Your comprehensive guide to the EFX LP Reward Farm and how to participate

Discover the world of DeFi, AMMs & yield farming, and learn how to participate in the EFX LP Reward Farm.

Effect Network

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Effect Network

4 min readAug 26, 2021

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Decentralized finance (DeFi) has been at the forefront of innovation in the Blockchain world.

What makes the applications of this blockchain-based form of finance so distinctive is that they are permissionless, meaning that anyone and anything, like a smart contract, can interact. Today we will be exploring the importance of yield farming AMMs & liquidity providers on the DeFi ecosystem while also introducing the EFX LP reward farm and practical steps on how you can easily participate.

Keeping DeFi liquid: Automated Market Makers (AMMs)

Firstly, before we go any further it is important to understand what Automated Market Makers (AMMs) are. AMMs are smart contracts that power Decentralized Exchanges (DEXs), keeping the ecosystem liquid 24/7. In essence they allow digital assets to be traded automatically, without permission, by using liquidity pools instead of a traditional market of buyers and sellers. Users of AMMs supply liquidity pools with crypto tokens, whose prices are set by a continuous mathematical formula.

Liquidity Pools and Liquidity Providers

DeFi banking applications, and in particular startups, require a lot of money up front. Because of this, liquidity is a chief concern. In conventional finance, cash is considered the most liquid asset as it can be easily exchanged for other assets. Cash, on the other hand, is difficult to convert to cryptocurrency. This is where liquidity providers (LPs), who add funds into liquidity pools, come into play.

What is a liquidity pool? Simply put, a liquidity pool is a ‘pool’ of funds in the form of tokens that are locked into a smart contract. They are fundamental components of the DeFi ecosystem today. These pools facilitate efficient asset trading on Decentralized Exchanges (DEXs), rewarding LP’s in return for providing liquidity. Recently, LPs have also been able to earn yield in the form of project tokens through what is known as “yield farming.”

Yield Farming, what is it?

One concept that has emerged out of the expanse of DeFi applications is yield farming. In 2020 the term “yield farming” did not exist. Since then, yield farming (also known as liquidity mining) has become a hot new term, growing in popularity as a method of token distribution by acting as an innovative way to generate rewards with cryptocurrency holdings using liquidity protocols. So, how do you yield farm? The good news is that you can start today with the EFX Pool.

Earn rewards with the EFX Pool

For crypto initiatives, liquidity mining has been one of the most efficient ways to distribute additional tokens into the hands of the right people. People like you. In essence, tokens are distributed to users who deposit their tokens in a liquidity pool using an algorithm. These freshly minted tokens are then allocated equally to each user’s pool share.

If you provide liquidity to the EFX Pool on PancakeSwap, for example, you’ll receive tokens representing your portion of the pool. You can use those tokens to deposit into the EFX LP Farm and earn a return. Created by the EffectDAO, this farm rewards liquidity providers with additional EFX tokens. Interested in participating? Follow the steps below.

What is the EFX LP Rewards Farm?

The EffectDAO has created a liquidity farm that rewards liquidity providers with EFX tokens.

The farm rewards will start on Thursday, August 26th at 10 am CEST and will end on October 7th, 2021. During this time the farm will yield 6773 EFX daily.

For more detailed information, you can read the EffectDAO proposal here: https://dao.effect.network/proposals/67

Your step-by-step guide on how to participate in the EFX LP reward farm

The farm rewards you with EFX tokens provided by EffectDAO. As long as your LP tokens are locked in the farm, you’ll receive EFX rewards for every BSC block.

Step 1: Get EFX and BNB

You will need an equal (dollar) amount of EFX and BNB tokens, which can be bought from exchanges.

Step 2: Provide liquidity

Get EFX LP tokens from PancakeSwap:

https://pancakeswap.finance/add/BNB/0xC51Ef828319b131B595b7ec4B28210eCf4d05aD0

You’ll first have to click “Enable EFX” and wait for the transaction to succeed. Then press the button “Supply”. The more LP tokens you get, the more rewards you will receive.

Step 3: Stake LP in the farm

Go to https://bridge.effect.network and select Farm
Then select “Stake” and enter the amount of LP tokens to stake.

Step 4: Farm your rewards

Every block (3 seconds) a fixed amount of EFX is distributed from the farm. To claim the EFX you can use the “Harvest” button.

Step 5: Leaving the farm

When the pool ends (on October 7th), or any time before then, you can remove your LP tokens from the farm with the “Unstake” button. This will also claim your pending rewards.

Effect Network is an Amsterdam based company that is working on a blockchain-powered, decentralized platform for the Future-of-Work.