Introducing Alpaca Finance

Leveraged yield farming made-simple on BNB Chain and Fantom

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Alpaca Finance

9 min readFeb 26, 2021

Alpaca Finance is the first lending protocol allowing leveraged yield farming on BNB Chain. It helps lenders to earn safe and stable yields, and offers borrowers undercollateralized loans for leveraged yield farming positions, vastly multiplying their farming principals and resulting profits.‌‌

Furthermore, Alpacas are a virtuous breed. That’s why, we are a fair-launch project with no pre-sale, no investor, and no pre-mine. So from the beginning, this has always been a product built by the people, for the people. Or as we like to say: by the Alpacas, for the Alpacas.

Welcome to Alpaca Finance 🦙

🌄Alpaca — what a majestic animal! We can’t think of a better mascot to represent our ethos.‌

Alpacas love to live in the mountains at high altitudes… They will make your farming yields sky-high once you become their friend.
Alpacas come in 22 gorgeous colors… We will offer many farming pools for you to choose from.
Alpacas are green animals; they have a very light carbon footprint, and 95% of their wool is usable… Sending transactions on BNB Chain is incredibly efficient and will cost you much less gas, maximizing your yield.
Alpacas do not bite, and lack sharp teeth… Everything about our project is transparent and verifiable; there will be no rug pull!
Alpacas are a great investment; they’re inexpensive to raise, require small acreage, and provide a regular supply of wool… Our protocol’s leveraged positions will allow you to amplify your profit potential, providing higher yields on less capital.‌

Alpacas are truly an investment you can hug… you’ll be glued to your screen watching your profits continuously grow!

📈Why did we build Alpaca?

Pioneered by Compound during the DeFi Summer, yield farming on Ethereum has become a widespread method for projects to bootstrap their liquidity and acquire new users. However, as of late, the rising costs of the process have become more and more prohibitive for the majority of people. In fact, Ethereum has become a whale game because the gas fees are just too damn high!

As a result, BNB Chain has experienced an exponential boom in popularity, and in this emerging ecosystem, we noticed a gap amongst the applications offered there compared to other chains such as Ethereum. To be specific, one of the largest missing pieces — was an on-chain leverage protocol!‌

Thus, Alpaca Finance was born, seeking to provide value to the BNB Chain community through leveraged yield farming.

💻 Our Protocol:

As a user, you can participate in Alpaca Finance in three different ways:‌

💵 Lender: Alpaca Finance allows you to earn income on your base assets by depositing them into our vaults. These assets will then be offered to yield farmers for leveraging up their positions.‌

👨🌾 Yield farmer: As a farmer, you can earn a higher yield by opening a leveraged position on Alpaca Finance. Of course, this comes with bigger risks: liquidation, impermanent loss, etc.‌

🚨 Liquidator: Monitoring the pool for underwater positions and liquidating them when they become too risky. (Bots only)

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At launch, we will support two base assets — BNB and BUSD — and integrate our leveraged farming with PancakeSwap.‌

In this example below, we show how each participant works together in our ecosystem:‌

Alice the lender deposits her BNB into our deposit vault; her asset becomes available for a yield farmer to borrow; she earns interest for providing this liquidity.
Bob the yield farmer wants to open a leveraged yield farming position on the BTC/BNB pair; he borrows BNB from the vault and enjoys higher yield farming rewards. Alpaca Finance’s smart contract takes care of all the mechanics behind the scenes — optimally switching assets to the right ratio, providing liquidity to the pool, and staking LP for Pancake Rewards
Erin the liquidator bot monitors the health of each leveraged position, and when it goes beyond designated parameters, she helps liquidate the position, making sure lenders such as Alice do not lose their capital. For this service, she takes a 5% reward from the liquidated position. At Alpaca, we also have an in-house bot for this which uses 100% of this fee for a buyback and burn of the ALPACA token. So even if you’re unfortunate and have your position liquidated, if you’re an ALPACA holder, you can feel relieved knowing your token is going up in value as a result.
Carlos the bounty hunter bot monitors the amount of rewards accrued in each pool and helps reinvest it back, compounding returns for all farmers. For this service, he takes 3% of the reward pool, which goes to the dev fund to pay for operations. (In-house bot only)

🚀Tokenomics & Token distributions:

Alpaca Finance is a fair launch project with no presale, no investor, and no pre-mine. The contracts are now live and you can start depositing into our vaults right away! So head over to app.alpacafinance.org and check it out!

🌱Launch sequence

We will launch our service in sequences to ensure the smoothest experience for all users.

Phase 1: Deposit vaults & PancakeSwap ALPACA-BNB liquidity pool

Users can start depositing their assets into our vaults.
We have seeded PancakeSwap ALPACA-BNB so people can start acquiring ALPACA right away — note that we’ve burned the LP tokens — so the team can’t pull them out!
This phase is designed to make sure we have a healthy amount of assets for borrowing and liquidity for ALPACA trading for the next phase.
Here is the link to buy ALPACA.

Phase 2: Leveraged Yield Farming

When we think there is sufficient liquidity and audits have completed, we will open leveraged yield farming, thus completing our service loop.
We will make a separate announcement in advance to the community before launching Phase 2

🎁Rewards Distribution

To make sure we give everyone enough preparation time, we will start our rewards distribution on block 5,280,000 (approximately February 28th, 2021, 00.00 UTC time)‌

During Phase 1 Launch:‌

60% distributed to liquidity providers for the ALPACA-BNB pool on PancakeSwap
40% distributed to lenders who deposit BNB or BUSD into our vaults — rewards will be divided equally between the two pools

Base on the community’s feedback, we changed allocation in the first two days to:
10% ALPACA-BNB pool on PancakeSwap
90% to lenders‌

During Phase 2 Launch:‌

38% distributed to liquidity providers for the ALPACA-BNB pool on PancakeSwap
26% distributed to lenders who deposit BNB or BUSD into our vaults — rewards will be divided equally between the two pools
38% distributed to users who have leveraged yield-farming positions opened — rewards will be calculated based on the loan amount; only leverage positions (i.e., > 1x) will receive ALPACA rewards

** Please note that the allocation percentages are subject to change. The team will monitor key metrics (pool utilization, lending APY, etc.) and if required, adjust the reward allocations to maintain the health of the platform.**‌

During the 2-week bonus reward period, 30% of all rewards will be available to claim immediately while the remaining 70% will be locked. This is to ease early selling pressure and maintain steady liquidity within the protocol. The locked rewards will unlock approximately 30 days after the end of the reward period, and then be released linearly across one week within blocks 6499649->6699649. The locked rewards do not compound.

(*Below schedule updated on 4/25/21)

Please note that the inflation rate drops off dramatically after the initial periods. In fact, the inflation rate will fall under 5% after 8 periods.

❓ What is the ALPACA token used for?

Governance

We will soon launch a governance vault that will allow community members to stake their ALPACA tokens; stakers will receive xALPACA where 1 xALPACA = 1 vote, allowing them to decide on key governance decisions.‌

Capture Economic Benefits of the Platform

We will let the community decide how they want the economic incentives to be captured by the ALPACA token; For example, it could be similar to Sushiswap where x% of fees generated go to perform token buyback and burn. In fact, upon launch of leveraged yield farming, there will already be several mechanisms in place making ALPACA deflationary in nature.‌

Accrue Value Through Deflation‌

Deflationary mechanisms for ALPACA:‌

Every time our liquidation bot liquidates a leveraged position, it receives 5% of the position’s value as a fee. 100% of those fees will go towards buybacks and burns of the ALPACA token.
When a borrower takes out a loan of tokens in order to engage in leveraged farming, they pay a fee to the lender in interest. 10% of that interest will go towards the protocol fee, of which half(5%) will be used on buybacks and burns of the ALPACA token.‌

Protocol Utility

ALPACA tokens will be a fundamental part of future initiatives providing protocol utility. In particular, we’re planning an NFT integration that will require ALPACA tokens to participate, and will offer benefits relating to various aspects of leveraged yield farming such as higher available leverage level, higher lending rates for lenders, lower lending rates for borrowers, and more.

ALPAnomics

(These percentages have been rounded to the nearest whole number for simplicity. The actual figures are 86.17%, 9.57%, and 4.26%)

🎁Fair Launch Token Distribution

ALPACA will be released over two years with a decaying emissions schedule. In total, there will be 188 million ALPACA.

💧Development Fund

9% of the distributed tokens will go towards funding development and expanding the team, and will be subject to the same two-year vesting as the tokens from the Fair Launch Distribution.

🏰Warchest

There is an allocation of 8 million tokens reserved for future strategic expenses. These include listing fees, audits, third-party services, liquidity for partnerships, etc. 250,000 of these tokens were used to seed PancakeSwap’s ALPACA-wBNB pool.

To avoid dilution to token holders, we’ve also implemented a restriction. No more than 200,000 tokens (~2.5% of the 8 million) can be withdrawn each month, with the only exception being if there is prior approval from a community vote.

👨‍🌾Supported Pools

At launch, we will support:

2 deposit vaults:

BNB
BUSD

5 farming pools on PancakeSwap (planned):

CAKE-WBNB
BTCB-WBNB
ETH-WBNB
WBNB-BUSD
USDT-BUSD

We also plan to add many more deposit vaults, farming pools, and integration with other AMMs on BNB Chain in the future!

🔎Relevant contract addresses:

The admin (owner) of all the upgradable proxies is Timelock contract. Hence, everyone can see if we change or upgrade the implementation contract. Any changes made by developers will have a 24 hours lag before becoming effective. So any questionable attempts at modifying the code would provide ample time for users to withdraw their funds and exit safely.

Implementation contract Link: https://bscscan.com/address/0xd50aab6b210fe049b6c5262f5a7676204699ab8e#contracts

Tx hash transferring admin to Time Lock: https://bscscan.com/address/0x5379F32C8D5F663EACb61eeF63F722950294f452#internaltx

ALPACA token address: 0x8f0528ce5ef7b51152a59745befdd91d97091d2f

ALPACA-BNB LP token: 0xf3ce6aac24980e6b657926dfc79502ae414d3083

Timelock: 0x2D5408f2287BF9F9B05404794459a846651D0a59

Fairlaunch: 0xA625AB01B08ce023B2a342Dbb12a16f2C8489A8F

ibBNB token: 0xd7D069493685A581d27824Fc46EdA46B7EfC0063

ibBUSD token: 0x7C9e73d4C71dae564d41F78d56439bB4ba87592f

Proof of LP burn

🏃How do I get started?

Remember that rewards start at block #5,258,000; so be sure to make your deposits in our ibBNB, ibBUSD, or provide liquidity to PancakeSwap ALPACA-BNB pool before then to ensure you get maximum yields!

For more detail, please visit our documentation page