If even famous crypto Youtubers said "what is this yield farming craziness? it is just putting your tokens and get a new token with fancy food names, the only reason they have value is because people speculates into them and when it ends then it will go back down", then what would regular people who even still doubts the future of Bitcoin thinks? This is a homework for everyone in DeFi farming if we want crops with sustainable value in the future. For those of you who are new to DeFi or yield farming, let us return to few prerequisite information before diving into the discussion.
Does The Current DeFi Guarantees Full Ownership?
What is Yield Farming
If you think that process is complicated, then know that is actually still categorized as a very easy strategy. High yield DeFi farming can be more complicated. With the current gas fee system and demand, many people claimed that DeFi farming will only profitable when investing above $1000. Below that is not recommended except for just wanting to try. Before proceeding to the next section, here are todays famous farming platforms based on https://academy.binance.com/en/articles/what-is-yield-farming-in-decentralized-finance-defi:
Customers needs to borrow tokens, Compound Finance requires suppliers and that could be us, we lend liquidity and Compound Finance rewards us in COMP tokens. Today, compound is one of the core protocol of yield farming ecosystem.
We lock assets as collateral to maintain the DAI token stable to one dollar.
Similar to MakerDAO, we lock assets as collateral to issue tokens of anything that has price feed for example commodities, equities, and forex.
Another lending and borrowing protocol but famous for its flash loans. Lenders get âaTokensâ in return for their funds.
The most popular decentralized exchange (DEX) today using automated market maker (AAM). Supplier provides liquidity by locking their assets for customers to exchange tokens. Other than receiving commissions, suppliers receives UNI tokens
Curve Finance is a decentralized exchange protocol specifically designed for efficient stablecoin swaps.
Like Uniswap liquidity provider but allows custom allocations while Uniswap allocations are only 50/50 for each exchange pair. Suppliers receives BAL token.
Yearn.finance is a decentralized ecosystem of aggregators for lending services such as Aave, Compound, and others. It aims to optimize token lending by algorithmically finding the most profitable lending services.
Enter Harvest Finance
The Crops Utility
I did not hear any other utilities, if any of you know more, please mention them in the comment section. However, I know other utilities for other crypto coins:
Leave a comment for not only other utilities you know but also future utilities ideas. This is the homework for yield providers.
As for Harvest Finance and other similiar platforms, the current strategy is to find the highest yield in price and/or quantity. There is an open room in developing strategies for determining other crop qualities. For example other than taking the utilities into account, a strategy can also be based on chain analysis such as number of holding address and amount of transactions, and another one is sentiment analysis. This way, we can also find undervalued crops. I am sure that most people preferred farming crops in increasing trend rather than crops in high volatility and/or decreasing trend. However, is it worth developing this feature now? I am not sure, because I am not sure with the crops utilities itself where the yield providers must provide value first but stashing this idea and take it into consideration in the future may proof advantageous.