The DeFiYield Defiance

Yield Farming in DeFi

In 2020, decentralized finance took the crypto world by storm with its innovative solutions to age-old problems found within the modern financial system. With a focus on financial inclusivity, greater liquidity as well as lower costs, DeFi became an undeniable hit among thousands of consumers looking for a suitable alternative to traditional finance. Decentralized finance uses blockchain technology to eliminate intermediaries and allow people, merchants, and businesses to conduct financial transactions [1]. This is accomplished through peer-to-peer financial networks that use security protocols, connectivity, software, and hardware advancements, giving anyone with an internet connection access to a range of financial services similar to those provided by traditional banks, insurance brokers, and other financial intermediaries. The main difference is that these decentralized applications, known as dapps, run autonomously without any third party acting in the middle, since each dapp is powered by a smart contract — a special computer program that automatically performs a function when certain predefined conditions are met [2].

Currently, one of the most popular and lucrative applications on DeFi is yield farming. It is currently the biggest growth driver within the space, helping DeFi to balloon from a market cap of $500 million to $10 billion in 2020 alone. Yield farming is the practice of staking or lending crypto assets in order to generate high returns or rewards in the form of additional cryptocurrency. Yield farming protocols incentivize liquidity providers (LP) to stake or lock up their crypto assets in a smart contract-based liquidity pool. These incentives can be a percentage of transaction fees, interest from lenders or a governance token. The returns are then expressed as an annual percentage yield (APY) [3]. As more investors add funds to the related liquidity pool, the value of the issued returns decrease accordingly. However, instances of thousand percent APYs have led to countless people turning to yield farming despite the incredible risks involved in such high rewards ventures.

Yield Farming Risks

While yield farming can undoubtedly be a profitable endeavor, it also carries significant financial risk for both borrowers and lenders. Given the high gas fees that usually plague the ETH network, it only makes sense to put in a considerable amount of capital in order to make the investment worthwhile.

Additionally, yield farming is susceptible to hacks and fraud born from possible vulnerabilities found within the protocols’ smart contracts. Because DeFi protocols are permissionless and dependent on several applications in order to function seamlessly, if any of these underlying applications are exploited or don’t work as intended, it could impact the whole ecosystem of applications, resulting in the permanent loss of investor funds.

Finally, the worrying trend of sketchy protocols cropping up offering tempting APY returns poses additional risks given that the code for these protocols are often unaudited and returns are more vulnerable to price volatility. At worst, these liquidity pools can sometimes be scams that result in a “rug pull,” where the developers withdraw all liquidity from the pool and run away with the funds.

Although yield farming has gained the justifiable reputation of being a high risk enterprise that only experienced traders enter into, the appealing earnings are still enticing enough to draw in bold investors eager for a quick payoff.

Redefining DeFi Through DeFiYield

DeFi within the crypto space is undoubtedly the fastest growing technology in history, causing predictions that DeFi is the fulcrum needed to usher in a Finance 3.0 revolution. However, the space is still fairly nascent, making it prone to hacks and other exploits, an issue that continues to cost investors significant losses. This is the tumultuous environment that DeFiYield steps into. DeFiYield is an ecosystem that offers a range of decentralized products with an emphasis on investor safety and security.

With a comprehensive Asset Management Dashboard that conveniently allows users to access all DeFi functionalities in one place, newbies and seasoned investors alike can check their investment performance portfolios at a glance. Additionally, DeFiYield provides a personalized risk assessment by flagging potentially high risk projects within a user’s portfolio. This is possible because DeFiYield partners its dashboard with a compelling Security Toolkit that utilizes proprietary smart contract scanning technology to identify and flag potential vulnerabilities, thereby mitigating DeFi risks. For more details about this, you may check them out here [4].

DeFiYield’s Defiance

Born from comprehensive study with thoughtful consideration for users’ current and future yield farming needs, DeFiYield is designed to help new investors adapt to the crypto space in a convenient way. Utilizing the RAMP protocol, which aggregates various payment methods, and providing clear transaction terms with affordable fees, users can buy cypto with fiat without any hassle. DeFiYield makes it easy to track investment opportunities, monitor key performance metrics, allocate and reallocate funds, all while staying protected with the Approvals Analyzer, which informs users regarding malicious dapps that contain backdoors, infinite minting and other security issues.

DeFiYield also provides a host of impressive services that appeals to experienced traders. Its dashboard is designed to be compatible with Ethereum, Binance Smart Chain, Polygon, Arbitrum, Avalanche, Solana and, Polkadot, as well as and all non-EVM-compatible chains. And it boasts of an open access safety toolkit that includes the security audit database, the rekt database, the smart contract scanner, the timelock contract viewer and the advanced impermanent loss calculator. DeFiYield sets itself apart as the only security dashboard that combines effective crypto asset management with built-in safety infrastructure enabling users to effectively manage DeFi risks [5]. By making convenience and safety a priority, DeFiYield defies the status quo and successfully presents itself as the smart choice for any kind of investor, not just for the now but for the long haul.

--

--

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
Chain Ridge Capital

Chain Ridge Capital

32 Followers

We invest in companies and protocols building the next wave of innovations in the digital space with the product-market fit real use cases.