Starters Guide to Yield Farming
According to Defi-pulse at this current moment there is a total of $13.7 Billion worth of crypto assets locked in the De-Fi space, a launch to the moon from the $1.9 Billion in July 2017, that is, if you are comparing to where this space is projected to be. This meager increase, can be largely attributed to to a rising number of Dapps and De-Fi protocols that have emerged in the space in the past months. If you are reading this you are probably wondering how some of these market makers multiplied their capital investments in what people call Yield Farms, and how you can take a piece of this ticking pie before it explodes. let me start off by telling you it is NOT too late. Welcome to the beginning of your journey.
What is Yield Farming?
Yield farming (Liquidity Mining) in short is the practice of staking or locking up cryptocurrencies for rewards or returns. It uses the wizardry of computer programs called smart contracts.
The general idea is that when you a LP(liquidity provider) participates by throwing your magic coins like (Seals or Pickles or UNI) or any specific ETH at these wizards (protocols) and their magic wishing wells (liquidity pools) he will thank you for your participation by giving you even more Cryptocurrency (magic coins)!
Pick a Farm!
Emojis.farm
So for the purpose of this article I decided to pick out a very promising Yield Farm that is launching on 25th Nov by a really strong non-anon (not anonymous) development team, that I have been following for a while.
So lets get started.
I highly recommend when embarking or investing in anything in the Defi space or anything for that matter, take the time to read what it is about it will benefit you and your capital in the long-term.
A Quick Glance, at some considerations.
The difference between APR and APY
APR (Annual Percentage Rate) refers to the yearly rate of return imposed on borrowers, but paid to capital investors.
This methods most distinct feature is that the interest earned is not plowed back in the investment scheme to make more interest.
APY (Annual Percentage Yield) is an annual rate of return charged on capital borrowers and subsequently paid to the capital providers.
The main difference between APY and APR is that the latter allows compounding of interests to bring in more returns to the investor.
APY for Emojis.farm
To promote self-sustainable growth, the APY they have set for their yield pools will be fixed at 1000% APY and can only be changed through a governance vote process on-chain. This 1000% APY is achieved through a daily compounded interest of 0.6592%. Through actively staking their LP tokens in the EMOJI Farms for 365 days, LP token holders can withdraw 11 times of their LP token deposited.
The formula representing this is below:
Told you, yield farming is lucrative. This also means that as a LP you will have the ability to vote on the governance of such said processes. Et Viola, Decentralized finance for you, the power is in your hands.
Risk of Yield Farming
There are two main risk that you need to be aware of before embarkation.
- One of the biggest risks when it comes to Yield Farming, especially when it comes to providing liquidity on a decentralized finance platform, is the risk of an impermanent loss.
The risk of impermanent loss happens in an arbitrage opportunity. The thing is that the liquidity provider has to provide two assets in the correct ratio. If one of the assets in the pool is very volatile and its price goes up and down, then also the ratio changes. If the liquidity provider doesn’t take any action to correct the ratio, then so-called arbitrageurs will do it and take away some of your funds. The result is that the impermanent loss becomes permanent. - Smart contracts are mostly developed by anonymous developers who hold a substantial quantity of their own token. There have been multiple cases where Dev teams dump their tokens on the market or rug-pull, once they reach a certain cap.
Emojis.farm mediates both this risk for you with their wizard of a Smart contract, it implements this:
- They are not an anonymous team so it is in their best interest that their liquidity providers stay for the long-run. Additionally, at EMOJIS.Farm, developers CANNOT mint new tokens, for their own interest.
- To rebalance the pool, additional $EMOJI tokens will be minted by the smart contract. These EMOJI and (other asset) tokens are redeposited back into the pool to generate LP tokens as rewards that will be distributed amongst all users. (you CAN mint it and give it back to you, for the community’s interest.)
If you are ready for both the benefits and the risk.
With a few great strategies you are ready to begin on your journey to harvest plentiful yields of your magic coins.
I suggest, if you know what the wizard is about, you shouldn’t waste a second, and start flunking, no, hurling your coins at him like hes a stripper at the pink potion unicorn club!
Check them out yourself!
If you have read anything in cryptocurrency, verify it yourself.
These are the initial pools they are launching
- PICKLE/EMOJI
- yPLT/EMOJI
- CSMx/EMOJI
- HAKKA/EMOJI
- SEAL/EMOJI
- MGX/EMOJI
Their pre-sale begins on 25th NOV 2020 at bounce.finance
Here are some links:
Telegram — https://t.me/emojisfarm_chat
Website — https://emojis.farm
Medium — https://medium.com/@emojisfarm
Twitter — https://twitter.com/EmojisFarm
[((You can keep an eye out for new projects on places like Twitter, Coingecko, or this Sub-Reddit dedicated to new defi projects listings(or for advanced users contribute to this community so we can continue sharing and making it rain$))]
