Let's start with the beginning
- At first, it was nothing but a big giant ball of solid rock. Then, suddenly, a big bag happened and it was spreading all around the cosmic space...
- No, is too far.
- How close should we get? We are here for some millions of years.
- We need only the last year.
- Ah, ok. Sorry. I was taken by the wave. It's first time when I'm speaking of it and I am a little nervous.
- Just take your time.
- Ok then. In the last year, the crypto space was invaded by the DeFi FOMO and everywhere you looked, some DeFi stuff was popping out from somewhere. It's like in fashion. Some buzz is created for a certain thing, everybody is trying to go in that direction. Anyway, the short story is: until last year in summer, only few projects were offering DeFi services, and even few of them were decentralized. But in that moment, something linked with Uniswap, Sushiswap and other "swap" exchanges determined another upgrade of Liquidity Pool mining/farming offered by those exchanges.
- First: what is farming?
- In few words: the reward received for offering your coins to the DEX pool for improving the liquidity of that pair. For example - you can offer ETH and the same value of USDC. In that moment, you will receive a part from the fees requested by DEX from traders for buying and selling. This is farming.
This is how a Liquidity Pool farming looks like on a DEX:
Simple: you want to offer your tokens on Uniswap for Liquidity Pool, you will receive a part from the fees collected from traders who are dealing with that pair of tokens on Uniswap.
This is your result:
- And, where is the problem?
- Maybe you could become a little sad because, as long as you are keeping your pair of tokens on Uniswap and take, let's say, 12% APR, you could get 15% on Sushiwap for the same thing.
- Then move to Sushiswap.
- Easy to say, hard to do it when you have maybe only 2000 $ portfolio value and the fees for moving those tokens are more than 100 $ (that means 5%, almost 6 months of harvest).
- And, there is a better solution?
- That's why Harvest Finance or other similar services are born!
- How is that?
- Well, instead of moving from a DEX to another and pay enormous fees for this that make your gains disappear, you could choose your pair for Liquidity Pool, take your tokens that are certifying this and load it to Harvest Finance platform (I must say it could look a little more refined).
- Because they gather in a single pool, all that tokens for a pair and make a single move of them from a DEX to other for getting the best reward, even for one day. Why? Because they can! What means 200$ fee for a 2 million Liquidity Pool?
- 0,01 %
- Exactly. It's nothing! So, if they have a good enough APR, they will move the portfolio where are better rewards.
- So ingenious!
- Not bad, at all! So, this is the role of Harvest Finance! Unifying the small Liquidity Pool providers into a big basket for avoiding the fee issue.
- What should we choose?
- Well, yesterday I wanted to recommend you some stable coin pairs, like DAI:USDC, for example, or DAI:USDT, because I was believing a crypto correction should take place after this bull run of BTC and ETH. But that was before Tesla's announcement regarding it's involving in crypto space by acquiring BTC and allowing payment in BTC for Tesla cars. This created a new hype and you saw this on the news and in the market.
- Where are we heading now?
- If I'll know for sure, I will be the richest person in the world, but I'm not. So, I can only make you some recommendations:
1. make this only if you have more than 6.000 $
2. split your portfolio in 3
3. provide a stablecoin pair with ETH (ETH:DAI), an ETH:WBTC pair and a little more exotic pair, like SUSHI:ETH.
- I'll explain on each pair chosen:
ETH:DAI - if ETH is growing, you will have your part of gain. If is decreasing, you will have your risk divided by half with a stable coin which could be used for buying more ETH in an eventual dump - Recommended for the ones who wants a low risk investment, something between stable coins and one of the most wanted crypto coin
ETH:WBTC - I think this is the real stabelcoin of crypto: on long term, both, ETH and BTC are the future of crypto world, so, you will be happy to have both of it and with a reward as a bonus - Recommended for the ones who wants a nice long term increase of portfolio value
SUSHI:ETH - both projects are good and Sushi is a revived Star, so both of them are a good long term investment - Recommended for the ones who wants to invest DeFi sector with a medium risk
- I understand until now, but how can I do that?
- Well, at first, you need to have Chrome browser on your computer, than install a Metamask add-on, load it with ETH, SUSHi, WBTC, DAI, get your LP tokens from DEX and load it on Harvest Finance - you'll see the link below with detailed explanations
- Thank you dude, I hope it's everything very clear and I will try to use it.