The tern.crypto Telegram channel published an article about farming stablecoins. The author talks about five protocols that allow you to get up to 30% profit from stablecoins investments.
A protocol is a service or application that is controlled by decentralized regulators making services more transparent.
We have written step-by-step instructions for this post and will tell you what you need to install, where you can invest your money, and what yield you can get. But first, let's make clear what farming is.
In a way, farming can be compared with traditional deposits, but with the understanding that it has some risks. The main goal of farming is to increase the profitability of cryptocurrency investment. In other words: to increase the investor's profit. There is farming with liquidity harvesting (for example, providing funds for loans) and without (placement of tokens in the pool). Today, farming is one of the most popular ways to get passive income from cryptocurrency investments.
Anchor Protocol
Pool — is used for loans. There is a liquidity risk;
APY — approximately 20% annually and always keeps approximately at this level;
Withdrawal —always available and for the whole amount;
Additionally — all income is also used for farming, there is a risk of hacking since algorithmic stablecoines are used;
Insurance — you can get it here.
It is a protocol on the Terra blockchain that yields approximately 20% APY (expected annual rate of return on investment, taking into account compound interest). Anchor has the largest capitalization of all protocols (TVL) — $12.2 billion.
Step-by-Step Guide
First, download and install the Google Chrome Terra wallet extension. You can also download Terra Station to iOS or Android.
In this wallet, we will keep UST and LUNA tokens. If you already have a wallet, then you can import it. To do this, you need to click Import Wallet, enter the key (seed phrase) and wait for 1-2 minutes. If you do not have a wallet, then click New wallet and fill in all the fields. Also, this page has your seed phrase. Be sure to keep it in a safe place.
Click Submit and stand the check: you need to specify which word is in a certain place in your seed phrase.
Click Submit and if the phrases are correct, you will see the name of your wallet and a link to it.
Now you need to buy LUNA or UST tokens on the exchange and transfer them to your wallet. After replenishment, we go to the Anchor web application and connect our wallet. To do this, in the upper right corner, click Connect Wallet.
Choose Terra Station Wallet and click Connect in the opened window.
If you did everything correctly, now in the right corner you can see your balance and part of the wallet number.
Next, press the Deposit button and deposit any amount into the account. Click Proceed and confirm the transaction in the opened window. To do so, you need to enter the password from the Terra Station wallet.
Below the balance, you can see a calculator that allows you to calculate the approximate profit for the year, month, week, and day.
Vires Finance
Pool — is used for loans. There is a liquidity risk;
APY — from 10 to 30%, but about annual 20% on average;
Withdrawal —always available and for the whole amount;
Additionally — you get a platform coin as a bonus, and consequently increase APY;
Insurance — you can get it here.
It is an Anchor analog with a floating percentage. Sometimes you can get 10-15% and sometimes reach up to 30%. Vires protocol is based on the Waves blockchain.
Step-by-step guideFirst, you need to open a wallet on the Vires.Finance official website or by downloading the application. To do so, open the site and click on the Connect wallet in the upper left part of the screen.
Tick in the opened window and select Waves Exchange. You can select Seed or Email to get to the login page.
Another window opens where you need to select Sign Up.
Next, fill in your email and password, and agree to the site rules. You will get a six-digit confirmation code in your email.
Now you can enter the wallet with your login. We recommend immediately enabling two-factor authentication to protect your account from hacking.
To replenish the balance, you need to click Deposit on the left side of the screen. Four blockchains and several currencies are available, and no commission is charged.
Now go to the site's main page and scroll down to the Markets section. Select the currency you chose to replenish the balance and click Supply.
You will see a window with all the information about the deposit. We disable Use collateral if we do not want to borrow. Having set the amount that we want to invest, click Supply.
Clipper
Pool — used for exchanges. There are no liquidity risks;
APY — project started recently, there is no information;
Withdrawal — you can withdraw money only after 30 days;
Additionally — you can lose money if there is high volatility;
Insurance — none;
Clipper — this is a fairly new exchanger that allows you to earn on commissions from the exchange. There is no information on the annual percentage yield, as the project opened recently. But if we judge by the first month of work, APY is about 30%.
Step-by-step Guide
We go to the official Clipper website and click the Liquidity button. On the opened page, you need to select a token — there are seven options in total. Diamonds next to tokens mean a demand. For example, the screenshot below shows that GLMR and WBTC are needed more than DAI or USDT.
The higher the demand, the more you will receive. The site will remind you of this again if you make a choice in favor of a token that is already in excess in the pool.
Enter the amount you want to deposit and click Connect your wallet.
You will be prompted to select a network and wallet. The availability of a particular wallet depends on the selected network. Many people recommend using MetaMask, and this wallet is available regardless of the chosen network. The principle of creating a MetaMask wallet is the same as that of Terra, so we will not go over this again.
The MetaMask extension will open on the screen side, where you need to click Next and then Connect.
Sometimes the pool reaches its maximum, and it no longer accepts money. To find out about the opening, you can check the site on a regular basis or subscribe to the newsletter.
HashFlow
Pool — is used for exchanges. There are no liquidity risks;
APY — up to 112%, it depends on the selected network;
Withdrawal — you can withdraw no more than 10% of the total TVL per week;
Additionally — to gain good APY, you need to get to WL-pool;
Insurance — none;
HashFlow offers pools in different networks: Ethereum, Avalanche, Arbitrum, Polygon and BNB. Experts recommend Avalanche as it has quite a large APY.
You can work with MetaMask wallet, WalletConnect and Coinbase Wallet. Also you can farm Hashflow tokens. For those who have just signed up, only the BNB network is available but if you apply, you will get access to others. There is a nearly 100% chance of approval.
Step-by-Step Guide
We go to the official site and click Start Trading in the upper right corner.
In the window that pops up, select Connect Wallet, and then select the network and wallet that you plan to use.
On the right, you will see an extension (in our case it is MetaMask), where you need to confirm the connection twice.
Now select Pools on the left and click on the My Pools tab, press the Create Pool button.
To apply and participate in other pools, follow the link and select the networks that we want to open, and then indicate the wallet address. To do so, you will need a Discord account.
Hyphen
Pool — is used for exchanges. There are no liquidity risks;
APY — up to 29%, it depends on the selected network;
Withdrawal — is always available for the whole amount;
Additionally — it is a new network, there are risks of hacking;
Insurance — none;
Hyphen project by Biconomy was launched on March 16th. In the beginning, APY was under 4000%, but now it averages up to 16-20% depending on the token. Experts recommend waiting a bit before joining this project, as there may be problems with the site vulnerability.
Step-by-Step Guide
MetaMask wallet or WalletConnect will do. To deposit tokens, go to the official website and immediately select the wallet that we will connect to.
Your wallet pops up on the right, you need to confirm twice that you want to connect it. There are three networks available: Ethereum, Polygon, and Avalanche.
Now click on the Add Liquidity button and select the token and network in the window that opens. Wait about 30 seconds to see the APY and enter the amount.
After you complete the transaction, you will be given NFT, indicating the amount of your deposit to the pool. You can transfer this NFT into Farms and get extra rewards.
Algorithmic Stablecoins: the Difference and the Risks
In contrast to fiat stablecoins, algorithmic stables are backed by cryptocurrency tokens and work in the same way as cryptocurrencies. For example, when compared with USDT, algorithmic stablecoins are decentralized and do not have a single regulator and issuer.
Algorithmic stablecoins are less popular in the crypto industry than fiat ones. And there are three reasons for this:
- it is difficult for people to understand the algorithmic stablecoins mechanics;
- algorithmic stablecoins are more volatile;
- there is a high chance of hacks and scams.
Algorithmic stablecoins are now widely used in DeFi, but due to the above disadvantages, they cannot reach the economic level.
There is a serious risk for algorithmic stablecoins to be hacked, especially since some coins have already suffered in similar situations. For example, in March 2022, the price of the Cashio coin, which was fixed to the dollar, first fell to $0.0002, and now it is at $0.00005. Attackers could mint tokens without collateral, which led to a value drop.
By some estimates, about $28 million was stolen due to the use of this exploit. There is information that a few days later there was another attack, and another $50 million was stolen. However, the owners of Cashio did not confirm this.
It wasn't just one incident. For example, in 2020 a similar exploit was used and tokens to back Balancer were minted. And in the summer of 2021, hackers dropped the cost of SafeDollar to zero.
Conclusion
If you are a newbie, then we recommend not investing all the money in one protocol at once: divide the finances into several equal parts. So you will not lose all your savings and will be able to understand which option is more advantageous and profitable at the moment. Later, it is also not worth keeping all the money in one place — this is one of the golden rules for minimizing financial risks.
