing the right yield farming strategy can be strenuous.  

Of the many different challenges that come with earning yield in DeFi many investors are often left asking one question: Are these yields sustainable?  

We’ve all seen it, a pool offering great yields. Then, either suddenly or over the course of a few weeks, the rate of return drastically declines. This is because many yield-farming opportunities face dilution. Where, when more investors enter the pool the shared yield declines in value.  

This then begs the question, how do I know if my yield will be diluted?  

That’s where we’ve seen yield farming solutions like Mero start to flourish. The Mero protocol was first deployed on Ethereum mainnet during mid-March of 2022. Since then, its yield-aggregating liquidity pools have proven to be top performers and, on many occasions, have generated some of the highest base APYs on Ethereum.  

One of the key factors that has kept liquidity providers on Mero is their underlying strategy design which generates yield solely through blue chip DeFi protocols such as Curve and Convex. For instance, the USDC pool (which is currently Mero’s most popular pool) generates yield by deploying funds to a Curve pool which consistently has over $100m in TVL! Meaning, in order for the current APY, which is 8.64%, to be significantly diluted, the Mero USDC pool would have to grow exponentially in TVL. This room for growth, or resistance from dilution, enables more sustainable rates of returns for liquidity providers and less exposure to volatility.  

Another reason yield farmers choose Mero is that it offers customizable market triggers that they can set to their provided liquidity. Meaning, while their assets stay on Mero earning yield, the Mero protocol will monitor their external positions and shift their liquidity if needed. These customizable market triggers, called Actions, can be set by anyone who provides liquidity on Mero. As of now, Mero supports Actions for collateral top-ups and debt repayments. Both of which have been utilized by borrowers to hedge risk and increase leverage while simultaneously farming yield. 

While Mero pools have been steadily generating yield for about a year, it should be noted that there’s still much to come, as it has been sometimes hinted at on Twitter. The Mero token has yet to be deployed and many community members look forward to future protocol governance. Individuals interested in Mero and the future of DeFi yield farming should join the community on Discord 

This post is commissioned by Mero and does not serve as a testimonial or endorsement by The Block. This post is for informational purposes only and should not be relied upon as a basis for investment, tax, legal or other advice. You should conduct your own research and consult independent counsel and advisors on the matters discussed within this post. Past performance of any asset is not indicative of future results.

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