$ZIL Generar un 50% de retorno en un día es extremadamente arriesgado y especulativo, especialmente en el mercado de criptomonedas que es volátil por naturaleza. No hay garantías de obtener tal retorno en un corto período de tiempo, y hacerlo implicaría una alta probabilidad de pérdida.

Sin embargo, aquí hay algunas estrategias que yo como inversor suelo considerar, pero recuerda que todas conllevan un riesgo significativo:

1. Trading de Alta Frecuencia (HFT): Utiliza algoritmos para realizar una gran cantidad de operaciones en muy poco tiempo. Requiere un conocimiento técnico avanzado y acceso a infraestructura de trading profesional.

2. Arbitraje: Consiste en comprar criptomonedas en un mercado donde el precio es bajo y venderlas inmediatamente en otro mercado donde el precio es más alto.

3. Inversión en ICOs o Tokens en Fase Temprana: Invertir en proyectos de criptomonedas nuevos o en su etapa inicial puede ofrecer altos retornos si el proyecto tiene éxito, pero también es muy arriesgado.

4. Staking o Yield Farming: Algunas criptomonedas permiten generar ingresos pasivos a través del staking o yield farming, pero alcanzar un 50% en un día es poco realista.

Es importante investigar a fondo y considerar la posibilidad de pérdida antes de invertir. Además, es recomendable consultar con un asesor financiero antes de tomar decisiones de inversión. La inversión en criptomonedas no debe tomarse a la ligera y siempre debe hacerse dentro de los límites de tu tolerancia al riesgo.
#yieldfarming #staking #tradingcrypto #Anfelia_Investment #Bitcoin

#Staking #yieldfarming #DeFi

Are you tired of unpredictable market conditions affecting your investments? Look no further than FlidoFi, a new dApp that combines the power of Lido Finance and Flashstake protocols to offer unique staking opportunities.

With FlidoFi, your deposits cannot be liquidated no matter how volatile the prices or interest rates may be. Plus, you have the flexibility to withdraw your staked ETH at any time. All investments with FlidoFi are 100% secure, with funds directly deposited into Lido to ensure their safety and protection.

But the best part about FlidoFi is the peace of mind it provides with a fixed yield. Lock in your yield for up to three months into the future, and say goodbye to the stress of interest rate volatility.

FlidoFi makes it easy to get your hands on fTokens, which can be bought on the open market or minted using the "Advanced" mode on the dApp. When you lock in the staked ETH rate and receive your yield upfront, you forfeit your claim to the future yield. This yield becomes the responsibility of the fstETH holders, who take on the risk and potential reward of interest rate volatility.

By adding liquidity to the stETH/fstETH pool, holders of fstETH are eligible to earn trading fees every time someone flashstakes through FlidoFi and receives their upfront yield. Additionally, fstETH holders can reap the benefits of any increase in interest rates.

But why is the FLASH token beneficial?

By using Flido, a portion of the fees go into the Flash Capacitor, which can only be removed through the use of the FLASH token. So, FLASH holders can sell their token for profit or use it to help sustain the long-term growth of the Flido ecosystem.

FlidoFi is powered by Flashstake Protocol, a cutting-edge financial platform that allows you to earn a fixed return on your assets effortlessly. The upfront yield rate (APR) is determined by several factors, including staked token quantity, stake duration, available yield in the pool, and the availability of more efficient yield redemption routes.

The Flashstake Protocol enables a dynamic marketplace of time that caters to the needs of different users, using block timestamps instead of locking funds for a specific number of blocks. When you stake for a chosen duration, your funds become available precisely at the end of that period.

Decentralized finance (DeFi) has emerged as one of the most exciting and promising areas of the crypto industry. It has created a new financial system that is accessible to anyone with an internet connection, without the need for intermediaries like banks. DeFi platforms have become popular among investors because they offer high annual percentage yields (APY) on staking.

Cryptocurrency presents a plethora of ways to potentially generate income. The traditional approach involves purchasing a preferred crypto and hoping its value increases, but this is just the beginning. Another rapidly growing approach is yield farming, which involves lending out cryptocurrency and earning interest. Yield farming is attractive because some ventures offer remarkably high interest rates, with some offering an annual percentage yield (APY) surpassing 100%. In fact, there are even projects offering over 1000%.

The mechanics of yield farming

Yield farming revolves around finding the most lucrative returns via cryptocurrency lending. While there are numerous platforms that offer interest on digital assets, decentralized crypto exchanges, without a centralized authority, generally offer the highest interest rates. Presently, some of the most prominent decentralized exchanges are named quite cryptically:

Uniswap

Sushiswap

BurgerSwap

PancakeSwap

On these decentralized exchanges, investors may contribute to various liquidity pools for different cryptocurrencies. A liquidity pool is a conglomeration of crypto assets that people pool together to provide the exchange with liquidity. By lending to an Ethereum liquidity pool, for instance, it increases the exchange's Ethereum for use in transactions.

Anybody who contributes to a liquidity pool will receive a portion of the trade fees for that specific cryptocurrency. Should you lend to an Ethereum liquidity pool, you'll obtain a share of the fees whenever users trade Ethereum. The amount you can earn through yield farming is contingent on the exchange and liquidity pool you opt for. PancakeSwap, for instance, features the APY (annual percentage yield) for all of its pools. If you lend the exchange's CAKE token, you can potentially earn an APY of over 40% at the moment. Though some pools may offer higher interest rates, the involved cryptocurrencies can also be more volatile.

The drawbacks of yield farming

However, while high APY may sound tempting, there are several risks involved in staking on DeFi platforms.

 

Smart Contract Risks

DeFi platforms are built on smart contracts, which are self-executing computer programs that automate the process of executing transactions. Smart contracts are designed to be trustless, meaning that they don’t require a middleman to execute transactions. However, smart contracts are not foolproof, and they can contain bugs or vulnerabilities that can be exploited by hackers. If a smart contract is hacked, the hacker can steal the funds locked in the contract, leaving stakers with significant losses.

 

Impermanent Loss

DeFi platforms use liquidity pools to facilitate trades between different cryptocurrencies. When a user stakes their crypto in a liquidity pool, they earn rewards in the form of tokens. However, the value of these tokens can fluctuate based on market conditions, which can result in impermanent loss. Impermanent loss occurs when the value of the tokens in the liquidity pool diverges from the value of the staked assets. For example, if a user stakes ETH and BTC in a liquidity pool, and the price of BTC rises while the price of ETH stays the same, the user will experience impermanent loss.

 

Regulatory Risks

DeFi platforms are relatively unregulated compared to traditional financial institutions. This lack of regulation can make DeFi platforms vulnerable to regulatory crackdowns. If regulators decide to crack down on DeFi platforms, they could impose harsh penalties, which could result in the platform shutting down or users losing their funds.

 

Liquidity Risks

DeFi platforms rely on liquidity to function properly. If there is not enough liquidity in a liquidity pool, the platform may not be able to execute transactions, resulting in users not being able to withdraw their funds. Additionally, if a large number of users withdraw their funds at the same time, it could result in a liquidity crisis, leading to the platform shutting down.

Is Crypto Farming Worth Your Time and Investment?

Crypto yield farming offers high rewards but also involves high risks and complexity. To succeed, you need to invest time in learning about liquidity pools and assessing options. If you're willing to take the risk, it's worth investing a small portion of your portfolio, but no more than 1%. If you're looking for less risk, consider lending your crypto to centralized exchanges such as Binance, which offer lower interest rates but a more secure lending option.



How to Begin Yield Farming: A Step-by-Step Guide

For those who made it this far and finally decide to jump in the world of Yield Farming, this following section of tutorial can help.  To help you get started, follow these steps:

Select an exchange and liquidity pool. Choose a reputable exchange (like Binance) and research the crypto you will be lending to ensure its potential for growth.

Obtain the necessary crypto. You can trade for it on the exchange or buy it from a major cryptocurrency exchange.

In case you choose a dex (like pancakeswap), connect your wallet to the exchange. Most exchanges have a button to link your wallet and deposit your crypto.

Add liquidity to your desired pool. Select the pool and click on the add liquidity button, then decide how much crypto to deposit and approve the transaction.

Monitor your balance. Check your balance on the exchange's website anytime by connecting your wallet.

If you decide to withdraw your crypto, simply choose the withdrawal option. Some pools may require a set commitment period or charge a withdrawal fee, but many allow for penalty-free withdrawals anytime.

TL;DR

In conclusion, yield farming can be a profitable way to earn high returns on your crypto investments, but it's essential to understand the risks and choose a trustworthy platform. Yield farming is a complex process that involves locking up your funds and interacting with different protocols, which can be intimidating for beginners. Nevertheless, if you do your research, start small, and diversify your portfolio, you may be able to earn significant returns on your investments. Remember, no investment is entirely risk-free, and you should always consider your financial goals and risk tolerance before investing in any asset class.

#Binance #yieldfarming #Educational #dyor #nftfi

#DeFi #yieldfarming #Ethereum #Arbitrum

DeFi has revolutionized the way we interact with money, offering unprecedented transparency and control to users. However, the complexity of DeFi protocols can be intimidating for newcomers, and earning yield can be a time-consuming process. This is where Stablz comes in - a yield capturing protocol designed to simplify yield earning and deliver as much real yield as possible directly to depositors.

Stablz is built on top of existing farming protocols, with a focus on transparency and non-custody of funds. The platform assumes as little liability as possible, earning fees from generating and locking in yield for its users. $STABLZ is the ERC-20 token built on Ethereum Mainnet that powers the Stablz ecosystem.

To provide liquidity to Stablz farming pools, the platform has chosen to build on top of Curve Finance, the largest and most liquid protocol for stablecoins in DeFi. All yield is harvested from CRV and stored in 3CRV LP tokens, allowing users to withdraw USDT/USDC/DAI. Stablz has no lockups for liquidity deposited on this face of the platform, and there are no deposit/withdrawal fees on Stablz stablecoin pools. Currently, the average stablecoin yield sits at 3-9% among integrated pools.

In addition to farming, Stablz also offers staking options for $STABLZ tokens. Staking involves locking up $STABLZ tokens to generate an incentivized interest rate, paid in $STABLZ. The interest rates for $STABLZ staking are fixed and pay out higher for longer lockup periods. For example, one may lock up 100 STABLZ for 1 month at an 8% APR incentive, which means upon deposit, they receive 100 OS receipt tokens and a total of 0.66666666 STABLZ over the course of the lockup period.

Stablz is constantly evolving, with plans to expand farms to other chains while maintaining revenue and rewards distributions on Ethereum Mainnet. Stablz smart contracts only add extra benefits such as depeg protection, emergency withdraws, and periodic auto-claim features to pools built on top of other farms. STABLZ and OS staking contracts will be exclusively on Ethereum Mainnet, with rewards coming from the contracts themselves or the fee handler contract.

In conclusion, Stablz is a platform that simplifies yield earning and delivers real yield directly to depositors. Its focus on transparency and non-custody of funds aligns with the ethos of DeFi, while its farming and staking options offer lucrative earning opportunities for users. Stablz is at the forefront of the latest advancements in DeFi, ensuring the highest standards of safety and security.

Yield Farming vs. Staking: Which Passive Income Strategy is Right for You?

As major cryptocurrencies have flirted with all-time highs this year, investors have looked toward passive income strategies as opposed to active trading. Spurred in part by low interest rates in other markets, and in reaction to the risks of active trading, yield farming and staking are becoming more popular as ways to reward investors when they HODL their favorite tokens and coins.

Not satisfied with just storing their digital assets and hoping that the value will appreciate, investors have found ways to put their crypto to work. Of all the various ways of earning passive income on your crypto assets, yield farming and staking are taking center stage. Between the two strategies, which one will work best for you?

In this article, we’ll look at yield farming vs. staking in order to better understand how they work, their associated risks and benefits, and which strategy could better fit your goals.

What Is Yield Farming?

Yield farming is a method of generating cryptocurrency from your crypto holdings. It has drawn analogies to farming because it’s an innovative way to “grow your own cryptocurrency.” The process involves lending crypto assets for interest to DeFi platforms, who lock them up in a liquidity pool, essentially a smart contract for holding funds.

The funds locked in the liquidity pool provide liquidity to a DeFi protocol, where they’re used to facilitate trading, lending and borrowing. By providing liquidity, the platform earns fees that are paid out to investors according to their share of the liquidity pool. Yield farming is also known as liquidity mining.

Liquidity pools are essential for AMMs, or automated market makers. AMMs offer permissionless and automated trading using liquidity pools instead of a traditional system of sellers and buyers. Liquidity provider tokens, or LP tokens, are issued to liquidity providers to track their individual contributions to the liquidity pool.

For example, if a trader wants to exchange Ethereum (ETH) for Dai (DAI), they pay a fee. This fee is paid to the liquidity providers in proportion to the amount of liquidity they add to the pool. The more capital provided to the liquidity pool, the higher the rewards.

Yield Farming: Advantages:

As a yield farmer, you might lend digital assets such as Dai through a DApp, such as Compound (COMP), which then lends coins to borrowers. Interest rates change depending on how high demand is. The interest earned accrues daily, and you get paid in new COMP coins, which can also appreciate in value. Compound (COMP) and Aave (AAVE) are a couple of the most popular DeFi protocols for yield farming which have helped popularize this section of the DeFi market.

Instead of just having your cryptocurrency stored in a wallet, you can effectively earn more crypto by yield farming. Yield farmers can earn from transaction fees, token rewards, interest, and price appreciation. Yield farming is also an inexpensive alternative to mining — since you don’t have to purchase expensive mining equipment or pay for electricity.

More sophisticated yield farming strategies can be executed using smart contracts, or by depositing a few different tokens onto a crypto platform. A yield farming protocol typically focuses on maximizing returns, while at the same time taking liquidity and security into consideration.

What is Staking :-

Staking is a process of holding a cryptocurrency in a wallet for a certain period of time to support the operations of a blockchain network. In other words, staking involves holding a certain amount of cryptocurrency as a collateral to verify transactions on the network and earn rewards for doing so.

Staking is a popular alternative to traditional mining, which requires significant computing power and energy consumption. Staking, on the other hand, is more energy-efficient and requires less computational power. This is because stakers use their own coins as collateral, which is a less resource-intensive way of verifying transactions compared to the Proof-of-Work (PoW) algorithm used in traditional mining.

There are several advantages of staking:-

First and foremost, staking allows cryptocurrency holders to earn passive income in the form of staking rewards. The amount of rewards earned depends on several factors such as the amount of cryptocurrency staked, the duration of the stake, and the network's reward structure.

Secondly, staking helps to secure the network by incentivizing users to hold and use their cryptocurrency to validate transactions. This, in turn, reduces the risk of attacks on the network by malicious actors.

Thirdly, staking encourages long-term holding of cryptocurrency, which can help to stabilize the market by reducing volatility. This is because stakers are incentivized to hold their coins for longer periods of time to earn higher rewards, which can lead to a decrease in the overall supply of the cryptocurrency in circulation.

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#BTC #feedfeverchallenge #Staking #yieldfarming #Educational

#DeFi #Arbitrum #yieldfarming #staking

The world of decentralized finance, or DeFi, has exploded in popularity over the past year. However, the space can still be incredibly volatile and risky, with many investors unsure of where to turn for long-term growth and stability. That's where VOX Finance comes in - a yield-farming protocol on Arbitrum that aims to revolutionize the DeFi landscape.

The key advantage of the VOX Finance platform is their revolutionary token mechanics. Their token incentivizes long-term investment and provides a stable source of liquidity for the platform. Plus, their platform offers innovative features such as automatic buybacks and reinvestments. By prioritizing long-term growth and stability, VOX Finance offers a sustainable approach to yield farming.

Recently, VOX Finance launched a staking pool with several unique features. These include a 0.75% withdrawal fee, a 2-52 week locking period with attractive multipliers for longer staking periods, and the ability to (re)stake rewards to immediately compound your tokens. The staking pool rewards long-term supporters more than short-term investors, with longer locking periods offering higher multipliers.

In addition, VOX Finance recently collected approximately $15,000 worth of $VOX tokens on Ethereum, Binance Smart Chain, and Polygon. These tokens will be used to convert into $USDC and then bridged over to Arbitrum to form the initial liquidity for VOX2.0, the latest version of the VOX Finance platform.

The tokenomics of VOX2.0 on Arbitrum are as follows: 20% of the total supply is set aside for staking, 30% for liquidity mining, 25% for marketing, 10% for initial liquidity, 10% for an airdrop, and 5% for the team.

If you're looking for a sustainable approach to yield farming and long-term growth and stability in the DeFi space, VOX Finance on Arbitrum is definitely worth checking out. With innovative features and a focus on incentivizing long-term investment, VOX Finance is poised to make a big impact in the world of DeFi.

#yieldfarming #DeFi #Stablecoins

Are you looking for a DeFi platform that offers everything in one place? Look no further than STABLZ - the first platform of its kind to offer stablecoin rewards, staking, yield farming, automated harvesting, community governance, and more.

Built with adaptability in mind, STABLZ is designed to weather all market conditions. As part of its future expansion, it plans to incorporate non-stable asset pools such as ETH and high APY farms, with yield secured into stablecoins.

The four key pillars of STABLZ - ecosystem evolution, above farms, real yield, and stable rewards - work together to create a synergistic ecosystem that aims to capitalize on the DeFi market share.

Unlike other DeFi platforms, STABLZ doesn't compete with your favorite farms but builds on top of them. As a yield aggregator, you can find the best farm protocols in one place accessible directly within an easy-to-use dAPP/dashboard UI.

One of the most exciting innovations in the STABLZ model is the ability to receive automated conversion of farming yield rewards into a variety of stablecoins. This means that you can enjoy stable rewards, regardless of the volatility in the crypto market.

Moreover, the platform provides multifaceted ecosystem that offers innovative stablecoin-centric farming and set and forget utility. STABLZ offers community governance, automated harvesting, stable rewards and much more, making it the perfect choice for crypto enthusiasts who want a multifaceted ecosystem that provides a wide range of benefits.

In conclusion, STABLZ is a versatile DeFi platform that offers a lot of benefits, including stable rewards, easy-to-use interface, and automated conversion of farming yield rewards into stablecoins. With its innovative approach and future expansion plans, STABLZ is well positioned to become a leading platform in the DeFi space.

#DeFi #yieldfarming #DEX #Arbitrum #BNBChain

Decentralized finance (DeFi) has changed the way we think about financial services. With DeFi, users can earn passive income by staking or locking their crypto assets. But not all yield is created equal. AsgardX is a DeFi ecosystem that offers real yield, which means users earn returns based on protocols sharing their revenue for staking or locking tokens, rather than just receiving inflationary rewards tokens. In this article, we will explore how AsgardX generates protocol revenue and shares it with contributors.

Real Yield Narrative in DeFi

Real yield is a concept that originated in traditional finance. It measures nominal returns minus inflation. However, in DeFi, real yield has become a catchphrase for yields generated by economic activity and fees obtained from services provided. AsgardX is at the forefront of this narrative, proposing a model of DeFi where users' returns are based on protocols sharing their revenue for staking or locking tokens.

AsgardX Ecosystem

AsgardX is an ecosystem focused on real yield earning through decentralized exchange, launchpad, and AI farming. It uses a dual-token model with the primary currency being ODIN and its escrowed version called xODIN, which are both utilized for staking rewards and governance purposes.

The protocol charges 1% on buying and 1% on selling $ODIN, and 30% of the tax collected will be used as a reward for $ODIN stakers. AsgardX also generates revenue from its dual liquidity model, consisting of a Liquidity Protocol and an Aggregation Protocol. The transaction fee from DEX trades is shared between liquidity providers and token holders who participate in the rewards program.

The AsgardX Launchpad supports top-tier projects in raising funds, with all tokens subsequently listed on the AsgardX DEX. This has helped bootstrap the Total Value Locked on AsgardX and within the Arbitrum Ecosystem. Additionally, the Launchpad is integrated with the DEX, generating more revenue. The profit from the Launchpad will be distributed in parts to protocol contributors.

AsgardX also leverages AI to maximize revenue for the protocol from farming pools by collecting data from various chains and implementing optimized strategies. The protocol's profits from pending allocations are farmed by cross-chain AI in the most profitable and secure stablecoin pools. The AI dashboard displays all transactions and the pool farms that the AI is using, along with their ratings, farming time, end time, and estimated profits. In the future, $ODIN token holders will have the ability to vote on the direction of AI development through AsgardX's governance structure, AsgardX DAO.

To ensure the sustainability of AsgardX's tokenomics, there is a supply hard cap, carefully crafted emissions, and additional deflationary measures in place. Revenues generated by the main features are partly redistributed to xODIN holders as real yield and used for buyback and burn activities, creating constant buying pressure on ODIN.

xODIN Token

xODIN is a non-transferable escrowed governance token, corresponding to staked ODIN. Each staked xODIN token will earn the same amount of xODIN as a regular ODIN token. xODIN can be used in two ways: staked for real yield rewards or vested to become actual ODIN tokens over a period of one year. Note that xODIN is not meant to be transferable.

In conclusion, AsgardX is an innovative DeFi ecosystem that offers real yield to users, which is based on protocols sharing their revenue for staking or locking tokens. The ecosystem is designed for sustainability, with carefully crafted emissions, deflationary measures,

#DeFi #Arbitrum #staketoearn #yieldfarming #sustainability

Yieldification is a DeFi protocol that offers up to 50% APRs using brand new ERC-20 fungible tokens and NFTs as certificates of deposit/stake receipts. Built around the concepts of decentralized Certificates of Deposit, sustainable yield, and innovative tokenomics based on stakes & utility fees/usage & time decay asset sell taxes, Yieldification offers high yield that is sustainable over the long term.

The Yieldification ecosystem is designed to build unique NFT utility that generates revenue and pays for investor staking yield long term. This means that staking yield is sustained and APRs and utility fees are adjusted as needed to ensure long-term sustainability. Yieldification is positioned to be a significant first-mover protocol in crypto with new and improved innovation that will achieve significant market share across the entire space.

The primary ERC-20 token for Yieldification is $YDF, which serves as the entry point to the Yieldification protocol. $YDF is continuously burned and minted as revenue generating utility and protocol products that consume YDF burn and user's stake/unstake. The YDF supply is allocated between the team, a small number of trusted advisors with years of experience in crypto and DeFi, and OTC investors, ensuring transparency and fairness.

YDF is burned as revenue generating utility consumes and/or collects fees and product revenue from utility. YDF is minted anytime a user claims their yield from their sYDF or slYDF NFTs. This YDF is minted directly to the vesting contract, and a timer starts for users to begin vesting their earned yield from staking over a 90 day period.

On October 26th, 2022, Yieldification expanded to Arbitrum with a fully functional claimless 2-way bridge! The move to Arbitrum was prompted by the high gas fees on the ETH network relative to other L1s and L2s.

This means that users may be wary of paying high fees on activities such as staking, opening futures positions, claiming yield, and withdrawing vested yield. Yieldification explored a cheaper and higher throughput chain to support its protocol.

In conclusion, Yieldification is a sustainable DeFi protocol that offers high yield using innovative tokenomics based on stakes & utility fees/usage & time decay asset sell taxes. Its ecosystem is designed to build unique NFT utility that generates revenue and pays for investor staking yield long term. With its expansion to Arbitrum, Yieldification is poised to become a significant player in the DeFi space.

Dear Alpacas,

As decentralized exchanges (DEXs) upgrade their automated market-making logic to incorporate concentrated liquidity (CL) and shift their incentives rewards towards this new model, yield-generating protocols that build on top of DEXs, such as Alpaca Finance, will also need to evolve to continue offering high-yield products to their users.

In this article, we’ll share with the herd our thought process, various options we considered, the path we are currently pursuing, as well as the progress and expected timeline for the new leveraged yield farming (LYF) product that will integrate with CL DEXs.

Background:

First, let’s briefly go over some basics to establish a working knowledge of how the CL DEX model works.

In a nutshell, the CL model allows for liquidity to be allocated within a custom price range, as selected by the user. In the previous version of the XYK DEX, liquidity was distributed uniformly along all possible price ranges (zero to infinity). By concentrating their capital to smaller price intervals, liquidity providers (LPs) stand to earn more fees when the selected range sees higher trading volume. At the same time, traders also see deeper liquidity around the current price, resulting in a lower price impact cost.

However, there is no free lunch. These advantages come at the cost of more complex position management and higher impermanent loss (IL) for LPs. We will discuss these issues in more detail in the context of different ways of integrating with CL DEXs in the sections below.

🌌The different ways to integrate with CL DEXs

In this section, we will walk you through the different approaches we could take when integrating with a CL DEX and our analysis on each method, culminating in the ultimate approach we decided to pursue.

1️⃣ Option1: Customizable, individual LYF position

One approach would be to integrate with a CL DEX in such a way that allows users to customize and open their own individual LYF positions. Users would have the freedom to select the price range, leverage, the pool to farm, and borrowed asset(s). While this setup might appear similar to the current “Farm” function in AF1.0, there are key fundamental differences and challenges:

Challenge#1: Active position management

Providing liquidity in the UniswapV2 DEX is a passive “set it and forget it” endeavor. Your assets are always active and earning yields. True, when doing an LYF, one would need to monitor price movements to safeguard a position from liquidation, but if the selected leverage level was conservative, i.e. ~2x, the chance of liquidation would be greatly reduced and the monitoring required would be limited to only when a large price movement occurred.

With a CL DEX, LPs will be required to frequently reset/adjust the range when the price moves outside the originally selected one to continue earning yields. Moreover, to earn the advertised APR% in some pairs, the price range would have to be very narrow, which then necessitates active management and frequent range adjustments.

We believe that the complexity and the level of attention required will make this product unpopular for retail users, and difficult to keep profitable given that range adjustment on positions in LYF carry swap costs.

Challenge#2: Gas Cost

CL DEX LP position’s ownership is represented as an NFT instead of a fungible token — i.e., ERC20. This means individual positions can’t be combined together into a single vault to take advantage of more gas-efficient position management. Specifically, each position’s yields from liquidity mining and trading fees must be reinvested individually and separately. Regardless of whether the transactions would be activated by a user or the protocol, it’s clear that the tx cost would greatly increase for this setup which would eat into the profitability, especially for smaller positions. (For reference, AF1.0 has thousands of active positions.)Finally, we have observed this integration in production for over a year in another protocol with limited adoption, which further suggests that this product may not have the market fit. Given all the reasons mentioned above, we do not believe this is the optimal direction.

2️⃣ Option 2: Simple Position Manager

Another approach would be to create a simple position manager that aggregates users’ positions into vaults, which will reduce the management burden required by users. The Manager would perform basic functions such as re-adjusting the price range to ensure the LP is always active, and reinvesting liquidity mining rewards and trading fees, among other tasks.

The hallmark of this approach is a relatively simple and deterministic set of rules to manage the vaults. At the same time, the managers will not necessarily show backtest results, actual historical performance, or promise profitability of the strategy.

Challenge#1: Impermanent Loss

Many of our readers are familiar with the concept of impermanent loss (IL), as we have discussed it in detail on many occasions. If you are new to this topic, please refer to our Docs. With a CL DEX, impermanent loss is greatly magnified through the tighter liquidity range. If the position is not properly managed, any gains from fees and liquidity mining rewards will be offset by IL.

We see many protocols working on this solution and there are several live products that have been around for some time. However, based on our research, we have yet to see one that we can convincingly believe will generate positive returns for users in the long run.

For one, while many of these protocols show various stats such as instantaneous APY, fees earned, historical TVL, etc. The one key info glaringly missing is the historical vault’s share price or actual vault’s return. We have not seen any protocol in this sector transparently published the historical return for their position manager like we have done with our Automated Vaults.

Alpaca Finance transparently publishes historical returns for all its AVs

Moreover, we have seen from our own experience operating AV-v1 just how difficult beating IL is. With our relatively simple rebalancing rule, it worked in a high-yield environment, but it quickly became unprofitable in a low-yield, high-volatility market. We don’t have any reason to believe that this approach would generate a positive return in a CL DEX, where IL is magnified.

Given Option#2’s simpler logic for vault management, it would require less research and development effort, allowing us to get to market faster. However, we believe it won’t generate a positive return for users in the long term, so the product would not be sustainable.

3️⃣ Option3: AV-v3

What we believe is required to create a winning and sustainable product is an AV-v3. The third iteration of our Automated Vault would build on the experience and proven success of AV-v2. However, given the differences between CL DEX and the UNIv2 DEX, we must rethink some of the design aspects from the ground up. We believe, though, that this is a good thing as we now have much more design freedom to allow AV to be more sophisticated and versatile, ultimately resulting in higher yields for users.

Some of the key questions our R&D team is working on answering are:

What is the optimal price range to LP under different market conditions?

What benefits can be gained from having multiple LP positions (different ranges) in one AV?

What is the optimal leverage level given the increased capital efficiency through CL?

How can we execute repurchasing more efficiently under the CL model?

What is the best way to deposit and withdraw from the vault with minimal cost to users and impact on the current vault’s exposure?

How to automate this product so users don’t have to do any management?

…In the next section, we will discuss the current progress and timeline for AV-v3.

📆 Progress and Timeline

Now that AF2.0 MM is live, getting AV-v3 to production has become our highest priority on the product side. We can think of the development of AV-v3 as having two major pieces: 1.) the smart contract to manage the positions and 2.) the logic to manage the positions profitably.

To add context, here are some of the items we are building to manage the AV positions.

LP share price calculation: this is crucial to ensure that users receive fair value when entering or exiting the vaults.

Composing/exiting LP position

Reinvesting trading fees and liquidity mining rewards

Staking/unstaking LP tokens for liquidity mining rewards

Logic /algorithm to allow users to zapping in and out of AVs conveniently

Setting/adjusting LP rangeRepurchasing/rebalancing

Borrowing and debt repayment integration with AF2.0 MM…

Concurrently, we are also running backtests and simulations on various logics to find the most effective way to operate AVs under the CL DEX.

To accelerate the development process, we have hired additional researchers/developers to work on these tasks. As demonstrated by AV-v2, the most important thing is to get the strategy right and sustainably profitable. Once we have that, the adoption and TVL can come very quickly given Alpaca Finance’s track record of safety and professionalism.

AV-v2’s TVL increased by 4x to $100Mn in under 2 months

To the best of our current estimate, the AVv3 should be ready in early Q3 2023 around July. 

We will share more details on the development and launch plan closer to the launch date.

We believe that our experience and track record in operating Automated Vaults for over 12 months makes us second to none in the industry when it comes to the knowledge, capabilities, and expertise in developing a profitable Automated Vault. We also hope that the past 2+ years have demonstrated to our community our team’s work ethic and dedication to building and delivering great products.We strongly believe in the potential upside of this product. AV-v3 will have a larger competitive advantage in the era of CL Dexs because it may be one of the few profitable passive yield farming strategies in the market. Existing yield aggregators and simple strategy vaults will also need to evolve or they will no longer be profitable. Becoming a market leader in this category will open up many future growth opportunities for Alpaca Finance, including cross-chain expansion to offer this product to other chains with a strong CL DEX presence.

Thank you for taking the time to read this article and for your support. Please follow us on our social media channels to stay updated on future developments!

#yieldfarming #pancakeswapv3 #DEX #RealYield #BNB