Hello! I’m glad you joined me here. We’re about to learn what Leveraged Yield Farming is. Let’s review the basics and check out earning opportunities with Biswap LPs. Learn something new today!
What is Leveraged Yield Farming?
🚜 Leveraged Yield Farming — yield farming that allows you to increase returns over time by borrowing assets and reinvesting trading fees and farmed tokens. Yield farming with X yields Y returns, and yield farming with 5X yields 5Y returns. So, in other words, using leverage (borrowing funds) to expand your position X multiplies your yields.
How Does it Work?
To better understand the process, let’s take a look at 2 key participants:
- Lenders — earn yields by depositing single tokens into lending pools.
- Farmers — obtain additional farming yields by borrowing tokens from lending pools to increase their farming positions.
In leveraged yield farming, you can borrow more than you put up as collateral, known as undercollateralized loans. Consequently, the utilization rate is rising, resulting in great advantages for both farmers and lenders:
- Lenders often get higher APYs when their funds are utilized more effectively.
- Due to the leveraged growth of their initial investment, farmers can make more significant profits with higher APYs.
As you can see, leveraged yield farming benefits both parties involved! That’s great, do you agree with me?
Now, I would like to discuss the difference between undercollateralized and overcollateralized lending platforms.
For better comprehension, let’s use an example:
There is a lending pool with 1 000 BNB. Due to collateralization restrictions on a typical lending platform, 10 borrowers are only permitted to borrow a maximum of 10 BNB each, for a total of 100 BNB. As a result, the utilization of that pool will be 10% (100/1000). These same 10 borrowers might be able to borrow 50 BNB each from an undercollateralized leveraged yield farming platform, resulting in the utilization of 50% (500/1000). In a 50% utilization scenario, lenders will receive much higher borrowing interest than in a 10% utilization scenario.
Are you ready to move on to the next part?
Leveraged Yield Farming on Alpaca!
Our partner Alpaca Finance is one of the top platforms for leveraged yield farming. The largest lending protocol allows leveraged yield farming on BNB Chain and Fantom. It helps lenders earn safe and stable yields and offers borrowers undercollateralized loans for leveraged yield farming positions, multiplying their farming principles and resulting profits.
Using automated strategies, Alpaca helps farmers to achieve the highest yields possible. The following are some key features that enhance usability at Alpaca:
- Flexible deposit options: to supply the farming liquidity pool, the vault optimally converts your deposited assets and borrowed BNB or BUSD into equal value splits. So, for example, for the BSW/BNB pool, you can deposit any amount of BSW and/or BNB to start farming without having to do the conversions yourself.
- Automatic staking: your LP tokens will be staked automatically on the chosen platform (ex. Biswap), so you can start earning rewards immediately.
- Continuous auto-compounding: your DEX rewards (BSW, etc.) are automatically sold by the bot whenever any user interacts with the pool (when you or any user opens/closes/adjusts a position for your given pool). In order to optimize your APY, the bot then turns the rewards into LP tokens for the pool you are farming and compounds them onto your farming principal.
- Claim ALPACA rewards anytime: opening a leveraged yield farming position will earn you bonus ALPACA rewards that can be claimed at any time.
If you want to know more, follow the link below:
Earn with Biswap LPs on Alpaca | Boost Your Crypto Profits!
Users of Biswap and Alpaca can open leveraged yield farming positions through numerous Biswap Farming pools. Alpaca is a great place to start multiplying your crypto via Biswap LPs:
- High APYs
- Bigger Profits
Would you like to start? Click on the link:
❗Always make sure to DYOR before making any decisions. The Biswap team strives to educate our community; however, your funds are your responsibility.
As you can see, leveraged yield farming is not too hard to understand as it may seem at first. I hope you were able to learn something new today. Don’t miss out on a chance to earn with Biswap LPs on Alpaca! You can explore our Education Hub to learn more about lucrative opportunities!
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