Farming tips

Pendle Finance

28/09/2023

Home | News & Insights Pendle Finance – DeFi’s Yield Trading Protocol Starting to explore yield farming strategies based on protocols, and today we’ll take a look at Pendle Finance. Table of content Pendle Finance is one of the most intriguing protocols in DeFi right now. Its launch somewhat preceded its time, and the DeFi market wasn’t ready for widespread adoption of this protocol just yet. However, Pendle Finance has benefited from many innovations in DeFi over the past year: the emergence of the LSDfi narrative, the introduction of numerous other efficient yield-bearing assets, and the thriving DeFi ecosystem on Arbitrum. So, what is Pendle? Pendle Finance is a protocol in the Interest Rates Markets category. What does Pendle do? It divides yield-bearing tokens into two parts: the base portion (Principal Token = PT) and the income portion (Yield Token = YT), creating a market (pool) for them. Naturally, each specific YT/PT pool will have a maturity date. At the maturity date, the YT token will be worth 0, while the PT token will be equal to 1 unit of the underlying asset. Let’s take a look at an example using stETH. YT (Yield Token) By holding 1 YT stETH 🪙 🟢 You will receive the yield generated by stETH. This yield can vary depending on the activity in the Ethereum network, changes in the Lido protocol, and changes in staking rewards in the Ethereum network. 🟢 Your YT stETH will have a value (and a market with sufficient liquidity, by the way). The value will be influenced by: It’s worth noting that the price of YT is significantly lower than that of the underlying asset. For example, currently, you can buy YT stETH with a maturity date of December 30, 2027, for ~$250, while stETH is priced at ~$1850. This means you can exchange 1 stETH for 7.4 YT stETH and earn the yield equivalent to that of 7.4 stETH. It’s a kind of yield leverage without liquidations. Degen Tips: By holding a position in the Yield Token (YT), you, in a sense, have a long position in the yield of the underlying asset, and you generate this yield more efficiently (with “leverage”). PT (Principal Token) By holding 1 PT stETH 🪙 🟢 You will not receive the yield generated by stETH. 🟢 Your PT stETH will have a value (and a market with sufficient liquidity as well). The value will be influenced by: In the example of the same pool with a maturity date of December 30, 2027, the price of PT stETH would already be around $1600. By purchasing PT, you essentially acquire the underlying asset at a discount. More precisely, you are fixing the current yield. Degen Tips: By holding a position in the Principal Token (PT), you, in a sense, have a long position in the underlying asset + fix the yield. This can also be partially viewed as a short position in terms of yield if you expect the yield to decrease. DeFi opportunities with Pendle Finance So, we’ve discussed how interest rates markets work on Pendle. Now, let’s explore some specific farming use cases with Pendle and around it. Let’s dive in and explore the Pendle APYs! Impermanent Loss-free farming through YT At Leech Protocol, we don’t consider Impermanent Loss (IL) as a significant risk (we can provide a detailed explanation upon request), but nevertheless, this feature is present in DeFi. Pendle helps to coexist with this feature. That’s exactly what Pendle, in collaboration with @‌CamelotDEX ⚔️, has done. In the screenshot, you can already see LP PENDLE-ETH (Camelot) and ARB-ETH (Camelot). Farming Tips: If you don’t want to deal with asset price volatility in the pool and are bullish on the yield of a specific LP, YT LP is suitable for you. Farming Tips: If you want to lock in the current yield of the LP you are farming, PT LP will be useful for you. Farming in Pendle pools Alright, so Pendle has liquid markets, but where does that liquidity come from? It comes from its own liquidity pools, which means we can also become liquidity providers in these pools. Pay close attention here. Let’s say you have ARB-ETH LP (Camelot) and want to earn additional yield on top of it. You can come to Pendle and use the zap-in strategy (similar to providing liquidity to a regular pool) in the LP pool. Now, your LP is split into YT LP and PT LP, and you: Moreover, the nature of YT/PT assets in Pendle pools allows you to not worry about Impermanent Loss. Pendle pools are one of the best places in DeFi for liquidity providers. 💡 Farming Tips: If you want to increase the yield of your yield-bearing asset, take a look at Pendle Pools. If you truly want to delve deep into DeFi strategies related to Pendle Finance, you won’t find better threads than those from Vu Gaba Vineb. Farming based on Pendle The ve-tokenomics of Pendle Finance have not gone unnoticed, and the Pendle Wars have even ignited. To learn more about what is currently happening, check out an excellent thread by Small Cap Scientist. In any case, this has provided a boost for the development of a range of projects built on Pendle. The rewards earned in $PENDLE can already be directed towards yield boosters such as Equilibria or Penpie. Additionally, you can provide liquidity in Pendle Pools through similar projects, thereby earning yet another type of token rewards. Just take a look at the yield structure! In conclusion, we want to emphasize that Pendle may not be the most intuitive protocol, but it is highly versatile. It’s worth understanding it, if only because interest rate markets have the potential to become one of the largest markets in DeFi in the medium to long term. What should you do next? *Try our automated cross-chain farming app (soon) * Follow our Twitter for more DeFi and YieldFarming tips * Join our Telegram for Daily Farming discussion * Join our Discord to claim your roles and become early community member Share: Twitter Facebook Telegram

All you need to know about Ve(3,3) projects

21/10/2023

Home | News & Insights All you need to know about Ve(3,3) projects The presence of deep liquidity in a pool is a crucial requirement for ensuring trading volume and stable prices of a particular token. Every project that launches its own token faces the challenge of attracting liquidity to these pools, in addition to attracting liquidity to its own product. However, the emergence of ve(3,3) protocols in the DeFi space helps solve this problem and offers a new perspective on the relationship between liquidity providers and decentralized exchanges (DEX). Let’s take a closer look at the ve(3,3) concept. First and foremost, it’s worth mentioning Andre Cronje and Daniele Sestagalli – two of the most famous builders in crypto. Among their notable projects, one of them is Solidly – a decentralized exchange with the ve(3,3) tokenomics concept. Solidly gained attention when Andre Cronje published a brief article on Medium in January 2022, explaining the tokenomics concept of the new project and naming it ve(3,3). The Origins of ve(3,3) The name ve(3,3) stems from the combination of two tokenomics designs. The first design, ve (Vote Escrow), enables token holders to participate in the governance of a project by locking their tokens for a specific period. This design was first implemented in the Curve DAO project. However, one of the challenges of this design was locked liquidity. Users who acquire voting power by locking their tokens are unable to sell or transfer them until the lock-up period expires. The second design, (3,3), is derived from the concept of “Nash Equilibrium” in the Olympus DAO project. It attempted to set up a tokenomics framework where staking was the most profitable behavior for token holders, while selling tokens was the least profitable. Andre Cronje decided to incorporate a similar equilibrium into the Solidly project, but with more refined incentives. Thus, ve(3,3) © In his Solidly project announcement on Medium (ve(3,3), Andre Cronje outlined the following principles of this design: ve(3,3) Actors The ve(3,3) tokenomics in a decentralized exchange (DEX) involves four key types of participants: ve-token holders, liquidity providers, protocols, and traders. Let’s explore the roles of each of these participants in the overall ecosystem: Is ve(3,3) Concept Thriving? The general principle of ve(3,3) revolves around each participant having their own interests and incentives for mutually beneficial participation. For liquidity providers, it is also attractive that everything happens transparently, and at the end of each epoch, they can know in advance which pool will bring more profitability. By following the voting process, they can secure higher returns compared to the average market. Currently, there are numerous Solidly forks and projects that utilize the ve(3,3) design, each introducing their own additions. Some of these projects, such as Velodrome and Thena, have shown excellent results. Each project makes minor changes to the ve(3,3) concept, such as shifting from dynamic to linear emissions or introducing other modifications to timing and reward structures. For liquidity providers, this allows them to make informed decisions based on reward structures and potential profitability. If you’re interested, you can explore Solidly forks on the DefiLlama website (DefiLlama). If you have any questions, feel free to ask. We’re happy to engage in further discussion! What should you do next? Share: Twitter Facebook Telegram

How to calculate true APR/APY?

21/10/2023

Home | News & Insights How to calculate true APR/APY? Today we’re gonna talk about two important metrics – APR and APY. We’ll go over what they are, how and when to calculate them, and most importantly, how to use them to make smart farming decisions. Because let’s face it, when it comes to farming, it’s all about those “percentages”! Table of Content: Base. What is APR and APY? APR and APY are widely used in DeFi to help us understand the potential return we can earn by providing liquidity. Both metrics represent annual interest rates and are essentially forward-looking metrics. They are useful for predicting the potential returns we can earn from various investments. Here’s what each of them means: APR (Annual Percentage Rate) is the annual interest rate that is applied to the invested assets. APY (Annual Percentage Yield) is the annual interest rate that is applied to the invested assets, taking into account compound interest and other factors that affect the overall return. Calculating APR (Annual Percentage Rate) This is a basic metric for evaluating the profitability of a liquidity pool/asset/strategy. The main feature when calculating APR in DeFi is the strong fluctuations in parameters that affect profitability (TVL, volumes, fees, rewards per block, etc.). Therefore, sometimes to understand the “fairness” of APR, we need to look at the dynamics of these parameters. Calculating APY (Annual Percentage Yield) APY can be thought of as APR with a compounding function. This metric shows us the annual return taking into account reinvestment of the earned interest. It can be calculated differently from project to project. However, if you know your APR, you can easily calculate your APY. In summary, the difference can be presented as follows: What you need to understand about APR and APY: 1. APR and APY are calculated based on historical averaged data. In such a volatile market like crypto, extreme values can lead to statistical errors. In just one day, we can see pool volumes increase by hundreds or thousands of times, while the next day everything returns to previous values. Take a look at the screenshot of such a vault. 2. APR/APY are manipulative metrics in DeFi, with no standard for their calculation. Protocols are naturally interested in showing a high percentage. What tricks could be used in their calculation? 3. APR and APY are measures of profitability that do not take into account changes in the value of the underlying asset. Therefore, it is easy to see high APRs but suffer losses from a decrease in the value of LP tokens/tokens. But despite the fact that APR/APY have their peculiarities in DeFi and can significantly overestimate expectations, they still give us an understanding of the product’s profitability. Calculating the “true” APR/APY In reality, there is no “true” APR and APY. Any approach to calculating these metrics will be a simulation of future profitability. However, by delving into the model of generating profitability for a particular pool, you can choose a suitable approach to calculate these metrics – and this will be the most “true” APR/APY for you, as it will take into account your specific strategy parameters. Calculator APR/APY We have created a simple calculator for you in the form of a Google Sheet, which will help you calculate what income you can expect from different pools with various parameters. In it, you can also calculate the result with top-ups.Just make a copy of the table and use it👇 Leechprotocol | Calculator APR/APY What should you do next? Share: Twitter Facebook Telegram