Articles about #DEFI

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

Leech Protocol Launch, Stage 2

28/09/2023

Home | News & Insights Leech Protocol Launch, Stage 2: Testing Leech Protocol’s Multi-chain Farming App (Beta)! 2nd Launch Stage — Leech Protocol Leech Protocol is an app that provides a user-friendly solution for simplifying the yield farming process across all major blockchains and platforms, enabling users to efficiently earn yield on crypto in just a few clicks. The second stage of our product launch is imminent, with a maximum of $100K TVL, where each whitelisted wallet is able to deposit $20–500. The best part? Users that provide liquidity may be eligible for rewards from our team! Find the details below, and join the #easyDeFi movement! The Current State Of Leech Protocol’s Product Development First, and most important, we are happy to announce that our team of talented programmers and blockchain enthusiasts have successfully deployed the Beta Version of our multi-chain farming app, which we will be testing during the 2nd stage of our launch, with the help of our fantastic community! This is the first step of creating a platform designed to redefine how cryptocurrency farming operates. The app is integrated with five major chains: Binance Smart Chain (BSC), Avalanche, Polygon, Optimism, and Arbitrum. This multi-chain approach extends Leech Protocol’s compatibility and offers users an array of platforms on which they can execute our proprietary farming strategies. How Leech Protocol Is Different Leech Protocol has taken substantial strides to automate user routines, automatically performing tasks such as swapping, bridging, depositing, and compounding. This degree of automation is unique in the industry, liberating users from menial processes, allowing them to focus more on strategic decision-making instead of operational tasks. The second prominent feature (which has already been built), is a hedging strategy that can provide substantially higher-than-market APRs, and this strategy is available for testing by our inner circle of power users! If you think you want to become one — reach out! Our Hedging Strategy The main advantage of our strategy is that it provides an instrument that protects and stabilizes returns from an asset chosen by the user, while reducing the chance of that asset losing value due to impermanent loss and other market mechanics. How will it work? A user will choose a main asset, such as ETH, USDC, BTC, etc., and deposit it as their liquidity. Our system will swap some of the liquidity, bridge it (if needed), and distribute it into a defined pool list. For instance, if a user picks ETH as their main asset, the system will provide liquidity to different pools such as ETH/GEAR, ETH/MATIC, ETH/wUSDR, etc. At the same time, the system will keep track of changes in asset prices, APR, liquidity, etc. If the system identifies a specific situation which could negatively affect the profitability or portfolio value, it will rebalance the user’s provided liquidity and open a short position to hedge against asset volatility. This helps protect the main asset (such as ETH) from impermanent loss or price decreases. The result is that the returns come in the main asset, creating a steady income stream in all market conditions. We have proved the efficiency of this hedging strategy with backtests and on-chain tests, which have looked at the strategy’s behavior on historical data and how well the rebalancing module has performed in live pools on the Polygon network. Here you can see a backtest from Aug 1, 2022 to Jan 6, 2023, using the USDC/OP pool on Velodrome. We started with $100,000 and compounded daily. The average APR during this time was 50.49%, according to Beefy historical data. As you can see, using our hedging strategy resulted in a 19.06% portfolio value increase (48.06% annualized), vs a .66% increase (1.58% annualized) by providing liquidity to the pool, and a 17.6% decrease by holding 50% USDC and 50% OP. The strategy rebalanced 50 times, costing $1,010 and resulting in a net gain of just over $18K, or 18% for stablecoins, in just over 5 months. Here you can see a backtest from Apr 13, 2021 to Feb 13, 2023, using the USDC/ETH pool. We started with $100,000 and compounded daily (we continue with more in-depth testing). The Future of Leech Protocol So, what does the future of Leech Protocol hold in both the short and long term? In the immediate future, the Leech Protocol team intends to integrate over 100 different pools. The primary goal of this expansion is to provide users with a plethora of opportunities to increase their earnings, and this broad spectrum of earning avenues will not only allow users to capitalize on different market dynamics, but will also offer unprecedented versatility in yield farming strategies. In the long run, Leech Protocol aims to: Stage Two Short Term Plans During the second stage of launch, ambassador program participants and users registered on our Waitlist will have access to the Leech Protocol App beta. At this stage, each wallet will be able to deposit $20–500. The max TVL at this stage is limited to $100K. If you do not see the option to deposit during the second stage of launch (for example, if the maximum TVL of $100K is reached) you will need to wait until someone removes their liquidity, creating space for you to deposit your own liquidity. Any whitelisted wallet that deposits liquidity into the protocol during the second stage of launch will have a chance to receive a reward. The size of the reward will depend on the amount of liquidity and the length of time it is deposited for. The larger the amount and the longer the deposit period, the higher the reward may be. More details will be announced soon. If you can’t provide liquidity during the second stage of the launch, wait for the announcement of the third stage, which will have a higher TVL limit, along with another reward opportunity. Is my wallet waitlisted? How to check it? At the end of the second stage of the launch, you will be eligible to claim NFTs in another Galxe campaign (TBA). All neccessary instructions will be published.

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