My Journey To Discover Yield Farming
First of all, I not very good in english. The article is translate with Google translation on my chinese original articles (https://buysellcoin.blogspot.com) .If any problem on your reading please comment below:-
Why does DeFi need liquidity mining and yield farming? It seems to be cold. How long can liquidity mining last, and what value does it bring to the DeFi ecosystem? Is this value sustainable?
The above are all the questions I asked when I first started contacting DEFI. Have you ever asked yourself such a question? Or you are attracted by the interest in front of you. Do not consider the above questions, in the end your investment becomes worthless Return.
Similarly, income farmers continue to trade in the DeFi system for higher returns, and indirectly provide liquidity for DeFi. It can be said that liquidity mining and income farming are complementary to "provide liquidity--- Obtaining token revenue", as the price of tokens rises, people are more motivated to provide liquidity, thus forming a positive cycle, making DeFi show explosive growth.
The recent boom in DeFi and liquid mining is largely caused by the Compound project. With the continuous increase in the price of the COMP token and the market value of Compound's locked position once surpassing the former DeFi overlord Maker, liquid mining has shown great power, and has therefore been favored by the market.
Regarding the second question, in fact, as mentioned earlier, the greatest value of liquid mining is to bring huge amounts of liquidity to the DeFi ecosystem. The sustainability of this value depends on the token issuance and distribution plan in liquid mining, such as Compound. In the next four years, approximately 2,880 COMP tokens will be distributed every day until the Compound protocol stops providing tokens. . When the distribution of tokens ceases, liquidity mining ends.
It dilutes the rights and interests of the project development team, attracts community users for new projects, and initializes a reasonably distributed network of coin holders.
Beginning in June, DeFi projects represented by COMP, BAL, and YFI began liquidity mining. These projects were listed through DEX, and were bought at more than 10 times the issue price within a short period of time after they were listed. After exporting the market price Gradually build trading depth. The effect of sudden wealth has caused the DeFi sector to attract the attention of cryptocurrency investors as a whole.
As for liquidity mining or yield farming, this is not a new concept, and everyone should know Fcoin. Liquidity mining brings a lot of hot money to the DeFi ecosystem, and the demand for stablecoins continues to grow. The increase in demand for Dai has driven the prices of various mortgage assets, especially the price of Ethereum.
The sustainability of Yield Farming depends on whether the long-term value of the business can cover mining costs. In various DeFi projects, I personally think that liquid mining has improved the quality of AMM more significantly.
In order to subsidize the impermanent losses of market makers, Balancer provides weekly compensation worth about US$1.45 million in BAL tokens, attracting more funds to settle in, increasing the depth of the capital pool, effectively reducing users’ slippage during token swaps, and increasing user experience. In the DeFi ecosystem where TVL is king, Balancer's ranking has risen rapidly after starting mining, making its business more competitive.
How long can liquid mining and profit farming last? So long depends on whether the market platform still needs a lot of transaction flow to determine. First of all, users don't need to spend extra funds to buy coins, they only need to use their existing assets to get free mining token rewards, which is an irresistible benefit for any rational user. Secondly, for the project party, the increase in users and lock-up volume brought by liquid mining or income farming is real. Take the ForTube platform where I work as an example. This Tuesday, we launched liquid mining Mining incentives, in just two days, the amount of assets locked up on the ForTube platform has exceeded US$8.9 million.
As the previous guests said, whether it is liquid mining or profit farming, the benefits to users are tangible, and they are also in line with the business characteristics of the project. They are not hype. It is widely adopted by the DeFi circle project, which is also the dividend of DeFi in the early stage of the outbreak. I am here and encourage everyone to actively participate in it.
As for whether the value of liquid mining and income farming is sustainable, I think this is a certainty. The reason is simple. The creation of DeFi is to reduce the intermediate links as much as possible, "reducing the difference between the middlemen to make the price, the borrower saves more money, the lender makes more money". Moreover, through the DeFi lending platform, for the first time in history, people can obtain low-cost funds from countries with cheap funds such as the United States, and then lend them to users in developing countries to achieve efficient global distribution of funds. This is very significant. The advantages of Uniswap's simple pages, no KYC, and simple operation are now gradually being recognized by users. More and more users are moving from CEX to DEX. This also allows us to see the potential of DeFi in the future market. It will also grow substantially. Therefore, I am optimistic about the long-term development of DeFi after user subsidies.
I'm finding a strong comunities to build up YARN.money to provide liquidity mining, but there is no network fees, no impermanent loss and 100% governance token. If you interested to join please let me know I hope this will work the best project in 2021