Not a how-to article, more about how to think about this unique farming opportunity.
There are plenty of walk-throughs on how to actually farm BAO. Here’s one:
BAO is an interesting project. Supposedly doing some things similar to SNX, with the ability to do derivatives, blah blah blah.
If you’re not a dev, do you really understand what is going on with these tokens you buy and sell? If number go up, does it even matter to you?
What I find more interesting in farming BAO is it’s unique lockup period — 95% of funds locked up till 2022, funds being distributed in January and continuing for the next 3 years.
Distribution of funds similar to an interest payment.
Sky high APY!
So BAO farming on XDai has these ridiculous percentage rates of up to 2,000% (and beyond!).
The criticism BAO gets is how it arranges its distribution. “What do you mean I have to wait for a year before I even see my locked BAO?”
I think in retrospect there are plenty of folks who wished there was something that could have prevented them from selling off some precious crypto before it 10Xed.
I know I do.
I bought ETH at $12.50 in 2016. One-and-a-half years later when I looked at my account my $500 initial investment blossomed to $15,000.
…which I then “invested” in a bunch of s̶h̶i̶t̶ altcoins that subsequently dropped 95% in the post 2018 bear market.
BAO’s enforced locking of 95% of your farmed BAO is a feature, not a bug.
Enforced HODLing prevents the pump and dumpers, the high percentage farming grifters looking for the next scalping opportunity. Skim the cream off an emerging high percentage yield — then harvest and leave for the next big percentage yield.
Like many emerging crypto tokens, farming percentages can be a tad unreal. 2,000%? When you start delving into this world, though, this is not atypical. (Well, maybe a little atypical). When you are used to a 2% Ally Invest APY on your savings, the 2k percentage does seem otherworldly.
What’s cool is that you see your locked BAO skyrocket with the astronomical percentage yield. With, say, a starting $10k investment in their BAO-WETH XDai farm you start to see half-a-million BAO accumulating on a daily basis.
A million BAO today is only worth $800. In a year you could farm the equivalent of $146,000.
And that’s if the price stays the same.
If it rises then…well let’s just say the price of BAO is currently $0.0008. Every zero bumped is a 10X, then 100X…1,000X?
This without piling in any extra BAO.
Of course, BAO could all go to zero…but that’s the price you pay for getting in so early.
Compounding, The Eighth Wonder of the World
What I didn’t calculate though, when I first got into this, is the power of compounding. Instead of just banking the BAO, throw the 5% of BAO that does go in your wallet back into the 2,000% interest pool will compound an even greater locked amount to even higher ridiculous levels.
What comes after Quadrillion?
Of course the percentage rate goes down as more people get into the pool. And there’s a finite amount of BAO to go around…bunch of caveats. But with every amount you throw back in the pool you start to see the parable of the single grain of rice on the chessboard doubling on every square start to play out in real time.
Barriers to Entry
To figure out how to farm BAO you have to figure out how to connect to MetaMask. And if you dare, switch from Ethereum chain to XDai to get a higher yield, and escape the high ETH fees.
And then you wait.
Well, you farm…and wait…and farm some more.
Since the percentage compounds continuously, if you throw your harvest back into the pool, it then compounds against a higher amount that’s locked away.
If I could I’d automate it in such a way to harvest as often as possible (maybe once an hour) given the current fees paid in order to harvest, and then supply liquidity.
I harvest once a day. More often would d̶r̶i̶v̶e̶ ̶m̶e̶ ̶i̶n̶s̶a̶n̶e̶ be annoying.
Once you start doing this though, it’s the story of the single grain of rice placed on the 1st square of a chessboard, with the amount doubling every subsequent square. By the end a warehouse would be overflowing with rice.
The result is win-win. Even if the price drops, you accumulate at an insane rate. And if you throw it back in the pool, BAO doesn’t even have to be an unqualified success — it just has to survive.
The Few, the Proud…
If you’re one of those semi-technically capable people who loves a challenge, who is able to vault the barriers of figuring out how to connect MetaMask to Ethereum, then XDai, enjoy the puzzle of transferring BAO through an ETH-XDai bridge, and high jump adding liquidity, and finally supplying LP tokens to a farm — then this is just the thing for you!
Barriers prevent a flood of people farming this. Fewer people make for a higher percentage of the yield to those that remain.
One of the reasons the yields are so high are because the barriers are so annoyingly convoluted.
Another reason is that few understand the opportunity presented with a locked yield — how it enforces HODLing, weeds out the short-term players.
And, if BAO manages to rise in price over a year, then it could be quite a nice harvest after all…;)