Skip to content

What is yield farming and its impact on the DeFi ecosystem?

August 25, 2020

however What are the platforms on which we can carry out yield farming actions? Well, some of these platforms are the following:

connection

This is an Ethereum platform that specializes in granting credits in some cryptocurrencies: Ether (ETH), Dai (DAI), Basic Attention Token (BAT), 0x (ZRX) and Augur (REP). The operation is supported by an application developed on the Ethereum blockchain. Through the protocol, users of this platform can make deposits and request secured loans at a ratio of 1.5x. That means you need to deposit at least $ 1.5 for every dollar requested as a loan.

The operation of Compound is based on the implementation of smart contracts (Smart Contracts) from Ethereum. However, Compound Labs, Inc is responsible for managing the funds accumulated on this platform, thereby losing its decentralized character. However, the managers recently stated that they are working to make Compound a fully decentralized platform.

What is yield farming and its impact on the DeFi ecosystem?What is yield farming and its impact on the DeFi ecosystem?

Via Compound, the user can request credits without the intermediation of third parties. You can use one of the cryptocurrencies managed by the platform for this. You can also grant loans to other platform users. The latter makes you a creditor of a profit made from the interest on this borrowed money. At the same time, liquidity is added to the platform. You can also use Compound to exchange cryptocurrencies between the available ones.

Investigating the behavior of the cryptocurrencies managed by Compound, making deposits on the platform, buying, selling and requesting credit according to these movements of the cryptocurrencies, It is the work that investors and traders do to make their crypto assets make significant profits through yield farming.

Synthetix

It is a platform that provides a protocol that synths assets can be traded on Ethereum. L.Synthesizers are tokens that provide access to assets such as gold, bitcoin, and US dollars. And soon there will also be promotions like TESLA and AAPL within the Ethereum blockchain.

In other words, Synthetix provides its users with a liquidity log for derivatives in the Ethereum ecosystem. A protocol that enables the issuing and trading of Synths Assets. Each synth has an ERC20 token that tracks the price of an external asset. An example that can be cited is the sUSD token, which tracks the price of the US dollar. In contrast to the other synths, this token has a value of 1. nbsp;

A wide variety of synths exist within Synthetix, including fiat currencies, cryptocurrencies, commodities, and reverse indices. Basically, the system can support any asset with a clear price. This in order to ensure a chain exposure to an unlimited number of real assets. The protocol allows a variety of trading functions, including binary options, among others.

Synthetix is ​​based on an infrastructure of smart contracts (smart contracts) and a set of incentives that keep Synths priced. It is supported by the value of the Synthetix Network Token (SNX). The SNX is used as a collateral and a proportional value of the SNX is required to imprint the synths. Investors for supporting the system are rewarded with a proportional portion of the fees generated by activity in the system. So therefore the value of the SNX is directly related to the use of the network that it guarantees.

This mechanism enables Synthetix to support an instant, near-smooth conversion between a wide variety of synthesizers, without the liquidity and slippage problems of other decentralized exchanges. The resulting token network supports a wide range of use cases including commerce, lending, payments, wire transfers, e-commerce, and more.

Curve

Curve is a platform that has seen great development thanks to the constant pressure that yield farming activities put on the demand for stable cryptocurrencies (stablecoins). Nbsp;

Curve Finance’s decentralized business volume increased dramatically the week it was released the distribution of the COMP. We’re talking about a 16x increase as yield farming traders and investors struggled to get USDT (Dollar Tether) to maximize their profits.

Ren

On the other hand, Ren’s open protocol provides access to blockchain liquidity for all decentralized applications. Ren is intended to enable private and permissionless transfer of values ​​between blockchain. Ren’s core product, RenVM, focuses on decentralized finance (DeFi) interoperability.

Balancer

Balancer is an automated market maker based on Ethereum. It allows anyone to create customizable pools or add liquidity and earn trading commissions. Instead of the traditional AMM constant product model, the balancer formula is a generalization that allows for any number of tokens at any trade weight or rate.

Another way of looking at balancers is to use a reverse ETF. This means, Instead of paying fees to portfolio managers to rebalance their portfolio, the user charges fees to traders who continually rebalance their portfolio using arbitrage opportunities.

The balancer protocol is Designed to be Composable and has a few common background types: nbsp;

  • Private pools in which the sole owner can provide liquidity and has full permissions on the pool to update all of its parameters.
  • Common pools When the pool’s tokens, weights, and quotas are permanent and the pool creator has no special permissions. Anyone can add liquidity to shared pools, and ownership of the pool liquidity is tracked with a specific token called BPT – Balancer Pool Token.
  • “Smart Pools”This is a variation of a private pool in which the controller is a smart contract that allows any logical arbitrary restriction on how the pool’s parameters can be changed. Smart pools can also accept liquidity from anyone and issue BPTs to keep track of ownership.

Related Topics: This platform automates income farming in decentralized finance for its users

Receive Breaking News !

Install
×
Enable Notifications    Ok No thanks