YeFi (YEFI) aims to help DeFi newcomers avoid some of the pitfalls of yield farming and make the most of their cryptoassets. YeFi claims that its protocol allows users to stake a wide range of assets while earning an annual percentage yield (APY) of up to 80%.
Yield Farming Made Easier by YeFi
The success of decentralized finance (DeFi) over the last year has benefited all sectors of the industry, from decentralized exchanges (DEXes) to yield farming protocols and beyond.
While DeFi yield farming – a process that allows anyone to stake their cryptoasset and earn fixed or variable APY – has proven to be one of the most reliable ways for cryptocurrency investors to make their money work for them and bring in decent profits on a daily basis, navigating these platforms successfully can be a herculean task for newcomers.
According to YeFi, this is due in part to the fact that many of these yield farming protocols are not as appealing as they appear.
“While many yield farms boast impressive APYs, sometimes reaching 100 percent or more per year, this must be balanced against the performance of the token that must be staked. Consider a yield farm that provides a 100% APY. If the staked asset loses less than half of its value in a year, it is considered a net positive investment. However, in many cases, the staked asset drops faster than the yields are accrued, resulting in a net negative investment,” YeFi stated.
In light of this, YeFi advises yield farmers to carefully consider the bullish potential of any asset they wish to stake and farm only assets with a strong bullish trajectory. According to YeFi, this can be difficult to achieve because many yield farming protocols do not allow users to stake their preferred tokens – either because they only support their own native token or assets with poor market performance.
Here comes YeFi.
YeFi (YEFI) claims to provide yield farmers with multi-asset yield farms that support a wide range of digital assets. According to the project, yields on the YeFi protocol are determined by the computing factor of each asset.
Bitcoin (BTC), ether (ETH), and tether (USDT) have a 1x computing factor on the YeFi platform, while filecoin (FIL) and YEFI, YeFi’s native token, have 1.5x and 2x computing factors, respectively.
With up to 80% APY and daily payouts, YeFi allows users to choose the asset they are most comfortable staking, increasing their chances of achieving an attractive return on investment.
Stablecoin farms, in general, eliminate the need to manually account for volatility because they are, by definition, stable. This will allow you to better project your returns over the course of the farming season.
Getting up early is almost always preferable.
When it comes to yield farms, early participants typically earn higher yields than late entrants. This is a result of the way many yield farms operate.
In general, most yield farms will mint or have already set aside a fixed number of tokens to be distributed among all yield pool participants. This is typically divided among participants based on their share of the total value locked in the pool, so that someone who contributes 10% of the total locked value receives 10% of the reward pool per reward period.
Because the total amount of value staked is low, the yields are usually highest right after the pool is launched, resulting in a high APY. The rewards decrease proportionally as the total locked value (TVL) increases, implying that the early bird truly does catch the worm in this case.
As a result, it’s critical to check back frequently to see if the expected APY has changed. This will often decrease significantly if the yield farm becomes extremely popular, but it can also increase if it loses popularity or the farm implements other yield-boosting mechanics. In general, the later you start, the lower your yields will be.
In any case, keeping track of your deposits can help you maximize your yields by allowing you to double-down when yields are high or withdraw your funds when the APY is no longer competitive.