yield farming
Formation Fi to Launch Cross-Chain AMM on Polygon
Flash Loan Attacks Drain 2 Binance Smart Chain Defi Projects for $6 Million
There have been two back-to-back flash loan attacks in a short period of time stemming from two unique Binance Smart Chain decentralized finance (defi) projects. Last Wednesday, the yield-farming platform Pancakebunny lost close to $3 million in a flash loan attack according to reports. The following Sunday, Bogged Finance saw $3 million exploited from a […]Yield Farmers are Migrating to Polygon
Alpha Homora defies market slump, bolsters TVL and token price on v2 relaunch
The leveraged yield farming protocol looks to put multiple missteps in the past with a successful relaunch.
After a rocky first quarter, decentralized finance (DeFi) platform Alpha Homora announced the relaunch of its v2 leveraged yield farming program today — and so far both traders and users are celebrating as both total value locked (TVL) and ALPHA token prices soar.
The version 2 of the platform, which allows for leverage up to 7x on popular yield farming positions on protocols such as Sushi, Curve, and Balancer, notably had to shut down to new positions after a devastating hack in February. The protocol suffered $37 million in losses, which counts among the most devastating exploits in DeFi history.
However, the relaunch so far has gone swimmingly by multiple metrics. The ALPHA token — which underwent a revamped tokeneconomic design during the downtime — is up 11.1% to $2.28 on the day, and TVL has increased by nearly $100 million since the relaunch to a total of $675 million.
#AlphaHomoraV2 now has...
— Alpha Finance Lab (@AlphaFinanceLab) May 13, 2021
$675M TVL
$500M lent
$170M collateral
$99M borrowed
Though the demand to use the product is high, we'll maintain security measure that we set out to do by keeping $100M credit limit for now.
Will actively monitor & increase accordingly
It now remains to be seen how long the protocol will remain stable. In addition to the February exploit, the platform was tied to Rari Capital’s $11 million loss earlier this week, though that particular exploit was due to no fault on Alpha Finance Lab’s part.
The relaunched v2 also came with a new set of audits, but ultimately the greatest test of a DeFi protocol is time — the longer it’s survived scrutiny from would-be exploiters, the more users can trust its longevity.
Some observers are additionally off-put by Alpha’s unusual model, which has little precedent in Tradfi. However Leo Cheng of C.R.E.A.M. Finance, whose Iron Bank protocol-to-protocol lending platform enables v2’s leveraged yield farming, argued in an interview with Cointelegraph that if flash loans can be a key cog in DeFi’s capital efficiency, leveraged lending is a logical next step.
By nature, says Cheng, a smart contract “doesn’t quite care, and it doesn’t quite see the borders with the smart contract projects” with regards to where funds are coming from. As long as a transaction will end with the various protocols involved in the green, the transaction will go through.
Alpha Finance Labs did not respond to multiple requests for comment.
Balancer Launches Yield Farming Campaign With Latest Upgrade
Yearn Finance made almost as much as in March as it did in 2020
Fees from yVaults were the biggest contributors to Yearn’s revenue.
Decentralized finance yield aggregator Yearn has released its financial report for the first quarter revealing some impressive earnings for the period.
According to the Yearn Finance quarterly report, published on GitHub on April 27, the platform had earnings of $4.88 million for the quarter.
Declaring that these were earnings before interest, taxes, depreciation, and amortization, or EBITDA, Yearn Finance has made more in the first three months of 2021 than it did in its six operational months in 2020, which totaled $3.7 million.
Earnings for March alone totaled $3.16 million which alone was almost as much as its operational six months for the previous year. Not every month broke records, however, and in January and February this year, the DeFi protocol earned $528K and $1.19 million respectively.
The report stated that the yVault product line is the leading revenue generator and remains critical to Yearn’s core business. Vaults employ strategies to automate the best yield farming opportunities available by staking on other protocols. The version 2 vaults launched in January have increased top-line revenue for the period.
There were 36 new yVaults launched in the first quarter including five new v2 vaults. The y3CRV vault, which consists of three stablecoins — USDT, USDC, and DAI — was the most profitable generating $1.1 million in revenue for the quarter. A similar report from 2020 revealed that two-thirds of its revenue at the time came from the yUSD vault.
The yYFI vault saw a large increase in revenue for March as the protocol encouraged yield farmers to migrate to the v2 vault generating more income.
Previously, Yearn Finance earned its money from withdrawal fees with v1 vaults, some of which are still running, taking 0.5% when the collateral is withdrawn. The fee structure changed slightly when v2 vaults were launched, with the elimination of the withdrawal fee and the addition of a 2% management fee and a performance fee which can be as high as 20%. It claims the aim is for users to pay the most fees on the vaults that are performing the best.
The protocol launched yield farming with treasury assets in late February which also started to generate significant earnings. Yearn formed a committee to begin earning yields on idle assets held in its treasury with capital obtained from opening CDPs (collateralized debt positions) on other DeFi protocols such as MakerDAO.
“yVault revenue was the key driver of adjusted EBITDA [earnings], however, we anticipate Treasury yield farming to contribute an increasing amount of revenue in the future.”
At the time of writing, the total value locked on the protocol was a little over $3 billion according to DappRadar.
Aave v2 launches liquidity mining program targeting stablecoin borrowers
Aave has launched its v2 liquidity mining program, offering roughly $880,000 worth of governance token rewards to users daily until July 15.
Aave has launched liquidity mining incentives for its v2 protocol, paying out governance token rewards exceeding 20% to users who borrow stablecoins.
At the time of writing, users who deposit stablecoins into the protocol can earn an addition yield of between 4.78% and 13.49% on top of their regular gains in the form of staked AAVE (stkAAVE) tokens. Wrapped Bitcoin deposits are also paying an extra 4.59%, while Ether deposits are garnering 2.11% in rewards.
However, the highest rewards appear to be going to stablecoin borrowers, who are currently receiving rewards of between 5.15% and 22.05%
AIP-16 received overwhelming ‘yea’ votes from the community and has officially been executed. This proposal, created by @paraficapital, introduces liquidity mining incentives for Aave V2 ⛏️️https://t.co/ewa2Yvlc3w pic.twitter.com/s7xgz21eZ8
— Aave (@AaveAave) April 26, 2021
The liquidity mining program was passed through a governance vote on April 24, with 2,200 staked AAVE (stkAAVE) set to be distributed to lenders and borrowers until July 15, worth roughly $880,000 at current prices. The program will be reviewed in July.
More than two-thirds of rewards have been designated to the USDC and USDT markets, with the remaining 32.5% being distributed among Aave’s DAI, ETH, wBTC, and GUSD markets. Aave stated:
“AIP 16 increases the liquidity in the Aave Ecosystem Reserve, which can be used to fund grants, devs, and builders through a community-led grants programme.”
Aave said they wanted to reward stable tokens more to discourage risky borrowing and boost stablecoin liquidity.
With roughly 40% of Aave’s TVL still locked in its version one iteration, the v2 rewards campaign is also intended to migrate users to its updated protocol. “By introducing liquidity mining rewards only on Aave v2, liquidity providers and borrowers will naturally migrate toward the optimized version,” Aave said.
The program follows the success of liquidity mining rewards incentivizing users to explore Aave’s deployment on Layer-two scaling solution, Polygon (previously known as Matic). An April 25 tweet noted that Aave’s Polygon deployment had surpassed $1 billion in TVL and 7,200 users within ten days after its launch according to a tweet on April 25.
According to DeFi Llama, Aave is currently the sixth-largest DeFi protocol with a TVL of roughly $7.5 billion.
As DeFi tokens surge, CRV indicates a bumper crop for ‘DeFi Summer 2.0’
The seasons are turning and the markets are shifting — could it be a strong summer for decentralized finance?
Fire up your tractors: The farmer’s almanac of decentralized finance is indicating that DeFi Summer 2.0 could feature some healthy yields across the ecosystem.
Multiple common metrics used to gauge the health of the DeFi space are pointing toward a looming bull market, but perhaps most promising of all might be the surge in Curve’s CRV governance token price.
Often referred to as one of the “backbone” protocols of DeFi, Curve is an essential tool for many retail and protocol-level yield farming strategies. Curve allows for low-cost, low-slippage swaps of similar assets — for instance, swapping between different stablecoins such as Dai, USD Coin (USDC) and Tether (USDT) — and users who deposit liquidity into Curve’s pools get trading fees as well as CRV governance token emissions as a reward.
As a result, the protocol is the seventh-largest by total value locked per DeFiLlama, with $6.49 billion in assets, and functions as the primary yield-bearing protocol leveraged by yield vaults like Yearn.finance.
Remember $CRV is the underlying yield on so much of defi:
— Cryptoyieldinfo (@Cryptoyieldinfo) January 17, 2021
All yields are about to become supercharged across dozens of protocols with strength of $CRV price.
I think we're about to have a good few weeks ahead.
Reading the stars, testing the soil
If the price of CRV can be used as an indication of how many common farming strategies will perform in the coming months, then the summer is looking to be bright green.
CRV is up 4.6% on the day to $3.94 at the time of publication — part of a month-long rally carrying it 51.1% higher, per CoinGecko.
Part of the rally is fueled by CRV’s tokenomics. CRV holders have the option to lock their tokens for a four-year period in exchange for veCRV, which grants them access to additional protocol fees and boosted yields. Likewise, as the rest of DeFi rallies, as a top protocol, CRV prices should drift upward as well.
However, veCRV holders have also been the recipients of a number of lucrative airdrops as of late. Ellipsis, an “authorized fork” of Curve on Binance Smart Chain (copying the protocol down to the frontend, which is reminiscent of Windows 98), airdropped an initial round of EPS tokens to veCRV holders. Likewise, Convex Finance, a forthcoming platform aiming to “simplify staking on Curve,” has also announced an airdrop to veCRV holders, though the details of the drop have not yet been released.
Airdrops can often be a tricky affair. Protocols want to attract governance token holders who will be loyal to the project and provide informed votes. While in many cases that means distributing to wallets that formerly and frequently interacted with a protocol, with upstart projects building on the backs of others, distribution parameters can instead be intended to attract an especially knowledgeable community — and veCRV holders fit the bill.
In the end, it has the potential to create a virtuous cycle for all of DeFi: Speculators buy CRV to convert to veCRV in the hopes of receiving an airdrop; CRV’s price rises; DeFi’s yields grow fatter.
Bountiful good news
As the fate of CRV and the strategies that depend on it for yield play out, a host of other metrics are pointing to a strong summer for DeFi.
DeFi’s TVL figure currently sits at $123.29 billion, having climbed another $20 billion after eclipsing the $100-billion mark just last week. Even as the wider market pulls back after an exceptionally strong Thursday, multiple DeFi projects remain green on the daily and weekly, such as Curve and Compound, and OG projects like Maker are on a tear, with the MKR token eclipsing $4,000 for the first time yesterday.
The surge has multiple observers praying for a “DeFi Summer 2.0.” While throughout the winter and spring, a handful of DeFi Gen 2 tokens managed to overperform, and the sector looks to be the recipient of a strong rotation into older, established projects. Last summer, the space took off in a major way — but was also marred by a spate of hacks and exploits.
DeFi Summer II: Electric Boogaloo
— Jason Choi (@mrjasonchoi) April 15, 2021
Ultimately, however, the greatest sign in the stars for DeFi (as well as the larger market) is the performance of a joke: Dogecoin (DOGE).
The meme currency is hungry for blood, eclipsing five-digit gains on the year at 12,600%. Traditionally, when the Shiba Inu runs, other altcoins follow — another bellwether pointing toward a bumper DeFi harvest.
Remember the coolest part about $DOGE pumping is the money always ends up flowing into other alts when it's done.
— K A L E O (@CryptoKaleo) April 16, 2021
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