NOTICE: THIS DOCUMENT IS INTENDED FOR MEMBERS OF OUR INVESTMENT CLUB. IT IS PUBLICLY ACCESSIBLE FOR INFORMATIONAL PURPOSES ONLY. ALL STRATEGIES DISCUSSED ARE HYPOTHETICAL AND NOT FINANCIAL ADVICE OR RECOMMENDATIONS. MEMBERS SHOULD CONDUCT THEIR OWN DUE DILIGENCE BEFORE MAKING ANY INVESTMENT DECISION.
This week’s investment letter focuses on profitable and reproducible DeFi strategies designed for consistent, risk-adjusted growth across Ethereum, Base, and Arbitrum ecosystems. The goal is to empower members of our private investment club with reliable income opportunities and scalable methods to diversify portfolio yield.
DeFi markets continue to mature, with stablecoin yields surpassing 10% APY through automated yield aggregators and cross-chain optimization tools. Platforms such as Yearn, Curve, and Aave maintain their leadership in security and efficiency, while newer protocols on Base and Arbitrum bring fresh incentive programs and concentrated liquidity features. This environment enables investors to build sustainable returns without taking excessive directional exposure.
For crypto-asset positions, ETH and BTC yield generation remains centered around staking, liquidity provisioning, and lending. Combining liquid staking solutions like Lido or Rocket Pool with decentralized exchanges (Uniswap v3/v4) or lending protocols (Aave, Morpho) allows for balanced exposure to both returns and liquidity. Our recommended approach is a defensive yield farming strategy — focusing on low-risk stablecoin farming, combined with uncorrelated yield from ETH/BTC pools.
The ultimate objective of this week’s strategies is to provide a reliable double-digit APY anchored in smart contract security, proven liquidity, and automated compounding. All configurations can be reproduced independently by club members through non-custodial protocols, keeping full on-chain transparency and asset control.
The crypto market began October with significant volatility, triggered by a historic liquidation event that wiped out over $20 billion from the sector and saw sharp drawdowns in Bitcoin, Ethereum, and major altcoins. Bitcoin crashed from above $123,000 to a low near $105,000 before bouncing back above $114,000. Similarly, Ethereum plunged about 11%, bottoming out below $3,900 but quickly recovering above $4,100. Solana and HYPE from Hyperliquid also recorded drops of up to 30% before finding relative stability.
Market sentiment shifted rapidly due to geopolitical tensions—particularly new U.S.-China tech tariffs—and institutional ETF outflows, which intensified downside pressure. Despite these headwinds, key technical indicators now show early signs of stabilization, driven by a reduction in market leverage and gradual re-entry from institutional investors. Over half of the leading 100 tokens lost value, but some, like TAO and selected altcoins (MORPHO, SYRUP), posted meaningful gains during periods of increased volatility.
Looking ahead, analysts expect short-term volatility to persist, especially as the market awaits major macroeconomic events such as the anticipated U.S. Federal Reserve rate decision at the end of October. If monetary easing leads to greater risk appetite, crypto assets could resume upward traction, with Bitcoin possibly revisiting the $120,000–$130,000 channel and Ethereum targeting $4,300 in the coming weeks. Nonetheless, residual risks from global tensions and uncertain regulatory developments remain in play, reinforcing the need for careful risk management and diversification.
Overall, the outlook for the remainder of October is cautiously optimistic. The market is clearing excess leverage, recovering from its recent shock, and positioning for potential medium-term growth should macro conditions improve and regulatory clarity advance.
The current stablecoin landscape offers exceptional yield opportunities across both Arbitrum and Base networks. Our selection criteria prioritize protocols with proven track records, substantial liquidity, and sustainable tokenomics. For October 2025, we’ve identified five high-yield strategies that consistently deliver double-digit APYs while maintaining reasonable risk profiles.
On Arbitrum, Pendle Finance stands out with PT-USDai positions yielding over 30% fixed APY, while Morpho and Balancer/Aura provide more conservative alternatives with steady returns. Base network offers competitive opportunities through Morpho’s vault ecosystem and Pendle’s yield tokenization, creating a balanced portfolio approach across both chains.
The recommended allocation splits 40% across high-yield Pendle positions, 35% in Morpho vaults, and 25% in Balancer/Aura pools, providing balanced risk-return optimization while targeting 15%+ blended APY
For October 2025, Arbitrum and Base present highly competitive opportunities for yield farming with BTC and ETH pairs.
For both WBTC/tBTC and WETH/WBTC pools, impermanent loss remains the primary risk. When price divergence occurs between paired assets, liquidity providers may receive fewer tokens upon withdrawal than initially deposited. Even highly correlated pairs like WBTC/tBTC can temporarily decouple if liquidity shifts or market activity on one synthetic (like tBTC) diverges from Bitcoin spot performance.
Narrow liquidity ranges may increase short-term returns but expose the position to higher risk of going out of range during volatile market phases. Once out of range, assets remain idle, generating no trading fees. Wider ranges reduce this risk but lower overall APY potential.
Liquid staking tokens such as stETH and rETH may temporarily diverge from the price of ETH, creating short-term liquidity or volatility risks. This often occurs during high withdrawal demand or network congestion phases, and while arbitrage helps restore parity, it’s not instantaneous.
While liquid staking provides flexibility, momentary scarcity of ETH or limited secondary market liquidity can delay conversions between stETH/rETH and ETH. This could lock capital temporarily and hinder rapid redeployment into new DeFi opportunities.
While Uniswap V3 is audited and battle-tested, the ecosystem still carries technical and governance risks — especially when paired with external reward layers (e.g., Merkl). A bug, governance proposal, or oracle issue could affect either the reward distribution or pool balance.
Rewards denominated in volatile assets (tBTC, WBTC, WETH) may significantly fluctuate in USD value. This volatility can erode effective APY during bearish periods. Maintaining higher correlation pairs like WETH/WBTC mitigates exposure, but not entirely — large BTC/ETH ratio swings can still impact LP performance.
These strategies enable advanced LPs to consistently extract high returns on bluechip assets while controlling risks inherent to yield farming and market volatility.
Delta-Neutral Yield Using Hyperhedge & Hyperliquid Liquidity Pool (HLP)
Hyperhedge is a specialized platform offering delta-neutral yield farming strategies on the Hyperliquid ecosystem. By simultaneously taking offsetting long and short positions on assets such as $BTC and $ETH, Hyperhedge eliminates directional risk and earns returns mainly from funding fees and protocol incentives.
Delta-neutral setup minimizes risk, offers steady income in any market direction, and provides exposure to the growing Hyperliquid ecosystem.
The HLP token represents liquidity provision directly on Hyperliquid’s decentralized exchange.
HLP is therefore best seen as a non-directional exposure to trading volume and liquidity provision.
Thank you all for your commitment and trust as members of our investment club. Your engagement enables us to explore, share, and implement promising DeFi strategies together. We are also excited to offer automated vaults that implement these yield strategies based on the same proven principles we discuss in this newsletter. These vaults are exclusively accessible to club members, providing seamless, hands-off yield optimization with professional-level risk management and automation.
Please remember that all our investment proposals involve risk, including potential loss of capital. We strongly advise conducting your own due diligence and consulting with financial professionals before making any decisions. The strategies we discuss are for informational purposes only and do not constitute financial advice. We appreciate your understanding and look forward to continuing this journey with you.
Fazio Nicolas - CTO HexaOne Labs