Today I’ll be sharing with you everything I know about Harvest’s latest strategic collaboration and integration with APWine and how it will benefit the Harvest ecosystem and the humble farmer collective.
But first, what’s APWine?
APWine is the first protocol for yield tokenization that allows you to trade unrealized yield. It enables you to instantly sell your unrealized yield to hedge against price movements as well as to speculate on the evolution of the yield generated by different DeFi protocols.
Here’s how it works:
You tokenize the yield generated by your interest-bearing tokens (from Harvest, Aave, Compound, etc.) by depositing and locking them into the APWine platform for a period of a future to claim Future Yield Tokens:
You can then sell, buy, and trade Future Yield Tokens ahead of time on the APWine exchange to speculate on the APY of different platforms:
When you’re ready to claim your yield at maturity, burn your yield tokens and collect the profits:
Isn’t that cool!
On the one hand, APWine allows farmers to hedge their risk by selling their future yield. On the other, it lets traders speculate on the variations of APY and trade it on the APWine exchange.
All in all, APWine seems to be a promising new DeFi protocol that’s doing something new and innovative; something with which Harvest is all too familiar with ;)
What’s APWine’s Connection to Harvest?
On February 2, 2021, APWine showed up in the #Council-of-69 Discord channel – a place where farmer chads discuss investment opportunities to foster the Harvest Finance treasury and expand/influence opportunities – and explained briefly their model:
The Harvest community received APWine’s introduction well and became very intrigued by the project. Then, after a general consensus among members of the #Council-of-69, a proposal to invest in APWine’s upcoming seed round was brought on-chain for voting via Harvest governance:
As you can see in the “snapshot page” above, the community voted 100% in favor of investing in the project.
The APWine & Harvest Finance Deal:
- Harvest Treasury invests $50,000 USDC for $APW tokens at a price of $0.30 USD
- Harvest’s invested $APW tokens will be vested over a period of 2 years
- AP Wine has listed $iFARM for leverage in its beta version and is immediately available for deposit
- Harvest and APWine will discuss future strategies and integrations across both platforms
APWine x Harvest Brings Yield Farming to a Whole New Level
Just when you think Harvest has done it all, that their yield farming couldn’t possibly get any better, it does with APWine.
Let’s explore this here:
You see, with Harvest you can earn a yield on your idle crypto assets by depositing them into vaults where the assets are automatically put to work in high-yielding farm strategies. When you deposit your assets into these vaults, you receive yield-bearing fAssets (ie. fDAI, fUSDC, fLINK, etc.) in return and also $iFARM token rewards (depending on the vault).
You can then stake these fAssets into eligible Harvest pools to start earning $iFARM rewards while your fAssets continue to yield interest.
You still with me? Pay attention now.
Everything I described above is important as it’s what Harvest yield farming does and is how you get $iFARM which can be used with APWine to bring yield farming to a whole new level.
How APWine Brings Harvest Yield Farming to a Whole New Level
APWine Platform Interface - Beta (Source)
APWine enables Harvest farmers to trade their unrealized yield to hedge against price movements as well as to speculate on the evolution of the yields generated.
How does it do this?
Well, Harvest’s $iFARM is a composable ERC-20 asset that can be transferred to another address and used in various DeFi applications, all while earning interest from the deposited assets they represent in Harvest Finance.
Therefore, APWine allows its users to leverage Harvest’s yield-bearing token by depositing these tokens into APWine for a selected period of time to receive Future Yield Tokens (FYT) on a 1:1 ratio.
These FYT tokens represent unrealized yield and the value of each FYT token is dependent on how much yield that token is expected to earn during the specified period, and how much a buyer is willing to risk depending on the maturity date.
What are the Benefits APWine Brings to Harvest Yield Farmers?
APWine brings a whole ’nother dynamic to yield farming that benefits farmers in a variety of ways, such as:
- You don’t have to wait long periods of time to recover yield, holders can realize a month+ worth of future yield instantly with APWine.
- Tokenizing future yield for trading (selling) on the open market allows smaller farmers to buy FYT and participate in the rewards offered by Harvest without the intensity of gas required to interact with the protocol.
- Farmers can hedge against potential downturns in the market by selling FYT tokens, and/or utilize the profits to buy more assets for deposit and leverage.
- Buyers of FYT tokens can speculate on the APYs if they believe they will be equal to or higher than expected, making excellent returns from buying “cheap” yield.
Isn’t that something?
Now let’s provide an example of why you might want to use APWine:
Say you want to get involved with yield farming but the fluctuations of APYs scares you. Don’t fret my friend, you no longer have to be scared. With APWine, you can sell your interests at a fixed price to minimize the impact from fluctuations.
But how does that even work? How is it possible to trade interest before it is even realized?
Well, before a farmer can mint and sell FYT tokens on the open market, they have to lock their interest-bearing tokens ($iFARM or $fAssets) for the period corresponding to the future. The protocol then mints a number of future interest tokens (FYT) that correspond to the number of tokens locked by the farmer. FYT tokens are tradable and will allow their holder to redeem the yield gathered by APWine’s smart contract at the expiration of a future.
To put it more simply,
“The APWine protocol locks funds to generate interests which are tokenized as futures, enabling a DeFi user to trade unrealized yield.”
All in all, Harvest Finance and APWine are poised to stir things up in the yield-farming universe and I couldn’t be more excited to see how this all plays out. That said, keep your eye on these two projects as things are about to get interesting.
Also, take note that APWine is still in Beta and should be used at your own risk.