Is Yield Farming DEAD? Are There ANY Good Opportunities Left? DEFI Explained
So is Yield Farming dead? Are there any good farming opportunities left? And when are 1000% APYs coming back? We’ll answer all of these questions in this video.
Before we jump into the main topic, let’s quickly recap what yield farming actually is.
Yield Farming, in essence, is a way of trying to maximise a rate of return on capital by leveraging different DeFi protocols. Yield farmers try to chase the highest yield by switching between multiple different strategies. If the strategy doesn't work anymore or if there is a better strategy available the yield farmers move their funds around.
Liquidity mining plays a big role in yield farming to such an extent that sometimes these two concepts are used interchangeably. Liquidity mining is a process of distributing extra tokens to the users of a protocol, for example, Compound distributing COMP tokens to lenders and borrowers on their platform or Uniswap distributing UNI tokens to their liquidity providers. If you haven’t watched it yet, I’d recommend watching my other video on Yield Farming to understand these concepts even better.
So are there any opportunities left in a down-trending market?
ield Farming is now one of the hottest topics in decentralized finance and there is a high chance you may have already heard something about insane returns that some of the yield farmers are making. So what is yield farming? How did it all start? What are some of the examples of yield farming? And also what are the risks involved? We'll be going through all of this in this video.
But before we start, if you're new to DeFi you may want to pause this video and watch my introduction to decentralized finance video first.
https://youtu.be/k9HYC0EJU6E
Yield Farming, in essence, is a way of trying to maximise a rate of return on capital by leveraging different DeFi protocols.
Yield farmers try to chase the highest yield by switching between multiple different strategies. The most profitable strategies usually involve at least a few DeFi protocols like Compound, Curve, Synthetix, Uniswap or Balancer. If the strategy doesn't work anymore or if there is a better strategy available the yield farmers move their funds around. They may, for example, move the funds between different protocols or they may swap some of their coins to other ones that are currently generating more yield. In our yield farming world, this procedure is sometimes called crop rotation.
Liquidity pools, in essence, are pools of tokens that are locked in a smart contract. They are used to facilitate trading by providing liquidity and are extensively used by some of the decentralized exchanges a.k.a DEXes.
One of the first projects that introduced liquidity pools was Bancor, but they became widely popularised by Uniswap.
Curve realised that the automated market making mechanism behind Uniswap doesn't work very well for assets that should have a very similar price, such as stable coins or different flavours of the same coin, like wETH and sETH. Curve pools, by implementing a slightly different algorithm, are able to offer lower fees and lower slippage when exchanging these tokens.
The other idea for different liquidity pools came from Balancer that realised that we don't have to limit ourselves to having only 2 assets in a pool and in fact Balancer allows for as many as 8 tokens in a single liquidity pool.
So what are flash loans all about? And how can they be used to borrow millions of dollars worth of crypto with no collateral? You’ll find answers to these questions in this video.
A flash loan is a feature that allows you to borrow any available amount of assets from a designated smart contract pool with no collateral. Flash loans are useful building blocks in DeFi as they can be used for things like arbitrage, swapping collateral and self-liquidation.
Flash loans, although initially introduced by the Marble protocol, were popularised by Aave and dYdX.
So, what’s the catch?
A flash loan has to be borrowed and repaid within the same blockchain transaction.
So, what is Ampleforth? How does it work under the hood and why do the number of my AMPL tokens keep changing every day? You'll find answers to these questions in this video.
Ampleforth, in essence, is a new cryptocurrency with a quite unique feature - its supply is elastic and can change every day while the ownership of the AMPL tokens is never diluted.
There are 3 states that the Ampleforth protocol can be in, these are expansion, contraction or equilibrium. Before we explain how they work let's introduce one more concept - price oracles.
Price oracles are used to provide external prices to smart contracts. There are two main functions of price oracles in Ampleforth. The first one is to provide a current exchange rate of AMPL/USD. The second one is to provide a Consumer Price Index value. The CPI is used to establish a "target price" which is a price of 1 AMPL that the Ampleforth protocol tries to aim for. The target price is currently at $1.009 and it represents the 2019 purchasing power of the US dollar as represented by CPI. The target price plays a very important part of the protocol as it is used in conjunction with the current price to determine if there should be a change in the total supply of AMPL.
The Ampleforth protocol is implemented as a set of smart contracts deployed to the Ethereum blockchain. The AMPL token implements the ERC-20 interface and can be easily exchanged on decentralized exchanges such as Uniswap.
So what’s the story behind Uniswap - one of the most important protocols in DeFi? And why was the UNI token probably one of the best-distributed tokens ever? You’ll find answers to these questions in this video.
Uniswap is clearly one of the most important and the most discussed projects in the defi space. At its core, Uniswap is a protocol for decentralized exchange of tokens on the Ethereum blockchain. The Uniswap protocol is deployed as a set of smart contracts and it’s completely decentralized, permissionless and censorship-resistant.
Uniswap is built on the concept of liquidity pools and automated market makers or, to be precise, a constant product market maker.
Have you ever provided liquidity to a liquidity pool just to realise that some of your coins have gone missing? In this video, we’ll learn what “impermanent loss” is and how it can affect liquidity providers’ profits.
In essence, impermanent loss is a temporary loss of funds occurring when providing liquidity. It’s very often explained as a difference between holding an asset versus providing liquidity in that asset. Impermanent loss is usually observed in standard liquidity pools where the liquidity provider (LP) has to provide both assets in a correct ratio, and one of the assets is volatile in relation to the other, for example, in a Uniswap DAI/ETH 50/50 liquidity pool.
If ETH goes up in value, the pool has to rely on arbitrageurs continually ensuring that the pool price reflects the real-world price to maintain the same value of both tokens in the pool. This basically leads to a situation where profit from the token that appreciated in value is taken away from the liquidity provider. At this point, if the LP decides to withdraw their liquidity, the impermanent loss becomes permanent.
So what are NFTs all about? And how can they be used in decentralized finance? You’ll find answers to these questions in this video.
Okay, so let’s start with what NFTs actually are. NFTs stand for non-fungible tokens and they are one of the types of cryptographic tokens that can represent ownership of digitally scarce goods such as pieces of art or collectibles.
“Non-fungible” is not a very popular word so let’s see what it really means.
In economics, fungibility is the characteristic of goods or commodities where each individual unit is interchangeable and indistinguishable from each other.
Although NFTs can be implemented on any blockchain that supports smart contract programming, the most noticeable examples are ERC-721 and ERC-1155 standards on Ethereum.
When it comes to DeFi, NFTs can unlock even more potential for decentralized finance. Currently in DeFi, the vast majority of DeFi lending protocols are collateralized. One of the most interesting ideas is to use NFTs as collateral. This means that now you’d be able to supply an NFT representing a piece of art, digital land or even a tokenised real estate, as collateral and borrow money against it.
So what are Yearn Vaults all about? Also, how does the ETH Vault work under the hood and how can it bring over 60% returns? We’ll go through all of this in this video.
Yearn Vaults, in essence, are pools of funds with an associated strategy for maximising returns on the asset in the vault. Vault strategies are more active than just lending out coins like in the standard Yearn protocol. In fact, most vault strategies can do multiple things to maximise the returns. This can involve supplying collateral and borrowing other assets such as stable coins, providing liquidity and collecting trading fees or farming other tokens and selling them for profit. Each vault follows a strategy that is voted in by the Yearn community.
Yearn Vaults were created as a direct response to yield farming and liquidity mining that made searching for the highest yield much more complex than just switching between different lending protocols.
So, what is Ampleforth? How does it work under the hood and why do the number of my AMPL tokens keep changing every day? You'll find answers to these questions in this video.
Ampleforth, in essence, is a new cryptocurrency with a quite unique feature - its supply is elastic and can change every day while the ownership of the AMPL tokens is never diluted.
There are 3 states that the Ampleforth protocol can be in, these are expansion, contraction or equilibrium. Before we explain how they work let's introduce one more concept - price oracles.
Price oracles are used to provide external prices to smart contracts. There are two main functions of price oracles in Ampleforth. The first one is to provide a current exchange rate of AMPL/USD. The second one is to provide a Consumer Price Index value. The CPI is used to establish a "target price" which is a price of 1 AMPL that the Ampleforth protocol tries to aim for. The target price is currently at $1.009 and it represents the 2019 purchasing power of the US dollar as represented by CPI. The target price plays a very important part of the protocol as it is used in conjunction with the current price to determine if there should be a change in the total supply of AMPL.
The Ampleforth protocol is implemented as a set of smart contracts deployed to the Ethereum blockchain. The AMPL token implements the ERC-20 interface and can be easily exchanged on decentralized exchanges such as Uniswap.