DeFi Yield Farming
DISCLAIMER
Respect all applicable local, national, and international laws when operating or engaging with a DeFi platform. Content or activity featuring, encouraging, offering, or soliciting illegal activity may be prohibited in your jurisdiction. As the Blockchain is still in its infancy we highly advise you to DYOR and familiarize yourself with Yield Farming as most DeFi losses are often permanent and hence cannot be undone. Invest responsibly and be mindful of the inherent risks in partaking in such activities.
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Introduction to DeFi
DeFi Yield Farming
DeFi or Decentralized Finance has been buzzing lately owing to the hype and potential the sector holds. The driving factor in DeFi is a result of an increased volume in Automated Market Makers (where, unlike traditional order book exchanges, prices are calculated according to a Mathematical Formulae) and with that, an abundance of projects have sought to reap the rewards by contributing innovative ideas to the sector. The DeFi ecosphere consists of a plethora of sectors, from lending on open-sourced protocols like Aave in return for monetary gains to trading on decentralized exchanges (dApps) like Pancakeswap and UniSwap, the DeFi sector is booming with Coingecko indicating that the Market Capitalization has exceeded a whopping $114 Billion.
The majority of the ecosphere is built around Ethereum and with growing concerns of stability and surging gas fees, the sector has gradually begun to diversify to other Blockchains.
The entire purpose of DeFi is to reduce counterparty risks, cut out the middle man and act as a platform to reproduce traditional financial products (e.g. loans and trading) while retaining anonymity in a decentralized environment.
What is Yield Farming?
One of the most hyped trends in DeFi is Yield Farming, i.e. the practice of using your funds to provide liquidity for a given pair of crypto assets in return for financial incentives. The monetary returns for doing so are denoted as APR (Annual Percentage Rate) or APY (Annual Percentage Yield) depending on whether the decentralized exchange supports auto compounding. The APR’s have been a driving factor accounting for the hefty Total Value Locked (TVL) i.e. currently at a staggering $125 Billion+.
However, Yield Farming does not come without its downsides and risks, as it is vulnerable to what’s known as ‘Impermanent losses.’ Impermanent losses concerns pertain to liquidity pools in DeFi and occur when the price deviates by a given % and results in your deposited token values decreasing due to a divergence in the price of the LP tokens. Since AMM’s cannot automatically balance the exchange rates of tokens on their own, this is where arbitrageurs need to step in and create a match between the token prices of the AMM and external markets. The Impermanent losses may be erased when the token prices rebalance to the price one initially staked at hence the term ‘impermanent.’ Similarly, upon withdrawing from the LP pool at distorted prices can result in permanent losses.
Additionally, Yield Farming is susceptible to hacks, frauds and misappropriation occurring due to possible glitches and vulnerability in the execution of the Protocol’s Smart Contracts. The victim of the most famous and valuable crypto heists of all time has been Poly Network where the hacker(s) managed to steal $600 Million in crypto and later returned most of it back. Other notable instances include the price of Iron Finance crashing from $60 to $0 after a ‘bank run’ and a hacker crashing the price of Bunny Swap by nearly 95% through a ‘flash loan’ attack.
DeFi Yield Farming Tools
Upon partaking in Yield Farming, it is of the utmost importance to keep track of your funds to make informed decisions. Thankfully, there are available a multitude of tools for this purpose so be sure to utilize them.
Best DeFi Yield Aggregator
DeFi Yield Farming
DeFi’s hectic and constantly changing environment is not easy to keep up with. This is where DeFi Prime comes in. The platform nicely breaks down the different categories and niches in DeFi and the segregated sectors helps you track the project you feel has the best returns to offer.
In the case of Yield Aggregators, DeFi Prime enables you to track the AMM that’s optimum for your Yield Farming strategies and matches your ideals of what a Yield Aggregator should be. From platforms that allow you to maximise your returns and forget about the hassle involved in Yield Farming like Pickle to cross-chain yield optimizers like BeefyFinance, the list is comprehensive and are a must-know for DeFi enthusiasts.
Last but not least, DeFi prime also allows you to track DeFi platforms where it shows you a list of projects and their corresponding interest rates so you can make an informed decision and hence, follow where the highest earnings are.
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Best Yield Farming Tool Binance Smart Chain
Yield Watch is perhaps the oldest Yield Farming Tool on the Binance Smart Chain. Initially started out with offering its yields tracking dashboard only for Pancakeswap and is now available for a wide variety of AMM’s such as BeefyFinance and ApeSwap.
Yield Watch acts as the go-to DeFi Dashboard that lets you track your yield farming, lending and liquidity pool performance. Moreover, the tool lets you see all your LP staked in different AMM’s with corresponding APYs and potential impermanent losses, among other things at one glance and is also mobile-friendly.
The DeFi Dashboard also offers a pro service whereby for each $1 in $WATCH held by the user, the platform allows you to track $200 in LP Tokens. The pro service includes features like different base currencies, an individual TX overview, and, your wallet balance displayed in real-time prices along with much more!
If you’re an avid user of the BSC and are in search of a Yield Farming tool optimized for use on the chain then Yield Watch is the perfect fit for you, whether you’re a novice or an expert in DeFi, the interface is fairly straightforward and comprehensive.
Best Yield Farming Ethereum Tools
Yield Farming Tools provides stats on popular pools on Ethereum (such as Curve) and displays their APR in different time frames such as hourly, daily and weekly. It also helps you determine whether the rewards are worth the risks and aids you in achieving a decision about the DeFi protocol based on the concept, risk/reward ratio.
A common question among those new to DeFi is whether they should partake in Yield Farming (i.e farms), pools and this is where its resource bar comes in handy. It also has an extensive list of the best wallets, coin tracking sites and most popular DeFi protocols.
What makes Yield Farming Tools ideal for daily users of the Ethereum Blockchain is that it also shows you the gas price to aid in determining whether providing LP’s is worth the gas fees and a tool that lets you determine the impermanent loss. You can adjust the price changes for both sets of token pairs at your discretion and the Yield Tracking Dashboard provides you with the exact % of impermanent losses.
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Best Yield Farming Polygon Tools
DeFi Yield Farming
Cryptonuts is perhaps the only Yield Farming Tool that supports Polygon and also covers an extensive list of AMM’s with the ability to track multiple farms, track their APR and compare it with the TVL to determine whether the Dex is popular among DeFi enthusiasts.
Moreover, Cryptonuts allows you to track your staked balances via connecting your wallet to the site and has a comprehensive review of each AMM listed on its site so be sure to include this upon conducting your due diligence.
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Best Yield Farming Tax Calculator
A frequently asked question in DeFi is how to track the amount earned from Yield Farming that is applicable for taxes. With accuracy and a reliable platform being of immense importance, this is where Crypto Tax Calculator steps in.
Crypto Tax Calculator is a handy tool for investors and accountants alike. With prioritizing accuracy and being user friendly, the Tax tool also supports trading on all major DeFi and Dex platforms, such as UniSwap.
Unlike most tools, it also covers Yield Farming and LP products and to get started, just select the exchange and enter your wallet address.
Where to Yield Farm?
DeFi is still in its infancy and enthusiasts of the space have been wondering just how ‘big’ the space could be. While regulators brace to regulate the space, it is currently being overwhelmed by innovative protocols on an almost regular basis. Hence, it is vital to Do Your Own Research (DYOR) and read up more on the Yield Farming project you’re intending to participate in.
A standard method of DYOR is to actively follow the project’s community on their social media platforms, read up on their whitepaper and their roadmap/upcoming goals. Platforms like Telegram and Discord enable you to better search for the questions you have in mind. By reading up on the project and staying in touch with its community, you’ll have a better idea of how the project works and/or the team’s commitment.
Additional tools that aid you in DYOR are analysing its audits (a solid score is a must), whether the team is doxxed (not necessarily a major factor but is a sense of assurance) and using coin tracking sites like dexguru. Simply search a given token pair and press the “DYOR” button.
Best DeFi Yield Farm Tools: Honorable Mentions
When it comes to calculating taxes, you can never be too careful and need to be vigilant of using a tool that is optimized for your use depending on the type of investments you make. After all, not all Tax Calculators offer the same features and some are even limited to certain jurisdictions.
TokenTax: TokenTax offers an impressive suite of services that make it as easy as possible to generate gains and losses associated with Cryptocurrencies. The best part is that it works for every country and not just for crypto but lacks as a full-fledged portfolio tracker.
CoinTracker: A hassle-free dashboard that automatically syncs your transactions from your account and calculator your taxes – CoinTracker does your work for you.
Crypto.com: Crypto.com’s very own Tax Calculator and is already a fan favourite of its users. Currently available for limited jurisdictions and boasts of a user-friendly interface that supports popular exchanges and wallets. The best part? It’s free for all crypto owners regardless if they have an account on Crypto.com’s exchange.
Looking for marketing to grow your DeFi Project?
That’s what we do here at Crowdcreate. We help crypto projects grow and scale to thousands of influencers and investors. Book a call with our team to learn more.
Alternative Yield Farming Polygon Tools
Polygon is perhaps renowned for being the best scaling solution for Ethereum and has surged in popularity, being an L2 Blockchain, it has gained acceptance with Ethereum users which is why we’ve mentioned additional Polygon based Yield Farming Tools for your convenience.
Debank: An all in one dashboard for tracking your DeFi portfolio, providing a comprehensive overview of data and analytics from a wide variety of sources, AMMs, lending platforms and Blockchains. As of currently, it supports over 11 Blockchains and constantly expanding. The Yield Farming Tool also allows you to find the best swap prices for a given Crypto asset, therefore, allowing you to make the best of Decentralized Protocols.
ApeBoard: Also, a cross-chain DeFi dashboard and is similar to Cryptonuts (mentioned previously in this list). ApeBoard leans more towards established DeFi protocols hence you’ll find a more trusted overview of platforms here.
Zapper: A platform that claims to create the ultimate hub for Decentralized Finance whereby users can simply track their DeFi investments and asset management with a click of a button. Its most notable feature is that it saves you transaction fees by aggregating all of your individual transactions into a single consolidated transaction. Sweet, right?
Conclusion on Best DeFi Yield Farming Tools
DeFi has been booming lately and a good way to profit off the sector is to engage in Yield Farming. While some returns may be low, there is always a DeFi protocol offering a higher return but with higher risks. The beauty of DeFi itself is there are protocols and tools for almost every purpose e.g. calculating taxes, impermanent losses, etc. Hence, do make sure to DYOR and make use of DeFi Yield Tracking tools to stay on top of your investments and make well-informed decisions.
If you have a DeFi Yield Farming Tool that you’d like to be featured on prominent Crypto websites or having influencers create hype around it, don’t hesitate to contact our team at Crowdcreate where we can help out with your marketing strategies.
