Yield Farming - DeFi on SmartBCH
[The information in this article is outdated. SmartBCH faced issues with the 2022 collapse of Coinflex. Thus, activity is reduced and developments stalled. Perhaps, with the release of a decentralized bridge, SmartBCH will recover.]
In the last two years, DeFi kicked off and turned the tables in the cryptocurrency world. Especially from the beginning of 2020, we witness a massive marketing campaign to promote DeFi. It felt odd since anonymous websites started offering high yields, with many of them claiming astronomical APRs (annual percentage rate).
A new niche in the Cryptoverse investing field appeared, the yield farmers. And within a few months, participation in Ethereum Defi projects reached high popularity. Traffic at Compound, Balancer, Uniswap, and more DeFi platforms reached extreme levels, and investors poured billions of dollars into them.
After this success, more DeFi expanded to more blockchains. DEXs like PancakeSwap reached the size of UniSwap and 1Inch.
The most modern platform that is a bridge to Ethereum and runs on top of Bitcoin Cash is SmartBCH.
SmartBCH is already up and running for a few months and we already have 3 DEXs offering staking and yield farming.
I think this is about the right time to invest in these DEXs and already did my first investment yesterday. I will explain which it is and how it proceeds, but got to admit that the results from day-1 are giving me hope.
Yield Farming on SmartBCH — Be A Chad!
Today, we already have 3 DEXs operating within SmartBCH:
BenSwap, MistSwap, and MuesliSwap as DEXs offering DeFi opportunities.
We can put our tokens in liquidity pools and earn from trading fees. We can also trade tokens and speculate on their price appreciation by just holding.
There are stablecoins available (FlexUSD, BUSD) that we can also use when trading or for a more conservative approach when yield farming.
I traded some tokens in BenSwap but I had not tested the DeFi options so far.
DeFi Risks
I decided to use MuesliSwap, for test purposes, and understand the risk, but I also find minor differences with the other two DEXs when it comes to the risk factor. The risk mainly emanates from the native tokens (EBEN, MIST, MILK) and the probability of a rug pull, or a contract exploit.
In the previous two years of DeFi hype, we have seen quite a few occasions of rug pulls and exploits. The most famous of these was from SushiSwap, when the major developer and top liquidity provider for SUSHI on the SushiSwap platform (Chef Nomi) rug-pulled by withdrawing and selling tokens worth $13 million ( source).
It is always better to diversify, so the plan is to use all three current DEXs and the options.
The DeFi financial technology is based on smart contracts and instant execution of commands, so it becomes automated finance with no third parties involved. It is pure decentralized finance and the banks are already researching it, with plans to adopt parts of DeFi in their infrastructure.
The Plan
My plan for the moment is to test, research more, and gain experience. I can lose money from this, but I also think that it is right about time for the SmartBCH DeFi to start gaining attention.
My first step is to provided liquidity at MuesliSwap. I will also do the same investment in BenSwap and MistSwap but started with Muesli after reading the @MoreGainStrategies conversation with the devs.
I don’t want @MoreGainStrategies to feel any pressure on this, of course, since I completely understand the risks and everyone should always do their research.
- My Interview With the MuesliSwap Developers Part 1 of 2
- My Interview With the MuesliSwap Developers Part 2 of 2
I just think that this interview answered many questions I had (mostly about tokenomics), which would have taken valuable time to dig out on my own.
I also think that the gains devs would have from operating a DEX will far outweigh those of a rug pull, especially when this market is still at a very early stage of operations.
Anyway, I explained that I’m not very experienced with DeFi, so the risk is already higher for me. I plan to use the rest two DEXs very soon and try to find the best gain strategy!
This is the investment. I bought 500 MILK at $0.28 (current price $0.25) and provided liquidity. This instantly rewarded me with 11 LP that I staked at the MuesliSwap Farms.
It is 32 hours later, and this investment has already made me $11.34. The APR is constantly changing though, and probably will be lower later.
At the current rates, within a month, this investment will pay a 196.02% yield, and give back about $749.92! The yield is fluctuating; it was about 350% when I invested, and now is tripple than that! I don’t expect to have this rate for a very long time, though.
Since this is still a test for me, I will come back with better results after a week or better after a month. I will see how it goes and perhaps increase my investment if I find it to be worthwhile.
In Conclusion
SmartBCH is just at the first stage of what will be a long and challenging process. By testing the field, we are exposing part of our portfolio to risk, but we can also discover the opportunities of DeFi.
The success of SmartBCH will be essential for the price appreciation of Bitcoin Cash. The increase of demand, together with the burning process SmartBCH applies for BCH fees, will bring substantial growth for the Bitcoin Cash network.
It is not the only card Bitcoin Cash has to play, though. More developments are coming with tokenization and prediction markets.
SmartBCH is probably the ace in the sleeve for Bitcoin Cash, a development that creates a competitive advantage in DeFi, NFTs, Dapps, and allows developers to create without the issues of high fees and congestion of the Ethereum chain.
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Originally published at https://read.cash.
