Yield Farming with Compound “Yield farming” is a new iteration of cryptocurrency mining and staking that allows entities to earn an interest rate well above that of a typical US bank account. In exchange for providing liquidity, yield farmers – also known as liquidity miners – receive newly minted COMP tokens in addition to interest paid by the borrowers. UMA: Universal Market Access. Yield farming is the process of earning a return on capital by putting it to productive use Money markets offer the simplest way to earn reliable yields on your crypto Liquidity pools have better yields than money markets, but there is additional market risk Incentive schemes can sweeten the deal, giving yield farmers an added reward If you’re only throwing in a few hundred dollars, the fees will likely eclipse any earnings you realize. Obtaining COMP — either to sell or hold — is the end goal, and astute farmers borrow and lend whatever asset yields the most COMP. Yield farming is all the rage right now, but before we get into that let’s take a deeper look at Compound itself. Yield Farming Fuels Compound to Overtake MakerDAO Overtaking MakerDAO last week, Compound is now the most popular DeFi lending protocol measured by … This makes Balancer a flexible protocol, but it’s also newer. To that end, BAL is the governance token of Balancer. Top DeFi 'yield farmers' share their secrets to a profitable harvest. ), Top Bitcoin and Crypto Lending Platforms, Rated and Reviewed, Bitcoin Hits New All-Time High As Tesla Buys $1.5 Billion BTC, Let’s Cut Off Shorts from the Crypto Markets, Volatility Makes a Comeback to Kickstart February. Its builders want its governance to be fully decentralized and also do some bootstrapping. In a follow-up analysis, the Futureswap team said high volume during the Alpha “translated into the outperforming of holding equal value amounts of ETH/DAI for liquidity providers of over 550% annually.” That margin will certainly get most yield farmers’ attention. The specifics of how yield farming works depends primarily on the asset you are trying to accumulate. Futureswap is a decentralized futures exchange that’s billed as being both for “traders and yield seekers.” That said, users get paid for providing liquidity on the platform. Let’s dive deeper into DeFi’s hottest meme right now to better wrap our heads around what it means for us users. Why? Of the 100 million BAL ever to be minted , up to 65 million have been set aside to reward liquidity providers. These assets are popular cryptocurrencies such as ETH, DAI, and Tether. In the case of Compound, it provides liquidity to borrowers who are looking to borrow funds in digital currency. Why only 3 days? The emergence of the DeFi Compound (COMP) and Aave is what gave rise to yield farming’s boom in the early summer of 2020. Yield farming is new and isn’t going anywhere, so there’s no need to rush in. folks who measure yield as the amount of interest that’s grown atop underlying crypto assets like Dai, USDC, and USDT when put to use in DeFi platforms like Compound. Compound was the first platform to introduce yield farming to the market in mid-summer 2020. And in zooming out a bit, the fact that yield farming isn’t going anywhere makes it yet another ace for Ethereum when it comes to fostering interesting things that users want. The steps are as follows: If you have a wallet such as Ledger, Metamask, or Coinbase Wallet, you can link it with the Compound Finance app. This article provides an introduction to the combination of the three topics, and is not a financial advice in any kind. Yield farmers deposit digital assets into a liquidity pool to enable the protocol to fulfill its purpose. Once you’ve made the deposit, go to the “Compound” tab on the top right and deposit the stablecoins as collateral to begin maximizing your COMP earnings. Yield farming is the main life force of DeFi that drove the market to new and incredible highs in 2020. With larger investments, however, the rate of return can more than cover the fees, positioning you to realize consistent profits. Below is a scenario detailing how an investor can use yield farming with Compound, a decentralized finance (DeFi) platform that allows users to exchange stablecoins and Ethereum tokens amongst each other. But remember: it’s not all fun and games, either. One of the first mainstream DeFi use cases was high-yield interest income in which users deposited cryptocurrency to … How Yield Farming Works on Compound Finance. The Compound money market has a token called COMP. By. The more you lent or borrowed on Compound, the more COMP tokens you were rewarded. With yield farming becoming one of the most popular ways to earn sometimes frankly staggering returns on investment, 2020 saw platforms such as Compound take In the days since, many folks have moved their assets into Compound in order to start yield farming COMP distributions. Priyeshu Garg Analyst @ CryptoSlate. This buzz around the biggest happening in DeFi this year so far has had more than a few crypto users renewing their focus on various yield farming activities already available in the ecosystem, e.g. Simply put, yield farming is the act of leveraging DeFi protocols and products to generate high rates of return. Farming COMP (borrowing and lending on Compound to receive COMP) is the cheapest place to get COMP, but most COMP farmers are agnostic about which assets to borrow and lend. Additionally, third-party projects are helping to facilitate COMP farming like the smart wallet project InstaDApp, which rolled out a “Maximize $COMP mining” widget to help users easily hop in on the action in just a few clicks. Balancer is an automated-market maker (AMM) that allows users to create liquidity pools composed of multiple ERC20 tokens in contrast to the 1:1 pools used by Uniswap. Brooks Hays (0) Fungus-growing ants, found throughout the Americas, may prove to be a source of medically useful compounds… Notably, this network is credited with starting the current DeFi craze. Click on the “Maximize COMP Mining” recipe on the Compound dashboard. This means that anyone that borrows or supplies assets on Compound in this span will be rewarded with a proportional allocation of COMP, of which 2,880 are distributed daily. In exchange for providing liquidity, yield farmers – also known as liquidity miners – receive newly minted COMP tokens in addition to interest paid by the borrowers. COMP Token Yield Farming & FAQ COMP is the native governance token behind the leading lending protocol – Compound Finance. Here are their tips. DeFi's so-called yield farmers are putting their capital to work to earn yield from protocols such as Compound, Synthetix, Balancer, and Curve. Blockchain Investing 101: How to Build Long-Term Wealth in the Digital Asset Markets, Bitcoin ETFs: What They Are and How to Invest (in 2021), Best Performing Cryptocurrency Funds for 2021 (With Scores! Yet just days after the system’s launch, Compound’s now decisively the largest DeFi project and its COMP token has the largest market cap of any DeFi token at press time. In some instances reaching over 100% annualized yields. The smart contracts earn higher yields rates change based on demand and other market conditions, so what you one... 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