GTFO, how is that possible?!
On April 27, 2021 I started yield farming on Pandaswap, a Binance Smart Chain (BSC) swap created by BAOman. At the time, the RHINO-BNB Panda farm, cheekily called “Rhino Remoulade” was returning 84,000%. That’s 230% per day. So, for a $3,000 investment the 1 day return was around $9,900.
What’s the catch?
- Barriers to entry. In order to do this it helps to have an understanding of how to do this in the first place. This involves bridging assets from Ethereum to BSC. Then figuring out how to create Liquidity Pairs (LPs) and deposit to start earning yield. And then figuring out what to do with the yield — redeposit to amp the yield, or cashout, or both?
- BAO farms are similar some other defi farms popping up in that they lock 95% of the yield, which doesn’t start to payout till 1 year later. In the case of their XDAI farms it then pays out over the next 3 years. This was created in order to add stability to their farms, so it disincentivizes yield surfers just looking for the highest % gain; as well as early withdrawals.
- Projects such as Pandaswap start out with a high yield as there aren’t many participants. The percentage lowers as their distribution is divided by the increasing number of participants. The 84,000% yield dropped precipitously day to day, from 84,000% to 57,263.9% on the second day, and 40,603.59% on the 3rd day (currently 38,895.32%). Still a mind-boggingly high percentage.
- There are penalties for early withdrawals which range up to 50%, so do your due diligence and see if this is something you can stomach on an experimental defi play.
- The development team is anonymous, which makes it higher risk for a rug pull. Also, the development team is quite small, with only 2 devs currently.
5% of 84,000% is still a good amount
Why yes, yes it is…;)
With a $3,000 investment the 1 day return is the equivalent to $9,900. 5% of that which gets deposited is $495 worth of Panda (PNDA) deposited to your MetaMask wallet.
That’s per day.
Of course, with more people getting in the percentage will drop. But, if the percentage remains high (because of the barriers to entry, etc, listed above), you could gain your initial deposit back in about 6 days. This is without adding anything additional to your initial stake.
With Panda tokens flooding in, the question remains about what to do with this windfall? Save the PNDA tokens? Reinvest in the farm? Convert to a US Dollar stablecoin (cashout)?
Saving PNDA tokens is a bet that the token will one day have more value than the initial cost. This token is so early it’s not even listed on CoinGecko or CoinMarketCap. But if you believe in the BAOman vision of an interoperable defi token purpose built for derivatives then this may be akin to getting in on the groundfloor of an emerging IPO.
Reinvesting the PNDA tokens back into the farms can amplify the 84,000% to even higher levels, as the initial stake then grows which is then compounded.
But there’s an opportunity cost to consider. What else could you do with that money if you didn’t reinvest?
Which brings me to converting to a stablecoin. At current rates you are able to accumulate your initial stake in 6 days. Which you could then use for the next opportunity, or spend as you wish. Hey, money is money, and the current lingua franca at least in the US is the US Dollar. Panda could turn out to be worthless, but at least getting your initial stake out you have lost nothing.
Since Pandaswap locks away 95% of the tokens earned in my mind there’s no incentive to sock the PNDA in my Metamask wallet. I believe in the BAOman’s vision, so to leave it for a year, even given a probable Crypto Winter, I believe it will survive and thrive. Just participating in Pandaswap is an act of faith in its prospects.
So, that leaves cashing out to a US Dollar equivalent, or putting more back into the pool to generate higher returns. In my case, I do both. My first goal is to get out my initial $3,000 investment, so I convert the PNDA to USDC. This will take 6–10 days.
After I get my initial stake out, on a daily basis, half I reinvest to amp returns, and half I cashout to USDC to earn income. Half of $495 is $247.50/day, or $7,425/month — not too shabby! And the $247.50 in PNDA is reinvested into the stake to amp the already high return.
Nothing in this article is to be construed as investment advice. Neither the author nor the publication takes any responsibility or liability for any investments, profits or losses you may incur as a result of this information.