Leveraged Yield Farm is Now Available!

Published in

Meshswap

4 min readMay 20, 2022

Leveraged Yield Farming supports users to deposit paired assets on farming pools by borrowing additional assets from a lending pool.

Capital efficiency
Leveraged yield farmers can borrow assets from Meshswap’s Lending Pool with ample liquidity supplies such as MESH, ETH, XRP, USDC, USDT, DAI, WBTC, KLAY, ORC, KSP. Users can leverage up to 6 times, and the borrowed assets can be used for yield farming to maximize capital efficiency.

Maximum yields & Higher earning rate
By utilizing more than your equity value, you will get explosive MESH mining rewards and Airdrop token rewards. Although leveraged farmers have to pay the cost (interest) on the lending, sufficient rewards are given to them to earn more profits even after paying interest fees.

Easily customize the pair
In general, yield farming requires two assets to be deposited according to the pool’s exchange rate. But Meshswap’s leveraged yield farming allows users to deposit any proportion of the two tokens or even only one token. Through the smart contract, the underlying protocol will automatically swaps tokens into a 50:50 split in optimal rate based on the current pool exchange rate.

Borrow, Swap, Deposit at once
Meshswap’s Leveraged Yield Farm can carry out lending, swap, and deposit (liquidity supply) simultaneously in just one transaction.
In other words, there is no need to borrow assets from an external protocol. Users can borrow, deposit, and return directly from Meshswap’s lending pool quickly and conveniently with minimal transactions.

Add collateral, partially closing a position
Users can manage their accounts safely and quickly through additional collateral or partial loan repayment.
＊Add collateral: Depositing additional 1.0x leverage on your leveraged yield farming pool can quickly lower the Debt ratio. 1.0 x leverage means without leverage, such as with standard yield farming.
＊Partially closing a position: Withdrawing some amount from the leveraged yield pool returns the leveraged assets and lowers the debt ratio quickly.

Optimal Leveraged yield farm for volatile assets: WETH/oWETH, WMATIC/oMATIC

One of the biggest concerns for many DeFi investors, including leverage yield farmers, is the impermanent loss. In general, a stablecoin+stablecoin paired farming pool such as USDC+USDT offers low-risk, stable farm returns. Including the stable pairs, Meshswap has farming pools that enable stable leverage of volatile assets. It is the POS Token + oASSET Token paired farming pool such as WETH/oWETH and MATIC/oMATIC.

While WETH is ETH (ERC-20) asset which is transmitted to the Polygon network through Polygon Bridge, oETH is ETH (ERC-20) asset which is transmitted to Polygon network through Orbit Bridge. Since both WETH and oETH assets have the same value as ETH, the WETH/oETH pair is relatively free and safe from Impermanent loss (IL) caused by price volatility in the deposited pair. Hence, WETH/oETH paired farming pool creates more profit than simply holding the same ETH (HODLe) asset.

Case 1. HODLe holdings

1 ETH = $2,500. Holding 0.4 ETH (=$1,000). If the price of ETH increases 10%, your HODLe holdings = $1,100

Case 2. LP holdings

1 ETH = $2,500. In the $1M worth of WETH/oETH Liquidity pool, deposited tokens are 200 WETH and 200 oETH (WETH/oETH AMM is balanced, with equal values on both sides).
You deposit 0.2 WETH + 0.2 oETH (=$ 1,000) for providing liquidity. Now your share of the pool is 0.1% (Exchange rate: 1 oETH = 1 WETH).
Someone buys 0.5 oETH from WETH/oETH, Now deposited tokens are 200.05 WETH and 199.5 oETH (Exchange rate 1 oETH= 1.00501 WETH).
Your LP holdings = 0.2005 WETH + 0.1995 oETH (=$ 1,000)
your share of the pool is still 0.1%.

→ You still hold 0.4 ETH
(0.2005 WETH + 0.1995 oETH = $ 1,000).
→ You get additional MESH yields
(WETH/oETH 14.82%, WMATIC/oMATIC ARP 48.19%).
→ If the price of ETH increases 10%, you get market profit.
→ It is possible to provide liquidity without any ‘Impermanent loss’.
→ You can maximize your yields with WMATIC/oMATIC leveraged yields farm!

As such, the quantity of WETH/oETH, WMATIC/oMATIC pairs may fluctuate depending on the transaction demand between POS assets (WETH, WMATIC) < > oASSET (oETH, oMATIC), but in fact, it shares the same principle of holding an ETH single asset.
Nevertheless, the yields obtained from yield farming are incomparably higher than holding a single asset. Hence, the leveraged yield farming of WETH/oETH and WMATUC/oMATIC pairs can be the most efficient investment method for users who want to hold ETH and MATIC.

Supported pools

Meshswap’s Leverage Farm offers various pair combinations of farming pools, including stable assets, Polygon POS assets, and Orbit assets. The maximum leverage multipliers for each pair are different, so please refer to the table below.

Leveraged Yield Farming Info