THE BUSINESS OF HARVEST.FINANCE
THE BUSINESS OF HARVEST.FINANCE

THE BUSINESS OF HARVEST.FINANCE

By farmerjon | Harvest Finance | 20 Sep 2020


Heya fellow $Farmers, it's farmerjon again. Your friendly neighbourhood $Farmer at your service. Farmerjon has decided to step out of retirement (hopefully for the last time) to try to explain to you the business that is Harvest.Finance. Why? Because TOO FEW UNDERSTAND and the opportunity cost has unfortunately become TOO DAMN HIGH in discord. Time that could be spent debating on the best way forward is instead spent on education. Not that farmerjon doesn't believe in education, but explaining the same concepts over and over is tiring, even for the most hardworking and patient $Farmer. Hence, this blog post. Please don't make me come out of retirement again. I have better things to do (like follow my son Chad on Twitter), thanks.  

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(1) Harvest.Finance - Factoids for the Uninitiated 

Before going into the meat of the post, let me remind my fellow $Farmers on certain crucial facts that keep the business of Harvest.Finance afloat:

- Supply of $FARM at launch: 0 $FARM

- Total $FARM supply: 5,000,000 $FARM distributed over 4 years

- $FARM emissions after week 4: Constant emission at 23555 $FARM per week for 4 years

- $FARM emission distribution: 70% for liquidity providers (e.g. Uniswap LPs), 10% to the Harvest.Finance operational treasury (to pay for things like audits, gas subsidies, contributors etc.) and 20% to the team for building Harvest.Finance

- $FARM holders who stake their $FARM in the Profit Sharing pool receive 30% of the profits made from the farming operations of depositors on the "Farm" (first) tab of the website. Note that the new Uniswap pools on the "Farm" tab (the first 4 pools) only contribute 5% of profits to the Profit Sharing pool at the time of this blog post. 

Now that that is out of the way, we can (finally) talk about the business which is Harvest.Finance. 

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(2) Elements of a Business and How it Relates to Harvest.Finance

There are a few basic elements which make up a business. I'm only going to list some basic ones here which apply directly to Harvest.Finance:

- Business Owners/Shareholders: The people who own the business and are generally interested in growing the revenue and profit of the business

- Revenue: The amount of $ that the business brings in, before subtracting for cost

- Cost: The amount of $ spent to generate the revenue of the business

- Profit: The amount of $ left after cost is subtracted from revenue. Generally, profit is either reinvested in the business to generate more revenue or is distributed to the Business Owners/Shareholders in the form of dividends

- Dividends: The amount of $ distributed to the Business Owners/Shareholders of a business

GOT THAT? I'll let you internalise the 5 elements for a bit. Take your time, please. I really don't want to come out of retirement again.

Now that you have gone through sufficient internalisation, farmerjon shall work his magic and apply the 5 elements above to form the business of Harvest.Finance. 

- Business Owners/Shareholders of Harvest.Finance: The $FARM holders who stake their $FARM in the Profit Sharing pool. 

- Revenue of Harvest.Finance: The total amount of deposits/AUM on the "Farm" tab of the website. This is not the TVL number above, but this one below:

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- Cost of Harvest.Finance: The total amount of $FARM emissions that are released by the protocol every week. Why is this cost? Because this $FARM does not go back to the Business Owners/Shareholders (i.e. the $FARM holders who stake their $FARM in the Profit Sharing pool). It is used to PAY for things like liquidity (Uniswap liquidity providers or the $fAsset/Asset liquidity providers), marketing by increasing the $FARM APY on the "Farm" (first) tab to attract depositors etc.

- Profit of Harvest.Finance: This is currently fixed at 30% of the total amount of earnings from farming operations received by the deposits/AUM on the "Farm" tab of the website (other than the first 4 Uniswap pools which are 5% at the time of writing this blog post)

- Dividends: The amount of $FARM that is distributed to the $FARM holders who stake their $FARM in the Profit Sharing pool

AGAIN, I'll let you internalise the 5 applications for a bit. PLEASE DO NOT MAKE ME COME OUT OF RETIREMENT. I BEG YOU. 

Now that you have sufficiently went through two stages of internalisation, let me clarify some final doubts some of you $Farmers might still have. 

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(3) Final Takeaway Points

- When people talk about REDUCING EMISSIONS, they are talking about REDUCING COST

- When people talk about INCREASING DEPOSITS/AUM, they are talking about INCREASING REVENUE

- When people talk about INCREASING THE VALUE/ROI OF EMISSIONS, they are talking about HOW TO BEST SPEND MONEY TO INCREASE REVENUE IN THE MOST EFFICIENT MANNER

There you go! All done. Please read again if you have not sufficiently internalised the above. I hope we can move on to more productive discussions in discord. Farmerjon, signing off (FOR THE LAST TIME, PLS). 

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farmerjon
farmerjon

farmerjon loves $FARM. If you feel like giving farmerjon some $FARM, you can do it here: 0x38F23DcD254B56a219F2a79510e6892bf5501E0F farmerjon will use it to pay Chad's allowance. Chad is farmerjon's son and you can follow him on twitter @iFarmYourMum


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