What exchanges/platforms do you use to farm on? On one hand I’m trying to use platforms with high APR % like Snowflake, Kplr, FlatQube. I use a few assets there and earn good returns. But I read somewhere here on the sub that ppl root for not super high APR as they say it makes no sense. But I don’t understand. It’s obvious that the higher APR the higher the inflation is which means that the price of the assets fall fast. So the point in farming is that it does have a high APR so that I can cover this price drop. Otherwise I do not see the point in farming. Do you usually choose exchanges with higher APR? If so, what do you use? Or maybe you know tokens that are backed up by strong projects and that are worth farming in spite of inflation? Another solution that I see is when users are rewarded for using the project’s services (kind of bounty?) but you still have to invest/deposit something and actually use the service you need but you are also rewarded for this, does anything like this exist?
It’s not about the APY its about what you’re farming it with. Say a new DEX launches (lets call it xSHIT) and they’re using Sushi’s Master Chef contract for farms, which we all know is safe. It’s fine to farm xShit with a strong pair like WETH/wBTC or USDC/DAI. Just farm your xShit and dump it as fast as you can. Leave when the rewards dry up. What will get you absolutely rekt is getting greedy and farming the ETH/xSHIT or USDC/xSHIT pair for 1000% APY. The price depreciation of xSHIT due to inflation will offset that 1000% APY by a large margin. Its OK to farm a shitcoin. It is not OK to farm WITH a shitcoin. Big difference.
If you are earning money it’s coming from somewhere. Look at where the money is coming from and ask yourself whether it will keep coming. Then ask whether it could turn into a loss.
For example, PancakeSwap’s token CAKE has a high APR because they print tons of it. So the price goes down. So you’re gaining 60% more cake.per year but cake is going down 60% per year so what are you really earning? $0
Folks are telling a lot of nonsense when it comes to the triangle inflation, APR, price. Look at Evmos for instance: It started with an insane APR and meanwhile the price has dropped significantly as well as the APR but over the past months the price had a great volatility you could use to sell your Evmos rewards on the high or buy some more at the dip. If you got in there from the beginning with a decent amount of cash and got completely out a few months later you could have made an insane profit. Meaning: You can’t do general judgements, it all depends on what you want. If you want to invest in a token long time and don’t want to care, Evmos would have been wrong for you. If you’re in for a high risk, high reward investment it was perfect.
The issue is often that people look at the tokenomics and make a binary decision like good coin / bad coin. That’s not how it works.
In a bear market, you can farm in a few ways. One would be to have a market neutral position. Say you have $100, you can purchase (long) $50 worth of farm coin and borrow (short) $50 worth of farm coin for farming. If your farm coin is unavailable for borrowing, borrow ETH and swap it into your coin.
Ofcourse, this assumes your coin moves with the general direction of the market, or your coin’s valuation against $ETH / $BTC remains more or less stable.
One such play is to farm $GLP (GMX) by borrowing $AVAX. You won’t get mad yields, but a decent APR.
Farming can be extremely profitable *if* you know what you’re doing. I can give a few basic pointers that I like to follow:
1. Stick only to reliable platforms with high and accurate/reliable TVL and Volume. Ideally they have a proven track record and are respected in the space and are tried/tested. Contract bugs or rugs or whatever can be a big risk, so stick to what’s considered safe. Generally money follows safety, so higher TVL = safer.
2. /u/immibis made a great point about knowing *where your money is coming from*. For some platforms, it’s simply just printing the reward token. If you are not extremely bullish on that token (and idk why you would be) then you’ll want fairly soon to reap the rewards. Hey, maybe you’ll get lucky and your rewards will even increase in value. Often times though, these trend downward in price.
3. To build off the above point, have an idea of how they dapps you are using work. If you’re LP’ing on a highly volatile pair, for example, you can get wrecked by “impermanent loss/divergence” becoming permanent.
4. Understand that more moving parts = more complexity = more risk. Leverage can be very risky in this area. Some people take on leverage and then go play money legos with the loan….then find they’re liquidated all of a sudden.
5. Be aware of networks and their fees as this can eat into profit. Ethereum gas prices have been mostly low recently, but that could change at a moment’s notice. You don’t want to be in a situation where the amount of capital you’ve provided isn’t worth it relative to your fees paid (ex: it may not be worth it to play around with just $5k due to the fees associated with different dapps).
Hope this helps!
High earning income from yield has came and gone. Maybe there will be blips of this in the future. Today, you can find it but you need to actively manage your assets to get high yield. i.e., flash loaning between platforms once the yield drops. Essentially there may be a day or week of high yield on one platform (is it safe, idk?), but it will drop, and another might appear or might not. Then you need to flash out and do it all over. It’s possible but nothing is passive like defi summer
Don’t know how much it will last but the AVAX-USDC pool has crazy APR right now, probably because of the liquidity book + USDC being native now in Avalanche through Coindesk.
The truth is that the crypto space is huge and fragmented so you end up using multiple platforms depending on the projects you are farming. For Cosmos IBC projects, I use Keplr wallet.
OCEAN is another project I’m earning yields from staking it. The average APY is 15% which is very decent.
Be wary of snowflake. It can rug anytime due to its contracts being a proxy.
As all the other comments on this post have good knowledge and explanations, I will just share my preferred DeX which I’ve been using for yield farming in this winter. I love and trust Biswap and here is my referral link of the platform. https://biswap.org/?ref=c3f78a688c9adca6bfb7
You can check it out and obviously DYOR before investing anywhere. Good luck.