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What is alpha homora?

By Shahzad Noor | Noor Writes | 3 Apr 2021


What is Alpha Homora?

 

Alpha Homora is the first product of leveraged performance and leveraged liquidity in DeFi and the second product of Alpha Finance Lab, the company focused on research and innovation in DeFi. The company released Alpha Homora v1 in October 2020.

 

The protocol was initially launched on Ethereum and is now available on Binance Smart Chain (BSC) as well. In simple terms, Alpha Homora is a leveraged yield aggregator designed to simplify leveraged yield farming and unlock various yield farming enhancements.

 

According to their documentation, Alpha Homora is currently generating the highest loan APY in ETH on the market. Yield farmers can earn an even higher agricultural APY and commercial APY rates by taking leverage yield farmer positions. By leveraging the leverage, Alpha Homora would borrow ETH on behalf of users to produce a farm.

 

Similarly, liquidity providers can also earn even higher APY trading fees by taking on leveraged liquidity supply positions. Additionally, ETH lenders can earn high interest on ETH as well. The interest rate on the loans comes from leveraged yield farmers / liquidity providers who borrow this ETH to produce yield farms / provide liquidity.

 

This means that three types of users can earn passive income on Alpha Homora: ETH Lenders, Yield Producers, and Liquidity Providers.

 

What is in Alpha Homora ?

 

The Alpha Homora web interface shows that there are three main sections in Alpha Homora. Let's take a look at these sections.

 

Farm section

 

The farm section consists of two parts: farm groups and state. In farm pools, yield farmers and liquidity providers (LPs) select a pool that they want to produce a leveraged farm or provide liquidity with leverage.

 

In the state , liquidators and bounty hunters can earn the rewards. Details on how they earn are below.

The yield farming is the hottest branch of decentralized finance (DIFS) . It is a way to earn crypto with crypto. It involves lending your cryptocurrency holdings to others through the magic of computer programs called smart contracts. In return, they receive earning fees in the form of crypto for their services.

 

The process seems simple in the basic definition, but in DeFi, this is not the case. Yield farming, also known as liquidity mining, is a new way to earn rewards with cryptocurrency holdings using permissionless liquidity protocols . Cryptocurrency holders stake their assets with a proof-of-stake (POS) blockchain validator to earn block rewards each time a new block is added to the blockchain .

 

To get a yield farm, users call on liquidity providers to lend their funds to a smart contract called a liquidity pool . In return, they earn rewards that can come from fees generated by the underlying DeFi platform. Some DeFi protocols pay rewards in multiple tokens that can be deposited into other liquidity pools to earn more rewards, and so on.

 

Most DeFi protocols allow yield farmers to earn passive income based on the amount of liquidity they provide to their liquidity pools . But there is a DeFi protocol on Ethereum from Alpha Finance Lab that allows liquidity providers (LPs) to take advantage of their yield farmer position just like the stock market or forex broker does. The protocol is called Alpha Homora . Let's take a brief look at this protocol.

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Noor Writes
Noor Writes

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