In a previous post, I discussed my Algorand Governance Period 10 strategy. Building on top of the previous strategy discussed in the video below, this strategy helps you earn additional rewards now that Algorand's Governance Period 10 has started.
Strategy Overview
This strategy revolves around earning additional rewards through Folks Finance's lending pools. During the governance period you’re unable to increase your commitment and your wallet balance of Algos or committed LP tokens must remain above your committed balance; essentially soft-locking your assets.
Earning Additional DeFi Rewards
- Redeem Farming Rewards- If you followed the initial strategy detailed in the video above you will have gAlgo/Algo LP tokens farming on Tinyman. You can redeem these rewards daily which payout in Algo.
- Swap to gAlgo- You can then take your Algos received from your Tinyman Farm and swap half to gAlgo. The rate is usually favorable, current ratio is 1:1.02, which would mean a 2% return just from swapping as you can redeem gAlgo at the end of each period in a 1:1 ratio.
- Lending Pools- Next go to Folks Finance and navigate to the deposit tab. You will see a list of lending pool options. We will focus on the gAlgo/Algo Tinyman Lending Pool. As you can see these lending pools have a significant APY. Unlike the gAlgo/Algo LP tokens we used in the previous strategy within Algorand's governance platform, these LP tokens wouldn't be eligible.
What is a Lending Pool
Lending pools allow liquidity providers to accrue yield from Folks Finance's lending pools and liquidity pools on a DEX at the same time by increasing the efficiency of deposited assets. Lending Pools are DEX pools comprised of interest-bearing assets. If you use Lending Pools for ALGO-USDC, you will receive:
- The interest from the Algo deposit on Folks Finance
- The interest from the USDC deposit on Folks Finance.
- The swap fees from the DEX pool.
Reward Breakdown
As you can see lending pools APY is calculated from the lending APY of the assets, swap fees generated by the DEX, and the Farm APY.
Tinyman Farms
Once you add your liquidity. Again, you should just add your Algo DeFi rewards from our previous strategy and the gAlgos you swapped for into the Lending Pool. Ensure you stay above your Algorand Governance commitment, if your wallet balance drops below your committed Algos you will become an ineligible governor for period 10.
Once you have added liquidity to the lending pool (fgAlgo/fAlgo) you can farm your LP tokens.
This pool is hosted by Folks Finance and gives out extra rewards. Your assets will be converted to fAssets and will be held by Folks Finance.
By adhering to the criteria for governance period eligibility and implementing a carefully crafted approach, you have the opportunity to acquire extra Algo rewards through Folks Finance lending pools, Tinyman farms, as well as gAlgo swaps. The utilization of Folks Finance lending pools, featuring dual-yield mechanisms, adds another layer your DeFi returns. Currently giving the appealing 11.04% APY. It is imperative to exercise mindfulness regarding the associated risks and engage in comprehensive research to ensure well-informed decision-making while actively participating in this strategy.
