Biggest Yield Farming Secrets EXPOSED
The initial buzz around Decentralised finance (DeFi) has become the backdrop of yield farming recently, and for good reason. Yield farming promises dreamlike returns on capital investments in platforms like Curve, Synthetix, Balancer, and of course, Compound. These returns can reach 100% APR on ETH, comp, random, and other stablecoins. It suffices to say that the idea of yield farming epitomizes earning money while you sleep, but only if you're doing it right.
In the beginning, yield farmers simply made the most of the flattering attempts by new big names like Synthetix to enable liquidity providers to circulate their native tokens. They accomplished this through their synthetic ETH token (sETH), using Uniswap DEX. The bait was that adding liquidity to the targeted sETH trading pool and staking Uniswap deposits called Uniswap sETH LP tokens, would profit the investor with SNX ( the Synthetix token) as well as trading charges earned from the Uniswap platform.
Following that trend on various DEXs, Synthetix currently gives back the most SNX returns at (about 48,000 SNX) every week through the Curve DEX. Meanwhile, other protocol teams have copied that style, with the COMP tokens smashing various records after debuting as governance-tokens-on-sale recently.
On that note, the most experienced experts in the world of yield farming have released a few trade secrets that will change your approach towards yield farming for the best profits. Here's what they have to say:
Learn all you can about 100% APR – Arthur Cheong
By taking the time to meticulously borrow tokens that'll yield the most COMP, farmers have learned to supercharge their proceeds. This leverage borrowing system relies on the market-based distribution formula for the COMP token, and channels like InstaDapp has made that whole ordeal a more straightforward one.
The beauty of this strategy is in its continuity since liquidity providers can just hop on to the next scarce token after heating up to its maximum potential. This is evident in how most liquidity providers have moved onto less popular pieces like ZRX and BAT tokens after gaining weight on USDT.
Divide and plunder – Degen Spartan
Instead of looking at the juicy fruits on offer with the movement to COMP, you can capitalize on the resultant gaps in token space that have made niche strategies a bigger market for those willing to try. All you have to do is invest some stablecoins into the sUSD Curve pool, for example, and you'll be happy with more than an extra 20% APY in SNX after you throw the token into the Synthetix Mintr incentives contract.
Low-rate capital – Jake Brukhman, Founder and Managing Director of CoinFund
This has profit written all over it, but farmers will need to dig in their heels to weed out the really 'big fish' opportunity. There are many lending platforms offering capital at interest rates that go well below 0.1% - some are even available at 0%. There's also the exuberance of early protocol teams that promise sky-high APYs to consider. Of course, your assets, luck, and risk-taking threshold determine your prospects, but the odds are really good.
Don't forget the roots - Lasse Clausen
Little success in enabling liquidity for rewards can derail farmers from the basics of yield farming. One has to continually remember that yield farming is all about providing exposure for these tokens at their early stages in order to seize on their potential. While this means there's always some reinvestment to be done, the endless possibilities are why yield farming is so exciting anyways.