Since DeFi Summer in mid-2020, the crypto market has created a new and frenetic phenomenon known as #DeFi.
1. Working & building a strong network (Operating the network)
2. Lending to traders
3. Increase liquidity to the market (Providing liquidity)
4.Managing protocols
5. For marketing (Marketing)
A ‘farmer’ (investor) is a person with capital who wants their capital to grow in the future. It will be obtained in the form of a share from the Gov. Token and/or the fees incurred.
Yield Farming is a semi-passive form of earning in crypto.
Before going to dig a bit : You should ask 2 questions.
What is A Core Value that a Farmer deserves?
B “Who” distributes those rewards?
Before going deeper into the world of DeFi and Yield Farming, let me give you a #real-world example.
Option A: Let’s say we have 100 baht worth of gold with us. >> This one is that you just own it, don’t create cash flow, don’t create any returns. We hold gold to hope capital gain or hope that the price will stay or increase in the future.
Option B: Suppose we have gold worth 100 baht, but we take it to a pawnshop. as collateral, and we borrowed the cash. This time, we bring our cash to do business, sell grilled pork, circulate in the business every month to pay interest >> 1 year later, we already have 5 grilled pork trucks, which we want to get gold back. Business to pay back both trees and flowers to bring back gold worth 100 baht
In this way, Option B: half is Yield Farming.
In Yield Farming, should we really call it ‘passive’? Not really, because it has to be hard to understand. What is the share that arises and why should we receive it?
But it must be called not as hard work as A group that has to mine itself or open a validator-style service, that is, needs a deeper understanding. how the internal system works
Opportunity is that Yield Farming makes complexities like mining yourself or opening a validator service easier to access.
Half is that we Yield Farming should be a principle. to take time to buy & hold in that position and hope in the future The price should be trending up as well, other than just hoping for a pattern, fee or distribution of Gov. tokens.
Creating Value When the occurrence of an ‘exchange’ (exchange), the return is the most basic factor. what it is
1. Working & #building a strong network (Operating the network)
This method is ‘#Staking’ or being one of the service provider validators that process the transaction as valid, reliable and the provider is required to place a margin. (Or put it in crypto) as well if dishonesty, transparency, and untrustworthy occur. The deposit will be confiscated (part of it).
This model is that we are confident in the provider validators, so we ‘delegate’ the provider and expect us to pay off. from receiving fees when processing the transaction is correct
If we go to ‘authorize capital’ to a service provider that sucks, the deposit will be confiscated. because the system sees Poor work, not transparent
2. Giving #loans to traders (#Lending to traders)
Lending is a form of It’s easy to understand. From the first point we bring ‘authority of capital’ to service providers >> we can take our capital to traders to borrow to trade.
Lending creates value for the economy because traders use capital and return it, supplemented by the interest it accrues.
In the world of DeFi, borrowing is a must. Guarantee The value is more than you can borrow. Why? Because if you are borrowing more than you And escape the refund. It’s possible & easy to do too. Today’s protocols, so if you put a 100 baht guarantee, you may only get 50-80 baht.
3. #Increase liquidity to the market (#Providing #liquidity)
In the old days of DeFi boom, only Centralized Exchanges and/or large market makers had the technical know-how to be able to add liquidity to the market.
Incredible phenomenon is #AMM (Auto Market Maker). From the world of DeFi and Smart Contracts that can act on our behalf, Farmers are taking capital to increase market liquidity. Get passive income returns. Feel comfortable…
But it comes with many risks!!
Farmers risk their capital. But it also comes with attractive rewards such as trading fees/returns like the Gov. Token format.
4. #Managing protocols
In the blockchain world, we tend to think of “Code is Law.” It’s definitely coming out.
in fact We are still in the world of management, manual management. still have to vote still need to upgrade the protocol to be better
In that we need to think, invent, recruit the best. For our funds, there are measures (which may seem strange to read. Somewhere)
#Curve Finance is the world’s first stable swap protocol, with another protocol, #Convex Finance, to manage and manage funds as efficiently as possible (but still have the issue of buying the votes (bribe) for redistribution. too!) and like #Yearn Finance, who move assets to distribute, lend, increase liquidity, where there is the best return.
Having one protocol overlaps another protocol creates maximum efficiency. Reduce transfer fees on the way from an automated portfolio management model.
The way this protocol is actually managed isn’t called #creating any value, but rather about #extracting the value (squeezing, extracting the value from the protocol!), especially when asking for a semi-bribe for a farmer. It makes a good return. but not sustainable for the ecosystem
5. For #Marketing
Yield farming is also considered One of the great markets, besides the fact that the protocol has a TVL (Total value locked, or the amount of money circulating in the protocol), means it’s reliable. It has become a no-brainer option.
TVL still thinks differently. Big power companies like Web 2.0 can earn big money. have huge returns
In addition, having players attend a lot This form of capital liquidity Therefore, there must be a group of people who have to study/examine thoroughly. before placing the funds
Moreover, that Grant the right to semi-shareholders (to the Gov. Token) to satisfy the liquidity lenders. because like we are One of the owners with Protocol as well (and of course we’ll be told ‘#Drop it’ for these Gov. Tokens lol).
All in All : Finding returns from Yield Farming = Investors (farmers) donate funds. to exchange with direct and indirect returns
While Yield Farming may not be a hog concept and risk-free at all.
If you put your mind to it and understand it well, it’s not too difficult (too much).
Don’t forget to spread the risk as well, and in the future, the risks in the DeFi world should be gradually developed to reduce the risk and, of course, reduce the return as well.
PS. This article is not an investment advice. #NFA !!
#EarthDeFIRE Report
Article by : Panyawit Chattanrasmee new investor The owner of the page provides knowledge on the crypto market, Earth Defire.
More information from the page: https://www.facebook.com/EarthDeFIRE/posts/1050882865495215
