Yield Farming on Leverage - Complete Tutorial for Beginners

Yield Farming on Leverage - Complete Tutorial for Beginners

By D3F1 | DeFi Box | 19 Nov 2020


With everyone paying attention to Bitcoin over the past couple of weeks, it would seem that DeFi is dead, and Yield Farming would not return the same types of gains that it once was providing. However, on closer inspection, this is certainly not the case.

Yield Farming is most certainly still out there - it is just not as hyped up as much as it once was with the latest Bitcoin surge.

Nevertheless, there are always options to choose from when it comes to Yield Farming, and today I would like to introduce you guys to an entirely new concept in this sector - Yield Farming with leverage via Alpha Homora.

What's Alpha Homora?

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Alpha Homara is a  DeFi product released by the Alpha Finance platform launched on October 8th, 2020. It allows its users to liquidity farm at leverage through borrowed funds, and it is already backed by The Spartan Group, Multicoin Capital, and DeFiance Capital.

Yield Farming with leverage on Alpha Homora is not much different from leverage trading. In this case, you borrow funds from the protocol to put it into a liquidity pool and earn from the fees. With Alpha Homora, it is much simpler to do this, and you get ALPHA tokens atop of that, which provides a huge addition in the form of extra revenues - on top of the Trading Fees collected.

How to Farm With Leverage? 

Farming with leverage is extremely simple on Alpha Homora.

First up, head over to the Alpha Homora pools page. Here, you will see a list of all the potential pools you can start Yield Farming or liquidity provision on.

The main page shows you all of the active pools and gives details on what you can expect from farming there;

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The dashboard breaks down the total rewards you can expect to earn from each pool.

  • Box A shows you the pool name. The highlighted one is the ETH/SUSHI pool on SushiSwap with the purpose of yield farming. 
  • Box B shows you the expected APY you can receive. As this is leveraged farming, the APY gains are increased. You can see the original expected APY crossed out beneath (36.96%) if you were to farm without leverage.
  • Box C shows you the breakdown of returns for each component of the Yield Farming. In this example, we can see that the Yield Farming itself will generate 33.73%. On top of this, we can expect to earn 3.23% from Trading Fees and 64.89% in ALPHA token rewards. It is important to know that adding the Yield Farming and trading fees together will give you the APY value without the leverage of 'just' 33.96%.
  • Box D shows you how many underlying tokens have already been deposited into the pool in total on SushiSwap's end.
  • Box E is a field that allows you to select how much leverage you would like to use. When you change this, the values in Box B will adjust accordingly.
  • Box F is what you click if you want to go ahead and add liquidity to the pool and start farming. (plus a metamask window will pop out) 

When you decide on a pool to start Yield Farming with, you need to click the “Farm” icon in the relative Box F for the pool you choose.

In the following scenario, I have chosen to start Yield Farming on the SUSHI ETH/DAI liquidity pool. When you click “Farm,” you will be presented with the following screen;

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Let's break it down:

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A - Total Debt: This shows the total debt you will incur for farming in the pool. In this example, because I am about to put in 4 ETH into the pool (look at H) at a 2.5X leverage, my total debt will be 6 ETH borrowed (4 multiplied by 2.5X = 10, then minus 4 which is mine equals 6). Note: There is also a minimum of 2 ETH debt threshold to overcome. 

B - Slippage and Trading Fee: This is the slippage and trading fee incurred from depositing into the pool. As I am only depositing ETH, there will be a trading fee to convert some of this to DAI.

C - Total Sushi SushiSwap LP Token: This shows the total number of Liquidity Provider tokens you will receive for your deposit. This represents the holdings to access your underlying assets.

D - Yield Farm APY - This represents the APY you can expect from Yield Farming. The original value that is crossed out is the APY you receive with 0 leverage. The shown value, in this case, 22.6%, is the APY generated from leveraged farming.

E - Trading Fees APY - This shows the APY you will earn from trading fees when users make swaps in the ETH/DAI pool on SushiSwap. This is also leveraged to 8.08% in this case.

F - ALPHA Rewards APY - This shows the APY you will earn from receiving the ALPHA token as a reward.

G - Borrowing Interest APY - This is the interest that you will end up paying from Borrowing to leverage farm.

H - How Much To Farm - Here, we need to input how much we would like to farm. You can deposit just one asset if you wish to do so. 

I - Leverage - Change the slider to adjust the amount of leverage you would like to farm with.

J - Farm - When you are ready to get farming, hit this button.

Once you have clicked the button at J, that’s all there is to it! You are now officially farming with leverage on Alpha Homora.

How is Alpha Homora Different?  

There are a lot of farming protocols out there - so, what makes Alpha Homora different?

  • Yield farming with leverage to generate higher APYs.
  • Ability to farm by depositing just 1 asset
  • Straightforward process to get farming.
  • Farmed tokens are automatically reinvested to increase your yield farming position value.
  • If you choose to Yield Farm with 1x leverage (Orignal leverage), your farmed tokens are also automatically reinvested for you.
  • Lend ETH (optional) and receive the highest lending interest rate on the market.
  • The Alpha Homora protocol itself manages all borrowed assets to maximize your returns.
  • APLHA tokens being airdropped atop of leveraged yield farming

D3F1
D3F1

Yet another defi fan


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