Introduction

The sudden boom in the value of Bitcoin in the past years has led to th e popularity of other cryptocurrencies (like Ethereum) and generally, the blockchain technology on which they are built. Of course, there were a lot of problems associated with this novelty tech of which scalability, high transaction fees, interoperability, and security have been the most discussed, however, we have seen many projects proposing to mitigate these issues so there could be a massive adoption of the technology in years to come; some succeeded while others didn't.

Unlike the Bitcoin blockchain, the Ethereum blockchain is scalable and allows other Apps to be built on top of it. These Apps are referred to as Decentralized Applications or simply DApps since they are powered by blockchain technology and possess its intrinsic characteristics. 

Use cases of blockchain technology are quite numerous and are not limited to healthcare, media, real estate, energy, identity & record management, and of course, finance. Before now, the financial system used to be mainly centralized.

                                                                                                                                                             Image Source

Decentralized (DeFi) In A Bit & Its Impacts

CeFi or centralized finance in some ways is similar to the well-known traditional method of finance in which there is a central authority (governments & central banks) that controls and regulates the financial activities of every economy.

Much trust is put in such a body, thus, any decision made by them affects the whole economy. However, to eliminate these bodies and return the authority back to the people, there was an emergence of Bitcoin/Blockchain technology 12 years ago and this has undoubtedly pave the way for many revolutionary developments.

Defi or Decentralized finance on the other hand was built on this concept. It aims at bringing independence to individuals by creating an open financial system that is accessible to everyone without them putting any trust in it - a trustless network indeed! With a trustless system, everyone is in control of their assets/investments, and without the governance of central power; the power to make decisions is widely distributed among the participants of such a system. 

Defi comprises a network or group of decentralized applications (DApps) built on top of the blockchain to perform financial functions such as those seen in the traditional financial system - Lending, borrowing, earning high interests in a savings-like account & even more! The financial apps are highly compatible and designed for easy user interactions (mediated by smart contract programs); a mix between interoperability and peer-to-peer (P2P) interactions. It's just a matter of time before entirely new financial products and services emerge from this.

Merits Of Defi

The sudden popularity of Defi products and services in the early summer of 2020 is evident and cannot be sidelined. It's quite logical to think something is fascinating about it before gaining so much grounds within a short time. Let's take a look at some of the benefits of Defi.

• Digitalized Operations

Traditional or conventional finance method is dependent on institutions like banks and courts to act as intermediaries and mediators of legal issues respectively.

The need for these traditional services has been eliminated in such a service like Defi, however, the operation of smart contracts is adopted to bridge such gap. A smart contract allows the automatic execution of instructions that have been encoded within the system without the need for third-party control.

With the right coding in place, such contracts are committed to providing a resolution to every specific issue while also allowing each user to reserve the authority over their funds at all times. Hence, there is a tremendous reduction in the cost of running associated products and allows for a more frictionless financial system.

• Completely Decentralized

As said earlier on, Defi exhibits the intrinsic features of the blockchain on which it's built. One significant feature is decentralization where the control of activities within the system is transferred to the participants rather than a central authority. With this, every single user has a direct say in the decision-making process and planning.

Moreover, the data of such a decentralized system is documented on the blockchain and distributed across a large number of nodes which makes censorship or potential shutdown of service(s) nearly impossible. Because of the latter reason, the issue of single points of failure is completely eradicated, therefore if one part of the system fails, the entire system won't be stopped from working.

• Accessible & Borderless

The services of a traditional financial system are usually not available in remote areas. Apart from that, they are committed to making awesome profits to cover the cost of maintenance and other related things. Their operations in low-income communities are substantially limited since it could be quite difficult for them to meet up with the aforementioned things.

However, for decentralized finance, everything is done online and anyone with a good internet connection can access those quality services at the comfort of their homes irrespective of location - No discrimination whatsoever!

Also, such high costs required for the maintenance of the conventional financial system are significantly cut down with Defi, therefore, low-income communities are set to benefit from the ample financial services.

Demerits Of Defi

In a more practical sense, everyone knows there is no ideal system even though the advantages of such system could surpass its disadvantages.

In that manner, we should expect the same thing to apply to this novelty financial system, Defi. That being said, let's have a look at what the disadvantages of Defi are...

• Giving users full control of their investment could be disastrous if NOT well-managed
• Since these financial applications are blockchain-based and require internet access, Defi is prone to cyber-attacks which may lead to the loss of funds
• Bugs could be a very big issue
• Over time, there have been issues with how slow transactions are processed (an inherent feature of the blockchain)

Well, you shouldn't be so bothered as developers are fully aware of these shortcomings and a lot of work is currently being put in place to prevent or subdue these aforementioned issues.

Defi Use Cases

• Borrowing & Lending

Borrowing and lending of money have become an integral part of life. This could be justified by merely looking around you to see how people troop into banks for loan application. Obtaining loans from banks could be a daunting task since a lot of things will be put into check. However, this is NOT true in the case of Defi. See the illustration below...

Mr. Adams went to "Cheever Bank Of America" for a personal loan application. On getting there, he's told about the rigorous processes he has to go through before he could apply and ultimately be granted the loan (eligibility requirements, necessary documents & other processes). Having heard about this, he became frustrated and couldn't even start the application process.

He told his friend, Mrs. Eve, about his ordeal and asked how she could help out. Mrs. Eve, a crypto-conscious individual & a Defi adopter enlightened him about decentralized finance and ultimately put him through the process which was instant without the need for unnecessary documents. Now, Mr. Adams is very happy!

- The process is quite faster and cheaper

- No credit checks, therefore, open to more participants

- Digital assets are collateralized

• Decentralized Marketplaces

Defi applications also provide decentralized marketplaces in form of decentralized exchanges (DEXes) that permit the trading of digital assets WITHOUT relying on an intermediary to hold and safeguard funds, however, users can make direct trades between their wallets with the aid of smart contracts.

Compared to its centralized counterpart, trading fees are relatively low since no intense maintenance is required and this makes it a cool option to consider.

• Monetary Banking Services

As financial applications, the use cases of Defi Apps are not limited to the aforementioned ones. Monetary banking services such as the disbursement of stablecoins (E.g DAI, USDT, BUSD do not fluctuate in price), mortgages and insurance services are available at a significantly reduced cost and without the control of a central authority.

Obviously, participants get quality services at a reduced cost! Isn't that cool?

• Yield Farming... 

This section covers what yield farming is, how yield FARMers grow their crop; the kind of yield to expect; where & how a potential FARMer can venture into yield farming.

Yield Farming 🚜 & Its Profitability

Yield farming is a product of decentralized finance based on the Ethereum blockchain and usually with a high Return on Investment (ROI).

The method of yield farming, otherwise known as liquidity mining (similar to staking), requires FARMers to lock up some of their cryptocurrency holdings (ERC-20 tokens or stablecoins) in return for rewards. The rewards are determined in the form of Annual Percentage Yield (APY) or Annual Percentage Rate (APR).

By locking up their cryptocurrency, they provide liquidity to a pool of liquidity, hence, they are called liquidity providers (LPs). Although similar to staking, the process is usually more sophisticated as it requires moving of funds from time to time in search of greener pastures.

The boom in Defi COMP & Aave in the early summer of 2020 has led to the emergence of many other Automated Market Makers (AMMs) like SushiSwap, Harvest Finance, Kyber, etc.

Risks Of Yield Farming 🚜

Yield farming requires a huge amount of money to get a better yield. Aside from this, a FARMer is likely going to be exposed to the threats below!

• Liquidation Of Collateral Is High

For participants to be a beneficiary of the loan service offered by the system, collateral in the form of digital assets whose value could either be the same or more than the loan amount is required.

Some might require more while others might require little to no collateral. However, the purpose of this is to prevent borrowers from getting liquidated in the case of an unexpected crash in the market. This, it's quite important to take the collateralization ratio into proper consideration when using such a service…

If the collateralization ratio is 200%, it means you're required to have $1000 collateral to get a loan of $500.

• Smart Contracts Bugs

The various transactions in yield farming are powered by smart contracts. However because the system is not always subjected to regular audit, users are likely going to experience glitches in the system which could lead to the loss of assets or even expose their personal data.

• Fluctuations In Price 

Just like every other cryptocurrency, FARMed tokens are also subjected to price fluctuations which could be a result of various factors.

What actually contributed to the success of this project is the interest of individuals, however, with time if such interest dwindles, there WON'T be enough demand for a token which might lead to an immense drop in the future. However, a continuous boom in people's interests favors the project. It's a two-way thing!

• Composability Is an Issue 

The Defi system has been made in such a way that it's various building blocks are highly interoperable and seamlessly interact with one another to meet a particular aim. Despite how useful this could be, the failure of one block could make other blocks suffer.

Yield FARMing is quite risky and just like every other investment venture, it is very important to take your time to understand the "ins and outs" of the business to easily identify any forms of potential scams.

What if a system is devised to make things easier? Of course, it's gonna be all good and that's why everyone should adopt Harvest Finance!

Yield FARMing 🚜 With Harvest Finance

There are various platforms that anyone could exercise their FARMing skills to make substantial profits, however, Harvest finance remains the best as many of the aforementioned issues have been addressed and solutions are currently being proffered!

The method of FARMing used to be manual and is definitely not convenient for participants who have got a lot of tasks on their hands. To mitigate these, Harvest Finance has devised an algorithm to automate the FARMing process in return for high yields, thereby, making it convenient for FARMers and enabling them to focus more on other pressing tasks while being profitable at the same time.

Image Source

Why Consider Harvest Finance?

There are several reasons to consider the Harvest Finance platform for your FARMing process…

1. Comfortability 

Sincerely, the process of FARMing is quite complex and demanding as it requires regular moving of funds from one protocol to another in search of better yield. Doing this manually is sophisticated and time-demanding.

However, for the purpose of convenience, Harvest Finance has created an algorithm that automates the FARMing process for high returns.

2. Low Gas Fee

When carrying out any transactions on the Ethereum blockchain, a varying amount of fees is usually associated with that. This fee, in most cases, is usually high.

To mitigate this, Harvest Finance pools funds together to reduce what's been charged as a gas fee. Participants who FARM with Harvest finance also enjoy the benefit of the reduced gas fee.

3. More Secured

To prevent security breaches as it has been seen on other platforms, Harvest Finance is constantly subjecting its platform to proper security checks through Auditing.

You may check their audit reports here and their smart contracts here.

The FARM Token?

Throughout reading this article, it's quite noticeable that the word "farm" is being capitalized. Of course, this has a purpose since it is the token that powers the Harvest Finance platform.

Token Economics

• Farm holders receive cashflows from revenues on AUM, currently set to 30% profit sharing

• Circulating supply at launch: 0

• FARM has a current circulating supply of 299,227.623

• FARM has a total supply over 4 years of 690,420

• 14,850 FARM has been burned in week 3

• 5,846.9 FARM has been burned in week 4

• Harvest was completely bootstrapped, with no VCs and no premine 

Source:harvest finanace FAQ's page

How To Start FARMing On Harvest Finance

The platform works well on PC, Mac, or Tablet but not on phone! In the case whereby you only have access to a mobile device, download chrome and switch to the "desktop site" by tapping on the menu.

Now that you get that right, follow the procedures below…

1. Log on to the website here then click on "FARM" on the homepage.

2. You will be redirected to app.uniswap.org to acquire uniswap FARM/USDC LP. Buying the amount of FARM wanted in USDC is the easier way to start.

However, there is a need to connect your wallet to the platform if you haven't.

To do this, click on the "Connect Wallet" button and select your preferred wallet from the options. 

3. Now, pool your USDC and FARM together to create the FARM/USDC LP token by:

• Navigating to pool

• Click on add liquidity
• Then select FARM & USDC 

i

ii

iii

This transaction attracts some gas fee and this is paid for and confirmed via your MetaMask.

WAIT for the confirmation process to complete before proceeding to the next step.

4. Now that you have acquired the LP token, return to harvest.finance to stake it...

• Select the Uniswap Farm

• Wait for the page to load, then, click on STAKE & and CONFIRM the transaction

i

ii

5. Now that the transaction is completed, you start earning rewards right away and you can claim it anytime! 

6. You can compound your gains from the Uniswap pool to the profit-sharing pool.

Conclusion

With the new developments surrounding blockchain technology, it is no longer deniable that cryptocurrencies and digital money are not doomed to fail. Sooner or later, there will be a mainstream adoption!

Defi services and yield farming continue to proliferate. The rate at which they have both developed  shouldn't be surprising because there are more to come.

Yield farming is known to be complex to a common man and even though some understand how it works, they don't have enough time to devote. This category of people need  not worry as harvest finance through their automated process will make it easy-peasy.

More Resources & Information

• Harvest Finance Website
• Harvest Finance Twitter
• Harvest Finance Discord 
• Harvest Finance Github
• Harvest Finance Medium
• Harvest Finance Reddit
• Harvest Finance Wiki

Disclaimer: This content is mainly for educational purpose and should not be taken as a financial advice. If you are going to invest in the project, it is advisable you carry out an intensive research and you should only invest the money you can afford to lose due to the volatility of cryptocurrency.