Thread by @AlphaFinanceLab

1/21 Given the recent launch of #AlphaHomoraV2, we’d like to take this opportunity to educate our users again on

👉 how Alpha Homora works and
👉 how you should use it to maximize your gains

Must read for all yield farmers out there

2/21 General rule of thumb before we dive in:

As with any #DeFi product, DeFi users should do research, understand the products, and read the information displayed on the application before confirming any transaction.

3/21 What do you need to know to leveraged yield farm on #AlphaHomoraV2?

Alpha Homora V2 is a leveraged yield farming product that integrates with 4 AMM protocols.

This means the product adds leveraged functionality to the supported LP pools on the underlying AMM protocol.

4/21 As a result, the app’s UI clearly states the AMM name to make sure users know which pool & which AMM they are leveraged yield farming on.

E.g. If “Uniswap’s USDC-USDT pool” is selected, the transaction will be executed on the USDC-USDT pool on Uniswap.

5/21 Note that the product is designed to not support optimal routing.

While optimal routing can be added as an add-on feature, the feature will bring technical complexity. We evaluated the added risks that come with this complexity & decided that the feature is not worth adding

6/21 Now, let us go through an example of *unfavorable* yield farming position on #AlphaHomoraV2.

👇

7/21 Step 1⃣: Supply liquidity

Alpha Homora V2 allows users to supply any combination of assets.

E.g. users can supply only USDC, only USDT, only the LP token of Uniswap's USDC-USDT, or a combination of these assets.

Let’s say Henry decides to supply 4,000,000 USDC.

8/21 Step 2⃣: Borrow assets

Alpha Homora V2 allows users to borrow multiple assets.

In this example, Henry can borrow only USDC, only USDT, or a combination of both.

Let’s say Henry selects 7x leverage and borrows 100% in USDC, or 24,000,000 USDC.

9/21 Step 3⃣: Read summary before confirming the transaction

All information, including a step-by-step breakdown, is displayed for Henry in the summary section, so he can decide whether to proceed forward.

10/21 From the summary, it's shown that Alpha Homora V2 would swap ~13,300,000 USDC to USDT to ensure Henry has equal value of both assets before supplying to the underlying AMM.

As you can see, this transaction is not optimal at all since a large amount needs to be swapped.

11/21 The “price slippage & trading fees” shown at the bottom also states that this transaction would go through 5.17% price slippage & trading fees.

This is not a favorable scenario, and we would not recommend this transaction.

12/21 So what should Henry have done instead? 👇

13/21 Let’s run through a similar example.

Step 1⃣: Supply liquidity

Henry supplies 4,000,000 USDC.

14/21 Step 2⃣: Borrow assets

Henry selects 7x leverage and borrows ~42% in USDC and ~58% in USDT, translating to borrowing 10,000,000 USDC and 14,000,000 USDT.

15/21 Step 3⃣: Read summary before confirming the transaction

From the summary, it is shown that Alpha Homora V2 would swap ~6,000 USDC to USDT (since USDC & USDT prices are not 1:1) to ensure Henry has equal value of both assets before supplying the funds to the underlying AMM.

16/21 As you can see, this transaction is favorable and preferred over the transaction in the first example.

Both the amount to be swapped (6,000 USDC) and the “price slippage & trading fees” (0.0001%) here are significantly lower than those in the first example.

17/21 The two examples above show that DeFi users should definitely read all the information shown on the app before confirming the transaction.

If there is any unclear information, users should reach out to the project team members to ask for clarification before proceeding.

18/21 As the DeFi landscape continues to grow and the complexity behind DeFi protocols increase, education becomes more important than ever.

At Alpha Finance Lab, we take educating users seriously, which is why we show all the information on Alpha Homora V2 application.

19/21 To continue doing our part better, we will iterate on the UX/UI to display all the information in an easy-to-digest way.

Since fine-tuning UX/UI is an ongoing process, please feel free to reach out to us if you have any feedback/suggestions along the way.

20/21 While we do our part in displaying as much information as we can in the easiest way possible, users definitely should also do their part in reading the information displayed on the app before confirming the transaction.

21/21 For the official blog post with more details, please see below.

blog.alphafinance.io/how-to-use-alp…