Although several forum debates and academic publications have been written on the viability of decentralized finance (DeFi), it has become abundantly clear that there are other ways to make money in the bitcoin markets besides trading and holding. DeFi yield farming is one approach that can be used.
What exactly is meant by the term “yield farming”?
The term “yield farming” refers to a component of DeFi that involves “putting crypto assets to work” by integrating them into autonomous financial protocols to optimize profits via lending, liquidity provision, and staking, amongst other means. DeFi Yield farming is a component of DeFi.
How this Works?
Imagine that you have $100 in Bitcoin and Bitcoin Cash. You might put it (often in proportions equal to those of another asset) in a lending or trading pool on the DeFi platform. Depending on the annual percentage yield (APY), you could get interest payments from the DeFi protocol’s native token.
DeFi Yield Farming on Binance Smart Chain
As a result of its compliance with the Ethereum Virtual Machine (EVM) and its interoperability with ETH-native protocols, Binance Smart Chain has become a popular venue for decentralized finance applications (DApps).
Many protocols have already taken part in the yield farming program run by the Binance Smart Chain (BSC), and many more are on the way.
Top 5 DeFi Yield Farming on Binance Smart Chain
1. Pancake Exchange
In addition to being the first project on Binance Smart Chain to surpass $1 billion in funding, PancakeSwap is the most prominent automated market maker. The decentralized exchange protocol has beaten DeFi industry heavyweights such as Uniswap and Sushiswap to claim the top spot thanks to a 24-hour trading volume of $400 million.
The value of its native token, $0.48 at the time, has increased to $13 in recent years.
PancakeSwap allows liquidity providers to mine cryptocurrency in exchange for fees and other incentives by having them deposit cryptoassets into the platform’s liquidity pools. In exchange for providing liquidity, they are award liquidity pool tokens, which are also referr to as FLIP tokens. These tokens can subsequently be staked to manufacture CAKE.
When this article was written, its yield farm offered an annual APR greater than 300% on more than 10 pairs.
2. Venus
Venus is an algorithm-driven decentralized marketplace for lending and borrowing money. Users can make money when depositing cryptocurrencies such as BNB, ETH, and stablecoins.
It is possible to utilize interest as collateral to generate VAI, Venus’s stablecoin, or borrow different digital assets.
One of the most important Venus protocols is BSC’s Venus, which debuted in October 2020 with a 24-hour volume of $237 million.
3. Bearn
Bearn’s goal is to increase the interoperability between the BSC and Ethereum blockchain while offering a full environment for DeFi yield farming.
Double and even triple reward schemes are now possible thanks to the brand-new bVault offering of the cross-chain protocol. Vault investors receive 3% of freshly issu BDO, high annual percentage yields (APYs), and fees on farm assets.
Bearn’s liquidity pools are still operating at a high level, as seen by the company’s ETH farm producing over 1,000% APY and its BSC farms yielding over 300% APY, respectively (at the time of writing). The value of its native currency, currently valued at $507, had climbed significantly since December, when it was worth only $15.22, reaching a record high of $984.50.
4. Pancake Bunny
Pancake Bunny is a DeFi yield farm and aggregator that automatically combines the yields you receive from Pancakeswap. A Pancake Bunny is a company that has a lot to offer, as seen by its market capitalization of over $450 million and its intrinsic worth of about $1 billion. Although BSC is the major emphasis of the protocol, it was initially design as an aggregator of ETH and BSC yields.
As a result of the agreement that they have form with the platform, liquidity providers now have the opportunity to make $BUNNY by gambling their $CAKE on PancakeSwap.
5. Autofarm
The objective of the Autofarm effort, which is part of the Binance Smart Chain, is to increase the effectiveness of decentralized exchanges by pooling yields.
The protocol, which is just two months old, has seen tremendous growth, already having a market value of more than $124 million, a 24-hour trading volume of more than $20.7 million, and a total locked value of $1.3 billion.
Farms, true to form, have an overabundance of their respective products. There are around 30 different liquidity pools that provide competitive yields.
The Final Analysis
Like any other commercial enterprise, DeFi yield farming is fraught with risks, such as those posed by smart contracts and fraudulent exit and liquidation practices. Users of DeFi are require to have a full understanding of these risks to prevent unnecessary expenditures.
Although APY helps monitor a DeFi yield farming, the price of tokens might fluctuate dramatically since it is highly volatile.
DeFi Yield farming is an option worth considering, but only if you are comfortable taking calculated risks.