1/ All About Yield Farming on #Cardano🌾
Yield Farming (YF) has been around in crypto for years but it’s just now available on #CardanoADA w/ juicy APRs 🧑🌾
Let's explore how to play the game and avoid mistakes
A thread🧵
#CardanoCommunity #ADA $ADA #CNFT
2/ Before diving deep into the opportunities, in this thread, I will cover:
• YF for new entrants
• YF Risks
• 5 On-going YF programs (real alphas)
• How to play
• My farming strategy
3/ YF is an investment strategy
📍Its goal is to boost the liquidity of the protocol.
📍To participate, you will need to stake/lend your crypto assets to the protocol to get rewards in tokens.
📍The YF rewards often come from pre-allocated tokens, TX fees, interest, etc.
4/ Liquidity on Cardano x2 in a month ($140M -> $320M)
👉TVL is growing at WARP SPEED
Cardano's TVL ($320M) is relatively small compared to the market cap of $ADA = $40B
👉Plenty of room for it to grow
DeFi on Cardano has just started
5/ How to join this DeFi game
For now, YF on Cardano is primitive and not so complex
Connect wallet➡️Provide liquidity in a pool (a pair of tokens)➡️Select farm and start farming ➡️ Harvest your yields
@FlintWallet @YoroiWallet @NamiWallet @GeroWallet @MetaMask
6/ Yield Farming offers JUICY APRs
Atm, YF APRs can reach up to 3-fig % w/ ADA in the token pair. Ex:
• ADA/MIN 205%
• MEOW/ADA 257%
YF w/ bridged stablecoins on @Milkomeda_com gives about 20-50% APR
7/ Yield Farming is a DeFi game and it has DOWNSIDES
Before aping, investors should be aware of these 2 probable risks
• Impermanent Loss (IL)
• Rug-pull/Exploit
8/ YF is a game of calculation
IL occurs when the price of provided tokens is volatile
It can cause you a huge loss if it dumps
Otherwise, if the token bumps, you can get fewer profits from your provided assets
IL Calculator: Whiteboardcrypto.com/impermanent-lo…
9/ Rug-pull/Exploit can ruthlessly flush away your investment
There were Minswap vulnerabilities that could be exploited for $200M TVL. Luckily they were addressed
Latest cases:
@CashioApp $50M hack -> $CASH lost peg -> All LP $CASH tokens became worthless due to massive IL
10/ Let’s take a look at real Yield Farming opportunities on #Cardano
5 Alpha Plays
11/ @SundaeSwap has been getting the collective support to be the first AMM DEX to go mainnet
Noteworthy highlights:
• Invested by Alameda Research, cFund, Double Peak
• TVL: $102M
• 4 $SUNDAE Farms with 73% APR
12/ @MinswapDEX went live in Mar 2022 and the TVL immediately skyrocketed.
Here are some intriguing highlights:
• TVL: $183M (1st on Cardano with 63% DOM)
• 11 Farms with 50%-200% APR in MIN
• ADA/MIN farm yields the most MIN reward
• LP fee: 0.3%
13/ Minswap's features are Zap-In and Rewards according to a Point System.
Farmers should manage their assets since Minswap recently detected vulnerabilities and addressed them. However, funds are SAFU.
14/ @Meow_Swap was incubated by @OccamFi
• 24th trading vol: $148k
• TVL: $1.6M
• Farming w/ a duration of 12 months to earn $MEOW
• 4 farms with 290%-360% APR
15/ @MuesliSwapTeam is the first DEX to go mainnet on Cardano
It launched YF on the first Layer-2 of Cardano, @Milkomeda_com
• Order-book on Cardano, AMM on Milkomeda
• TVL: $35M on Milkomeda
• Farming to earn $MYIELD
• 13 farms with 34%-570% APR (including stablecoins)
16/ @realmilkyswap DEX on Milkomeda is a combination of Sushiswap and CurveDAO
• Audited by Certik and PeckShield
• TVL: $42M on Milkomeda
• Farming to earn $MILKY
• 18 farms with 27%-300% APR (including stablecoins)
17/ More Yield Farming programs are on the way to launch:
@occamDEX @wingriderscom @VyFiOfficial etc.
Correct me if I miss anything
18/ How to farm?
📍Natively on @Cardano
Using Cardano-native wallet => swap and provide liquidity => start farming
📍@Milkomeda
• Bridge ERC20 token to Milkomeda
• Swap and provide liquidity into favourable pools
• Deposit LP into farms and start harvesting yields
19/ My pragmatic farming thesis
(for reference, NFA)
I prefer playing the long-term game as Yield Farming programs can last for many months (a year)
Cardano is emerging to be a Smart Contract Neverland
We should bag knowledge to not get hurt while playing the game wrong
20/
w/ Yield Farming, I will stack project tokens instead of dumping them on DEXs.
Bc the Cardano ecosystem is in its early stage, many legos are still on delivery, therefore the TVL is too low compared to the MC.
➡️The fundamentals of the Cardano ecosystem are underrated.
21/ My strategy:
• Select reliable projects to start with
• Choose liquidity pools with low-volatile tokens such as ADA, stablecoins, high-MC tokens
• Manage position by investing w/ the fund that I can lose
• Stack project tokens instead of compounding
22/
My strategy is one that’s widely used in DeFi but it’s NFA and only for informational purposes.
Do Your Own Research and find alphas that play out the most to you.
Explore w/ #Cardano Ecosystem Overview
coin98.net/cardano-ecosys…
23/
Hope my thread will be helpful to you in some ways.
If you have any ideas, feel free to let me know in the comments or directly in DMs.
Check out #Cardano Alpha Playbook🚀
24/ Besides yield farming, there are other DeFi alphas on Cardano, which will be decomposed in the next thread. Stay tuned!
If you're curious about Alpha on #NEARProtocol
Don't forget this great thread from my teammate
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