3 Nov 2020 | Crypto Market
This year gave birth to several huge buzzwords in the cryptocurrency space, but there is no bigger hype than that of DeFi (decentralized finance) and yield farming. DeFi niche is probably far easier to explain since, basically, the fundamental nature of crypto is engraved into the DeFi core.
On the other hand, yield farming is an expression used by many DeFi enthusiasts to define a process of acquiring more cryptocurrency by making the one you hold “work”. Nevertheless, this is only a broad explanation of this DeFi-related phenomenon. If we want to get really acquainted with yield farming, we’re going to have to dig much deeper into the matter.
Yield farming is an effort of exploring and moving a certain cryptocurrency to protocols with the best APY (annual percentage yield) on a weekly or even more frequent basis. If those protocols are liquidity pools, then a crypto holder receives rewards in return for providing liquidity to the ecosystem. If a farmer receives additional coins besides the reward in tokens he invested, the process is called liquidity mining.
Yield farming, in a way, resembles investing in traditional funds. However, while a traditional investor doesn’t switch from one fund to another so frequently, a yield farmer does it very often, looking for the best opportunities.
It is important to note that, just like with funds, yield farming carries its own level of risk as the niche is still figuratively in diapers and many attempts have already gone wrong. For example, the already infamous MakerDAO’s “Black Thursday” triggered by the Ethereum flash-crash or the bZx flash-loan attack. When such unpredicted incidents happen, yield farmers have to be prepared to suffer some serious losses.
Most of the already established DeFi protocols suitable for yield farming are leaning on the power of the Ethereum or Tron network. However, they are all mutually detached and it is a highly time-consuming task determining which one of the protocols is currently the best yield farming option.
The whole concept of yield farming was first created by Fcoin back in 2018 when the exchange rewarded its users with the company’s native cryptocurrency for trading on their platform to incentivize liquidity. The first attempt ended with users producing trading bots whose only purpose was to do pointless trades to earn cryptocurrency, which, in turn, created havoc on the platform.
Since then, the first real and successful DeFi project that allowed a form of yield farming was Synthetix in 2019 when users were offered rewards in SNT tokens in exchange for providing liquidity to the sETH/ETH pair on Uniswap.
Since then, many more or less successful projects have emerged in the space. Some of the best-known ones are Compound, Harvest, Curve, and Sun, individually with well over $400 million locked across their respective pools. However, the yield farming industry is spearheaded by Uniswap liquidity mining pools with over $2.4 billion of TVL (total value locked).
The scattered DeFi and yield farming niche have a big problem in the detachedness of various protocols. Yet, Finxflo has a perfect solution for the issue. Finxflo’s DeFi development sector produced the world’s first DeFi protocol aggregator. This means that, by using the Finxflo’s native FXF token, yield farmers (and other DeFi users) are now able to access all these disarranged protocols through a single user interface.
This innovative approach not only systemizes the whole niche but also makes a time-consuming yield farming business much less sluggish. Moreover, by always offering its yield-farming users the best global rates in the market, Finxflo positions itself as the cornerstone product for every yield farmer. Also, with its highly intuitive user interface, FXF is a perfect onboarding platform for aspiring yield farmers.
Finxflo also incentivizes users to do liquidity mining on the platform through a well-devised miners’ reward mechanism. FXF token holders provide liquidity to the underlying exchanges for any supported cryptocurrency. Traders on those platforms get a far better trading experience, and liquidity-providing yield farmers get compensated for their financial services with FXF token, rounding up a perfect DeFi circle of benefits.
This is just a small portion of FXF token benefits. If you want to know more, please, refer to the link below: