For anyone that needs to hear this- your 500% APY LP will not last and the value of the token will depreciate faster than any gains you make

I see everyone touting their new LP find with a 500% APY and I just laugh. It’s a learning process and you’ll have to get burnt once or twice to understand it, but it needs to be said.

I went through the same thing with WAGMI/Viperswap back when the DAO forks were going crazy. I thought I’d be able to recoup any losses because I was receiving more of the token. Nope. The APY is meaningless if the token doesn’t have an actual use case.

Before you jump into the next farm with a crazy high APY, you need to know what the intentions are behind the incentives. If the protocol has no use case besides incentives, it will not hold its price, let alone appreciate in value. Those that got in early will cash out and you will be left holding the bag. Stay safe

Edit: LMFAO SOMEONE REPORTED THIS AS MISINFORMATION. Time to delete it guys. Guess my post wasn’t true:///

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41 thoughts on “For anyone that needs to hear this- your 500% APY LP will not last and the value of the token will depreciate faster than any gains you make”

  1. I thought this was common knowledge though. You farm while APY/APR is high, roll on to the next when it starts to dip. Sell the defi token yield into something with actual utility.

  2. Gains trade generated 10 million in dai revenue in the last few months and 80% went back to token holders as a LP dividend and token buybacks.

    Apy 120-200%
    Dai apy 20%

    I’m done with farms, I just want models that generate revenue.

  3. Except when staking on MM Finance. Then the token value goes up 23% while APR stays at 600%. – Lambo orders go brrrrr…

  4. You deserve an award, bro. I hope newcomers can find your thread in the future. People don’t even study how farming protocol works. It’s easier to jump into crazy APYs and pray. Can you tell a little bit about the protocols you’ve joined that end up not so really well? I’m using Venus, Pancake, Kalmar and Curve right now. Any favorite protocols that you may suggest?

  5. Well said. It happened to me. One really needs to understand how Defi works. It’s not the APY, it is the value of the token. If it fails, you’ll definitely fail. But if it soars, then you’ll write a success story.

  6. Most of my 500% apy plays I’m up on – I’m 4x on titano I’m up on drip even with the huge price drop, and I’m up on elephant

  7. You’ve made a really good point here, I don’t believe in 500% 1000% + APY on any given project for a prolonged period of time.

    I think if we look at tokenomics as well some projects do have very high APY in the beginning because the protocol distributes staking and LP rewards thru the APY over users participating in the system.

    e.g -> Osmosis AMM and Juno Swap AMM (soon)

    One important case needs to happen on the protocol itself which is the number of dapps or users coming into the system in order for it to be sustainable

  8. Lol this is like a defi rite of passage. I’m sad you even posted this. Noobs should learn the hard way. Chalk it up as the cost of tuition lol.

  9. Psshhh, mine is 90,000% APY.

    BUT.. you can play it safe by providing a stable or L1 pair to farm the tokens and then reinvest it back to the stable pair. Not all farms provide stable/L1 LP pair though.

  10. I totally agree! It’s not only the APY you need to be looking at.. your farming reward (token or LO) needs to be backed, deflationary, and has some sort of utility.. otherwise it’s a race to the bottom..

  11. Thank you for your post! Beginner in DeFi here, although many years in crypto. Currently learning (=falling in another rabbit hole for one more time, I know, deja vu for all of us :)))

    I guess the advice is to DYOR and choose the decent pairs and decent platform. I’m totally okay with that. 🙂 It follows the already learned general crypto principles.

    I just did a test lock of $50 in the pair CRO/MMO that currently gives 250% apr. Generally CRO has []( behind and has (well at least some q-:) decency. And for MMO I can’t really be sure. They are new, they seem to be serious, but… I don’t know.

    “This is not sustainable”. Yes. Doesn’t look like, it rather looks like a Ponzi when somebody promises 500% apr. What’s the sustainable rate for DeFi, I don’t know. In a few months my experience hopefully may be able to say something like: ~50% for decent coins/coin pairs, 20-25% for stables.

    You speak about IL. As far as I understand, even if there is a big price change, say 50% in one of the tokens of the pair, the IL is small like 2%. Does not seem terrible for me.

    I’m also pretty concerned about taxes, so I proceed very carefully. Swapping coins or coins to LP and back is a taxable event and I should say, I hate this. But it is what it is. I had to add extra complexity to my excel sheets to keep track of my test lock transactions. I’ll survive. The yield is probably worth. How do you do it?

    Any more comments/suggestions will be welcome. Thanks again. 🙂

  12. Boom. Been saying this for a year now. THERE MUST BE VALUE CREATION TO SUSTAIN SUCH A MODEL. Some kind of innovation, product, service, not just tokenomics. Business 101. This is why I don’t touch reflection coins with a 10 foot pole.

  13. It’s an important thing every DeFi farmer needs to know. This is even very worse for those with starting 4 figures APY. (some of them have very shallow pools)

    Always favors those who get in early & exit asap like you said. But sticking with stablecoins LP is better IMO especially if you plan to stay longer in the farm.

    That Viperswap still has ONEUSD-1USDC LP at 73% APR, meaning no impermanent loss, but I noticed the pool depth reduced a lot from what it used to be some weeks back.

  14. When I started farming with Kalmar on pancakeswap LPs I was all into those multi hundred percentage farms and grew my tokens massively as my dollar value of those tokens was being eroded faster!Not even talking about IL risks…
    Now I farm mostly stablecoins with much smaller APYs but reliably I can grow my assets steadily!


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