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Making DeFi products easily accessible to wider users

Garlam Won
Coinmonks
Published in
5 min readSep 16, 2020

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Decentralized finance (DeFi) in blockchain technology has revolutionized the cryptocurrency ecosystem. By providing trustless solutions, it has empowered investors across the industry verticals and has increased their ability to earn money exponentially.

DeFi has gained popularity in the past few years and has been at the forefront of innovation, exploring new possibilities. One of the emerging trends in Decentralized finance is yield farming. Also known as liquidity mining, yield farming allows anyone to earn passive income using permissionless liquidity protocols.

A smart way to measure the expected growth in yield farming is by analyzing the total value locked which informs about the amount of cryptocurrency locked in DeFi smart contracts. The DeFi industry continues its massive growth trajectory and has hit 7.48 Billion Dollars as total value locked. This clearly establishes DeFi as an attractive and lucrative investment opportunity for yield farmers.

Source: DefiPulse

Despite such unlimited opportunities offered by DeFI, the penetration rate is very low. In July 2020, ARPA conducted a survey on DeFi and targeted about 700 blockchain practitioners, blockchain users, crypto holders, technology enthusiasts, and other blockchain-related users in ARPA communities. One of the key findings of the research published was that despite its humongous growth in 2020, the only current number of DeFi users is around tens of thousands, with a penetration rate of only 1% compared to the 5 million crypto traders worldwide.

The barriers to entry

Unfortunately, DeFi developers are facing many challenges with existing smart contract options that prevent them from gaining mainstream adoption. One of the major factors contributing to this low penetration is high gas fees. A yield farmer needs to pay ETH for moving in and out of pools. The high fees charged to execute smart contracts make the yield farmers question the profitable return of the entire mechanism.

Another key challenge is excessive competition in the industry. In this marketplace, exciting new developments happen every week, making it almost next to impossible for the yield farmers to be regularly updated on the emerging opportunities. If a yield farmer is not able to employ these latest developments while investing in the DeFi ecosystem, it could lead to opportunity loss. This generates an atmosphere of chaos and confusion, hampering the overall strategy of the yield farmer.

Apart from all these factors, security is one of the biggest concerns related to smart contracts. It is quite true that smart contracts are much safer than centralized systems as they replace the need for a trusted third party. However, they are not completely risk-free. A bug in a DeFi smart contract can expose user’s funds to critical vulnerabilities. Though developers work constantly to achieve high-security levels, there is no 100% guarantee. This fear demotivates potential yield farmers to invest in the DeFi protocol.

So, what’s the solution?

To combat these challenges and provide easy access to wider users, an innovative and comprehensive approach is needed. APY.Finance, an automated yield farming platform, aims to mitigate these risks and offer a more secure, economically viable option for the yield farmers. The platform continuously routes the funds of the yield farmers to the latest and greatest yield farming which results in incremental growth in the overall profits.

So, how does APY.Finance successfully delivers the best possible results for the investors?

Working at the apex of innovation and technology, it employs the following strategies -

Automated yield farming

The main goal of yield farming is to earn as much as possible. As a result, every yield farmer looks forward to investing in the highest yielding farms. As more users start investing in the best returning pools, they would also dilute the yield. Therefore, farmers would jump from pool to pool seeking the best yield. The company recognizes this crucial problem and thus, devised an automated rebalancing mechanism that intelligently routes the funds between pools and makes high-yield farming easy.

Minimal Gas Fees

APY.Finance achieves economies of scale by collectively routing pool funds in a single transaction and in a non-custodial way. This would lead to a drastic reduction in gas fees by almost 99%. This is an incredible opportunity for a yield farmer as it creates an alternate world for them in which they can minimize their expenses and therefore, multiply their profits exponentially.

Risk-Adjusted Returns

The ultimate goal of the APY.Finance team is to build a 100% community-owned platform which will be achieved by progressive decentralization via APY token. This democratic governance model will empower token holders to initiate proposals and vote for important decisions like strategy risk score changes or even yield allocation. As the market situation changes, the community can take a collective decision to update these risk scores to reflect the new changes.

With a focus on transforming the DeFi landscape, the APY.Finance offers a next-generation yield farming which connects DeFi money legos to innovate high APY strategies with diversified smart contract risk. By employing performance-driven methods, it promises to deliver outstanding results to the yield farmers.

Also, Read

Defi
Yield Farming

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Garlam Won
Coinmonks

Written by Garlam Won

287 Followers

Managing Partner — M6

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