Steakhut Finance recently released their long-awaited Liquidity Book Vault for the AVAX/USDC LB pair. This is significant for several reasons, the first major reason being their passive auto-rebalancing strategy saves users a lot of gas in the long run. Rebalancing in the Liquidity Book is how you keep your funds being actively used and traded. This is how LB positions accrue trading fees, so keeping your money in the bin (rebalancing it) is extremely important for yield generation.

For smaller depositors in Liquidity Book, rewards may be close to the same amount it costs to rebalance several times a day. This means that Steakhut’s LB Vaults are especially useful for users staking less than $1000. For larger market participants gas is less of an issue relative to the potential yield.

APR on January 20th averaged around 184% after fees and peaked around 300%+ for the AVAX/USDC Farm, and when trading is active on Trader Joe, we can expect to see similar returns in the future. The current TVL of the vault is sitting north of $400,000 USD.

The vault is currently paying out JOE and STEAK emissions to incentivize depositors into the Steakhut vault. This means on top of the initial auto-rebalancing LP position, you are also accruing STEAK and JOE tokens. There is also a period of boosted emissions sponsored by Trader Joe and Steakhut.

These emissions can have several strategies. The current breakdown for me is sending my STEAK rewards to be staked on the Steakhut page. The JOE rewards will be routed to zJOE and staked on Vector finance to earn additional yield.

Alternative strategies include staking JOE for sJOE and depositing into the Steakhut sJOE Vault. This strategy incurs a fee for each deposit into sJOE, however. sJOE can also be used for Troves on Yeti Finance for borrowing or Yield Yak for auto-compounding.

I am currently utilizing this Steakhut LB auto-rebalancing vault for a portion of my liquidity provision portfolio. Like any investment, I do not recommend putting all your cash in one spot. Diversification is key. Some other sustainable Liquidity Book farms beyond the AVAX/USDC farm have opened for boosted pool rewards. AVAX/BUSD has had consistently higher yield as well as the AVAX/WETH.e pairs and both of these pairs are being incentivized with farms on Steakhut at the moment. These boosted pool rewards are an additional APR to the existing swap APY for the LP tokens.

The ideal next steps for the Steakhut LB Vaults would be the auto-compounding of reward farms by a yield aggregator like Yield Yak, as well as lending products from CDPs like Moremoney Finance or Yeti Finance. I am looking to hopefully see the continued expansion of DeFi products around the Steakhut Liquidity Book vaults as the market looks to unlock more utilization of these funds.

There are tons of new DeFi protocols sprouting up on AVAX, as well as a bunch of updates happening to existing ones. There really is no bear market for innovation in DeFi on Avalanche. The next substack will cover some other protocols’ updates including Vector Finance, Yield Yak, and Platypus Finance.

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