Advanced Yield Farming Strategies on Venus Protocol
How to yield farm using a single token with leverage on Venus Protocol through direct smart contract interaction.
Swipe’s Compound and MakerDAO clone has just gone live on Binance Smart Chain, offering XVS incentives to users who supply and borrow assets on their protocol. Let’s review the different yield farming options we have here.
Strategy 1: Simply supplying assets
Probably the safest and most straightforward strategy is to simply supply assets to the protocol to earn interest and an XVS reward, currently giving you a combined APY of ~1–35%, depending on the asset. Your risk is mostly smart contract risk in the Venus Protocol, and liquidity risk if somehow the protocol becomes undercollateralized.
Supplying assets and borrowing other assets to farm elsewhere with
Difficulty: Intermediate to advanced
Risk: Medium to high
This strategy is useful if you want to retain your exposure to the assets that you supply, and limit your exposure to the assets you borrow. For example, if you want to hold BNB, SXP, and XVS, you can supply these assets to the protocol, then borrow USDT and BUSD to farm on PancakeSwap for ~10.75% APR.
You will also earn both the supply and borrow APYs on Venus Protocol.
This strategy entails liquidation risk if the value of the assets you borrow rises quickly against the assets you supply. In our example, if BNB, SXP and XVS drop sharply in value against the USD, you may go over your borrow limit and get liquidated.
Strategy 2: Leveraged supply and borrow with multiple assets
Risk: Medium to high
Here you leverage your supply and borrow positions on the Venus Protocol, to earn both supply and borrow rewards. Example: Supply BNB, borrow BUSD, swap it for more BNB, supply more BNB, and repeat.
This example is useful if you want to take a leveraged position in BNB.
You can also do this using 2 accounts so there is no need for swapping, and you do not want to take on a leveraged position on the supplied asset. Example: Supply BNB, borrow BUSD, send to account 2, supply BUSD, borrow BNB, send to account 1, supply more BNB, and repeat.
Either way, you take on liquidation risk, which can be mitigated by using a pair of stablecoins instead, which are pegged to the same price. Careful though, Compound’s price oracle was just exploited to show DAI at 30% higher than it actually was, triggering $100M+ in liquidations.
Strategy 3: Supplying assets and borrowing the same asset to resupply with
Risk: Low to Medium
Example: Supply BNB, borrow BNB, supply more BNB, borrow more BNB, and repeat.
Here you again leverage your supply and borrow positions on the Venus Protocol, to earn both supply and borrow rewards. The difference is liquidation risk is minimal as you are only exposed to a single asset. Your borrow ratio will slowly increase over time as your borrow balance will increase at a faster APY than your supply balance.
However, because Venus’ app does not allow you to both supply and borrow the same asset, this will require you to directly interact with the smart contracts. If you do not know what you are doing you may lose your assets or get accidentally liquidated.
Read on for instructions on how to do this.
How to yield farm using a single token with leverage on Venus Protocol through direct smart contract interaction
In this tutorial, we will show you how to: supply BNB, borrow BNB, supply more BNB, borrow more BNB, and repeat.
Repeating the warning above: If you do not know what you are doing you may lose your assets or get accidentally liquidated.
Step 1. First, note the collateral factor of the asset you are supplying. Currently, all assets on Venus have a 60% collateral factor, which you can see on the app:
This is important as whatever you do, do not allow your borrow balance to exceed the collateral factor (60%) of your supply balance, otherwise you will get liquidated.
Step 2. Supply the BNB normally via the Venus app. Note the address of the smart contract you are interacting with, which will be the same one you need to interact with to borrow BNB.
Step 3. Go to the smart contract on BscScan, and go to the “Write Contract” tab. Scroll down to “borrow” and enter the amount you want to borrow multiplied by 1e18. i.e. if you want to borrow 1 BNB, you should enter “1000000000000000000” with 18 zeros behind.
Step 4. Repeat steps 2 and 3 until satisfied.
To unwind your position, redeem your supplied BNB via the Venus app, and use the “repayBorrow” function on the BscScan page to repay your borrow balance. Here you do not need to multiply the value by 1e18. Remember to not go above the collateral factor or you will get liquidated.
You may find it helpful to get a more exact figure for your borrow balance by going to the “Read Contract” tab and entering your wallet’s address in the “borrowBalanceStored” function.
The Easy Way
ACryptoS Vaults automate yield farming, and we automate the above strategy in our new BNB Vault. We currently target a borrow ratio of 95% with a threshold of ±2%, achieving~3.67X leverage. XVS is automatically harvested, swapped for more BNB and compounded in the Vault. The borrow ratio is rebalanced on every harvest, deposit and withdrawal from the Vault.
All you need to do is deposit, sit back, and relax.
Concurrently farming ACS
Depositing in our Vaults will also allow you to stake the Vault LP tokens in our Farms and farm our native token ACS. That means liquidity providers can earn both the yield from Venus, which is compounded in the Vault, and the ACS yield from our Farms.
Sharing a stake in the protocol
By distributing ACS via our farms, we share a stake in the protocol with our liquidity providers. ACS can be staked in our ACS Vault to earn a share of rewards and fees.
Our tokenomics and fees are designed to encourage long term provision of liquidity and staking of ACS. ~23.254% of daily ACS emissions and almost all fees are used to buy back ACS and/or are distributed directly to ACS stakers in the ACS Vault. The fee structure does mean that short term stakers will most likely have a 0 or even slightly negative return, so do review our docs carefully before depositing, and there are links in the app showing the relevant fees as well.
We’re a brand new project and ACS is volatile and extremely inflationary at this stage. Do carefully review the Security & Risks section of our docs as well as DYOR before proceeding.
Ready to give us a try? https://app.acryptos.com/