Energi Yield Farming is Live!
We are thrilled to announce the availability of Energi yield farming, which is now live and operational on our mainnet! This is an exciting use case for our growing decentralized finance (DeFi) ecosystem, and it supports our mission to become the world’s leading cryptocurrency platform and here’s how.
During the past year, individuals seeking above average rates of return have flocked to DeFi. According to DefiLlama there’s currently $257.73 billion locked in Decentralized Finance, that’s up from $66.12 billion as recently as July 22nd. DeFi continues to grow and one of the key drivers of that growth and adoption is yield farming.
General Yield Farming Explained
Yield farming is a way to maximize a rate of return on capital, by leveraging DeFi protocols via smart contracts.Yield farming allows you to put your hodled tokens to work producing income while also earning capital gains on the value increase of the coins themselves.
Yield farmers accomplish this by supplying capital to liquidity pools. Liquidity pools are used to facilitate the exchange between existing token pairs that are listed on exchanges. Each different token within those respective pairs needs to adhere to preset ratios to allow other users to swap between other token pairs. By supplying coins to a liquidity pool in a protocol, yield farmers receive fees as well as additional bonus rewards, in proportion to the amount they themselves have staked within a given liquidity pool.
Annualized Percentage Yield Overview
Annualized percentage yield (APY) is a common way to compare rates of return on your money produced by different investments. Using an example from traditional finance, a first-time investor who wants to open a new savings account would look for a vehicle that had the lowest fees with the highest APY. Yield farming is similar but much more profitable, when you consider the average APY from a savings account at a traditional bank ranges between 0.1% to 1.0%, while the yield farming APYs typically range from low double digits to as high as triple digit returns.
How the Energi Yield Farming Will Work
In basic terms Energi yield farming is an incentive program for investors who provide liquidity within certain pools of token pairs on Energiswap. Currently, the liquidity pools that will be eligible for yield farming are the token pairs of Energi/Ethereum (NRG/ETH) and Energi/Dai (NRG/DAI) respectively. Those individuals who provide liquidity on Energiswap for those two token pairs will earn proportional transaction fees and an introductory rate of up to 50% APY on their stake, but only during the first month of the yield farming launch. That APY will moderate after the first month and as more yield farmers use the Energi Bridge to move Ethereum and/or Dai into the respective liquidity pools — so don’t wait to dive in!
Understanding Total Value Locked
“The idea behind this is — ‘the more liquidity the better’,” said Energi Core President, Ryan Lucchese. “The more liquidity that’s in these pools, the larger the size and number of transactions that can be completed without price slippage. The goal is to drive mass adoption by driving the total value locked (TVL) on our Energiswap exchange. The more TVL on our exchange, the greater the value, utility, usability, and attraction to new users.”
Energi has been getting significant TVL traction already as this graphic from DeFiLlama shows. Over the past several days, Energi has seen a more than 36% pump in TVL — that’s the second highest growth among all other blockchains.
“The reward tokens for the Energi yield farming will be funded by the Energi Treasury, which is another differentiating benefit to our users. Thanks to our Energi Bridge, potential yield farmers can easily move their Dai or Ethereum to the corresponding Energiswap money pool to enable transactions on our native blockchain and receive NRG rewards,” said Lucchese.
It’s worth noting that other token pairs will continue to be added to the Energi yield farming offering, so be sure to follow us here on Medium, Telegram, and on Twitter for the latest Energi news and updates.
