The Matrix behind Alpha3 Capital; yield farming and Farming as a Service (FaaS)
The decentralized finance (DeFi) space has grown at a mind-blowing rate. Widely considered the primary use-case for Ethereum (and other EVM chains) alongside the promising NFT movement, DeFi has brought almost $100 billion of value locked in DeFi protocols. The most significant catalyst for DeFi’s growth in recent years has been the emergence of yield farming. In this feature, we’ll try to get you to understand the concept behind yield farming and explore how yield farmers are profiting from putting their assets to work on EVM applications. In addition, we’ll share with you our plan to make it easy for anyone to leverage yield farming with Alpha3 Capital and the risks associated with this technological innovation.
Understanding DeFi: Yield Farming Explained
Yield farming can be described as a DeFi 3.0 investment strategy that typically involves lending or staking your coins or tokens to earn rewards on your holdings, i.e. by locking your funds in a smart contract through a blockchain-based application. In return for your service, you will earn fees in the form of crypto. This is partially similar to earning interest from a bank account, as you are technically making your funds available for the protocol to manage. Occasionally, DeFi applications are being referred to as lego bricks or “money legos”, as users can stake their funds across multiple applications in unlimited combinations to maximize returns. Staking provides you with a way to earn passive income by putting your crypto assets to work. One of the keys to the DeFi ecosystem is composability: the money legos can be used interchangeably in very rapid succession. Thanks to composability, yield farmers develop complex strategies for optimizing the returns on their assets.
Yields are typically calculated in terms of annual percentage yield (APY), which compounds the interest rate paid over the course of a year. The interest rates vary, though they often range from 5 to 15% (sometimes significantly higher). Since the DeFi summer of 2020, yield farmers can benefit from interest rates that far surpass those paid by any traditional banking services.
However, the complexity of these protocols and the time needed to effectively optimize yields may deter entry. With Alpha3, we will farm on numerous protocols for you. Alpha3 aims to farm the best opportunities on the market and send back profit to you, the token holder. Worrying about aspects such as risk, performance, and maintenance of assets, investors tend to end up unmotivated and lost. Alpha3 will alleviate the need to worry by constantly monitoring those aspects, so you don’t have to. The team is excited about this transition for multiple reasons. It enables us, as a community, to build the reward pool regardless of volume, and give a smaller tax to those looking to enter the market, creating a lower barrier to entry.
DeFi is here to stay, and yield farming is undoubtedly going to be a big part of it for years to come — and we are excited to be a part of it. It’s safe to say that those engaging with yield farming today are experimenting with the bleeding edge of financial innovation. Yield farming is the key that will allow Alpha3 users to experience turbocharged money growth as we’ll leverage DeFi to pay outsized returns directly to your wallet. What we see as one of the core advantages of DeFi yield farming is the public openness of all activities. In addition, it’s pretty straightforward with Alpha3 Capital. Simply buy $ATC and let us do the heavy lifting.