Whether you're participating in Avalanche August, Solana September, or classic Everyday Ethereum farms, I wanted to write a quick follow-up to my original thread on DeFi / yield farming tips and tricks.
A quick 🧵
A quick 🧵
https://twitter.com/n2ckchong/status/1390494848478683136
1) It doesn't always make sense to auto-dump farmed tokens.
Some of my biggest mistakes from the past year are related to selling farmed tokens w/o thinking.
Missed a number of 5-50xes.
Look at the fundamentals before you sell. Is there a narrative the coin can ride up on?
Some of my biggest mistakes from the past year are related to selling farmed tokens w/o thinking.
Missed a number of 5-50xes.
Look at the fundamentals before you sell. Is there a narrative the coin can ride up on?
2) The importance of code checks.
Some new farms with high headline yields are often straight rugs.
A way to eliminate 90% of them is to run a code check using Diffchecker on the contracts against established contracts like the Synthetix mintr, Uniswap's code, etc.
Some new farms with high headline yields are often straight rugs.
A way to eliminate 90% of them is to run a code check using Diffchecker on the contracts against established contracts like the Synthetix mintr, Uniswap's code, etc.
3) Sustainability of yield & time allocation.
Dropping everything to spend an hour or two learning how to use a new yield farm and chain to earn xxxx% APY can actually be time-inefficient.
Yields can compress and make it nonsensical to transfer to that farm just hours later.
Dropping everything to spend an hour or two learning how to use a new yield farm and chain to earn xxxx% APY can actually be time-inefficient.
Yields can compress and make it nonsensical to transfer to that farm just hours later.
4) Pool 2s are recursive.
Because rewards are denominated in the governance token itself, as the price of that asset goes up, the yield snowballs higher.
On the way down, selling begets selling as the reward token becomes less valuable & less incentive to pool and stkae.
Because rewards are denominated in the governance token itself, as the price of that asset goes up, the yield snowballs higher.
On the way down, selling begets selling as the reward token becomes less valuable & less incentive to pool and stkae.
5) Make a Calendar.
Like me, I'm sure you all see dozens of new projects indicating their intent to launch x yield farming program on y date.
A good way to keep track of them is to create a list or calendar that you can reference throughout the months.
Like me, I'm sure you all see dozens of new projects indicating their intent to launch x yield farming program on y date.
A good way to keep track of them is to create a list or calendar that you can reference throughout the months.
6) Friends are the best yield farming companions.
Everyone has their own unique process of finding new opportunities. Lean into your friends, leak alpha, and win together.
Everyone has their own unique process of finding new opportunities. Lean into your friends, leak alpha, and win together.
7) APR *IS NOT* APY
I'm repeating this because it seems more pertinent than ever but APY =/= APR.
APR is non-compounded yield while APY is compounded yield.
To quantify this:
300% APR compounded weekly translates to 1,750% APY.
I'm repeating this because it seems more pertinent than ever but APY =/= APR.
APR is non-compounded yield while APY is compounded yield.
To quantify this:
300% APR compounded weekly translates to 1,750% APY.
8) Cost of bridging.
As we continue to delve into a multi-chain world with opportunities everywhere, bridge fees can start to take tolls on users.
A 0.1% multichain fee twice a month can add up to nearly 2.5% per year on your principal. Factor in those costs!
As we continue to delve into a multi-chain world with opportunities everywhere, bridge fees can start to take tolls on users.
A 0.1% multichain fee twice a month can add up to nearly 2.5% per year on your principal. Factor in those costs!
I had planned on posting this during the tail-end of Polygon and in the resurgence of some BSC farms but pushed this off until now.
Good timing w/ the ongoing revival in yield farms across the space.
Good timing w/ the ongoing revival in yield farms across the space.
That's it from me.
Best of luck my fellow yield farmers 👨🌾
Go get that bread. Stack your reserve asset of choice.
Best of luck my fellow yield farmers 👨🌾
Go get that bread. Stack your reserve asset of choice.
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