Yield farming is taking the DeFi space by storm, and if you’re not on board yet, you’re missing out on some serious fun! No, we are not talking about playing with farm animals – yield farming is actually all about earning passive income from your crypto assets, without getting your hands dirty!
If you are new to the DeFi space, it might sound too good to be true – but we promise it’s real! Just by depositing your funds into a liquidity pool, you can potentially earn rewards in the form of additional cryptocurrency. It is like growing money on trees, but way cooler with the help of technology!
In this article, we will take a look at Alpaca Finance, one of the most successful yield farming project at the moment, and explore the ins and outs of yield farming. So, grab your virtual pitchforks, and let’s dive into the world of yield farming!
Who is Alpaca Finance?
Alpaca Finance is the largest lending protocol providing leveraged yield farming that is built on the BNB chain. It was founded with the goal to providing value to the BNB chain community by being the first to offer leveraged yield farming.
Leveraged yield farming is an upgrade from your usual yield farming. The normal yield farming involves staking or lending of your crypto assets to receive rewards, while leveraged yield farming allows users to borrow extra funds or capital to expand their asset base, which allows them to accrue a much larger yield and maximize their profits!
Alpaca Finance pride themselves to providing the best possible user experience, or as they like to say – built by the alpacas, for the alpacas! As such, they have deployed automated strategies that simplifies the leveraged farming process to provide the highest possible yield for their users, as well as ensuring that the users have the best possible user experience while interacting with their platform. Some key features are:
- Flexible Deposit Options: Their Automated Vaults are able to automatically convert the user’s deposited assets or the borrowed assets at optimal conversion rates to get an equal-value split to supply the farming liquidity pool. This removes the need for users to make the conversions themselves and makes the process of farming easier.
- Automatic Staking: Their in-built code helps users to automatically stake their LP (liquidity pool) tokens on their chosen platform (e.g. PancakeSwap) so that they can start earning rewards immediately.
- Continuous Auto-Compounding: Every time a user interacts with the liquidity pool, such as opening/closing/adjusting a position, their in-built bot helps to automatically sell your DEX rewards (e.g. CAKE) and then converts it into the LP tokens for the pool that you are farming at and compounds them onto your farming principal so that you can maximize your returns.
- Claim ALPACA Rewards Anytime: If you open a leveraged yield farming position, you are automatically eligible to receive their ALPACA tokens as additional rewards that you can claim anytime on their staking page.
Future Outlook of Alpaca Finance
Alpaca Finance 2.0 is their latest protocol upgrade that improves their 2 main functionalities: lending and leveraged yield farming. This improvement helps to provide more features, greater flexibility and of course, higher yield returns!
Some highlights of the new features that AF2.0 offers include:
- Cross Margin and Sub-Accounts: This feature allows the creation of multiple sub-accounts for each wallet, and the exposure of these sub-accounts are isolated. Users are able to select which sub-accounts they want to be included for the cross margin and thus enables users to have more control of their exposures and controls risks.
- Configurable Interest Rates: By providing such a flexibility for borrowing interest rates, it provides a much greater profitability for users. For example, farms with lower yields but lower risks could be set with higher interest rates to become much more profitable.
- Flexible Collateral Types and Borrowing Assets: With AF2.0, users are now able to use any collateral-tier asset as collateral on any Leveraged Yield Farming pair. An example would be providing BNB as collateral while borrowing ETH to farm in the ETH-USDT pair. Users can also now borrow multiple assets when opening a single Leveraged Yield Farming position, thus reducing the costs and increases efficiency.
As we can see, their latest update Alpaca Finance 2.0 is greatly adapted for their customers. By taking in the feedbacks of their users, they have made various improvements to their protocol and platform that boosts user-friendliness and provide greater benefits. Within the DeFi space, the flexibility that AF2.0 provides for exposure customization is practically unheard of, which makes them the leader of innovation in the DeFi yield farming space! As such, we can definitely hope to see more of such improvements being made by their talented developer team to change the game for leveraged yield farming!
As with any other project, the community behind it determines their success. Alpaca Finance most definitely knows how to build a strong community as they are extremely community-centric and is always looking to improve their user experience.
To increase their community involvement in the project, they have also created the Alpaca Governance Vault to reward their loyal token holders and align the incentives of the platform. By locking up their ALPACA tokens, users will receive xALPACA tokens in exchange to represent their share in the governance rewards pool and also their voting power for the governance functions. Some rewards that holders can expect to receive include platform revenue sharing and governance voting power. This helps to increase the participation of their holders which can drive greater adoption of their platform.
Alpaca Finance also launched their very own NFT collection, consisting of 10,000 hand-drawn cute Alpacas on both the BNB and ETH chain. These NFTs can be used in their game launch, which will include breeding mechanisms that allows NFT holders to earn greater revenue from selling their new Alpacas. Some additional benefits that their NFT holders can expect to receive includes presale allocation of Alpaca game token, 50% higher max leverage on Alpaca Finance, and exclusive access to Alpaca merchandise. With a NFT collection, it also helps to build a sense of belonging for their holders, as they can represent the project by repping their NFTs for their Discord or Twitter profile pictures.
Alpaca Fireside Chat is another of their community building platform, whereby the hosts will talk about the current NFT/DeFi/Crypto market conditions and events. These Fireside Chats are held on Twitter Spaces, and the recordings will be uploaded onto their Youtube account. It provides the community with educational content as well as market updates, which is beneficial to the community while increasing the project’s exposure.
Final Thoughts on Alpaca Finance
All in all, Alpaca Finance is most definitely one of the most creative and leading builders of Yield Farming in the DeFi space. From community-centric updates to community building, they have done all of them extremely well. We strongly believe that users can look forward to the future updates from AF2.0 as they definitely have the potential to push out something amazing. Not forgetting, they do have some extremely cute Alpaca NFTs!
For more detailed information on Alpaca Finance, do check out their socials and website:
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