It all began with a hackathon. HackMoney, the 30-day virtual DeFi application competition, embarked in April, boasting judges such as the OG crypto evangelical Andreas Antonopoulos and Ethereum Founder Vitalik Buterin. An interesting variety of products was produced, with a new robo-advisor for the lending platform Uniswap coming in second. It successfully utilized a process that would soon develop into the immense online hype known as “yield farming”.
The team went on to form APY.Finance, one of the most highly anticipated DeFi projects at the moment. “We didn’t really have the term yield farming at the time,” said Will Shahda, the CEO of APY.Finance, “we didn’t have the yield farming craze that we see now.” APY.Finance developed into a robo-advisor that executes complicated yield farming strategies for its users through a fully automated and safe platform.
Yield Farming is Incredibly Profitable – But It’s Difficult
Yield Farming is a method to generate rewards with cryptocurrency. By lending, borrowing, or providing liquidity on platforms, users are rewarded with token rewards. Similar to staking, it involves freezing your assets in order for rewards to be generated.
Yield farming can be incredibly profitable, with a big catch: each yield farming strategy isn’t extremely valuable for very long. As other users catch on, the efficacy of an individual farming strategy becomes less successful. Popular liquidity providers and popular sources of yield include platforms such as Uniswap, Compound, Synthetix, and 0x – all of which have become fan favorites for yield farmers and liquidity providers.
The APY.Finance team saw the immense potential for a revolution in the yield farming world and found an obvious entry point. “We saw that there were a number of places where people were not pursuing yields because of the pain points. There were these big barriers to entries, like time commitments – the time you’d have to spend to yield for this stuff,” explained Shahda.
While this new DeFi development was proving to be impressively profitable for tech-savvy yield farmers, the entire process was still essentially off-limits to the general crypto enthusiast who was understandably intimidated.
A Goal to Make Yield Farming Easy and Accessible
Yield farming usually involves entering a number of different strategies for a limited amount of time and continuing to hop to different “pools” to keep up with the most updated and efficient executions. This process is, understandably, quite intensive and expensive. Users of APY.Finance’s platform contribute to a single pool, which is then managed by a robo-advisor that uses smart contracts to automatically shift funds to produce the DeFi opportunity at that present moment.
APY.Finance connects users to leading DeFi protocols including Compound, Synthetix, Uniswap, Balancer, Jarvis, and PieDAO. Not only is the platform more cost-effective, but it’s also much less risky than traditional yield farming because of the smart routing system that adjusts for perceived risk to reduce the downside. The platform is completely decentralized and community-owned (a huge plus for crypto purists), and has built a user-friendly system to allow members to keep track of their funds.
The project provides a product known as APY Analytics, which helps users analytically track profits across all APY.Finance strategies, as well as informed on recent DeFi smart contract risk factors. APY’s alpha launch is rolling out later this year and is planning on making other risk pools for users who have different risk tolerances or perspectives on smart contracts.
Shahda explained that it was only a matter of time before a solution had to be created for the demanding and exclusive yield farming environment. Where there’s a return strategy, people will try to enter the environment. “As time has gone on, those problems have gotten more severe and the need for this kind of platform has gotten more extreme,” Shahda said, “And that’s why it’s something we continue to push forward with.”
*The writer of this article has a personal relationship with APY. The Daily Chain encourages you to carry out your own research before you make any form of investment and educate yourself about how to stay safe in the crypto space.