Farming with Beethoven X, Loop Finance, Chest.fi
Disclosure: Members of Nansen may be participating in some of the following strategies and farms. This statement discloses any conflict of interest and is not a recommendation to purchase any token or participate in any of the mentioned farms. This content is for informational purposes only and is not investment advice. Please exercise caution if you are participating in these strategies.
This week's farming opportunities span across Fantom, Terra and Solana ecosystems. The 3 opportunities we cover include the following:
Beethoven X is a Balancer-friendly fork (voted by the Balancer community) that aims to be the leading decentralized investment platform on Fantom. Beethoven X offers both stable and volatile pools that contain between 2 to 8 different tokens with fully customisable weights. Beethoven X’s multi-asset pools can be said to operate similar to an inverted index fund - rather than paying fees to portfolio managers to rebalance your portfolio, you collect fees from traders, who rebalance your portfolio by following arbitrage opportunities. The pitfall of this is that it leaves one open to impermanent loss on volatile pools. Yield on Beethoven X is derived from (a) swap fees from traders and (b) the native token $BEETS by staking your liquidity provider (LP) tokens.
Loop Finance is a DEX built on the Terra ecosystem that is offering incentivized farms through their native governance token $LOOP. We focused this report on Loop because they just added new farms for $aUST pairs and many members use the Anchor protocol for yield already. In short, if you deposit $UST for 20% interest on Anchor, you can now earn dual rewards - 20% on your $UST deposits in Anchor and $aUST yield across multiple pairs on Loop. Of course, there is IL and you will later need the $aUST to redeem your $UST from Anchor later on. In this case, the yields are lucrative enough to be able to cover for any IL that may be incurred but of course DYOR as the yields will fluctuate.
Chest.fi is a project on Solana which helps users get exposure to complex strategies, by simply allowing them to deposit assets into a vault and earn yield. It uses options, futures and lending strategies to generate yield for different assets. At the moment, Chest vaults run weekly automated call-cover and put-cover options to earn yield for stakers. Each chest will have its own risk-reward curve, with riskier chests having a higher potential payout than less risky chests. A projected APY is displayed on each chest to estimate the vault returns for stakers and it currently ranges from 30-52% APY.
We will go over each farming opportunity, give step by step guides, and go over the risks and opportunities associated with each of them. Yield from these opportunities may comprise the protocol’s native token and other protocol rewards.
Each farming opportunity will follow the same format.
If we utilize Nansen dashboards, we will give a tutorial/guide on how to recreate the dashboards for your farming activities.
Beethoven X is a Balancer fork that aims to be the leading decentralized investment platform on Fantom. Beethoven X offers both stable and volatile pools that contain between 2 to 8 different tokens with fully customisable weights. Beethoven X’s multi-asset pools can be said to operate similar to an inverted index fund - rather than paying fees to portfolio managers to rebalance your portfolio, you collect fees from traders, who rebalance your portfolio by following arbitrage opportunities. The pitfall of this is that it leaves one open to impermanent loss on volatile pools. Yield on Beethoven X is derived from (a) swap fees from traders and (b) the native token $BEETS by staking your liquidity provider (LP) tokens.
Traditional liquidity pools like on Uniswap and SushiSwap have 2 tokens with a 50:50 ratio. Liquidity pools on Beethoven X can have up to 8 tokens with any arbitrary token ratio. This can have positive impacts regarding impermanent loss and token exposure versus 50:50 pools.
For example, the FTM/USDC pool’s composition is 70% FTM : 30% USDC. The higher weighting of FTM in the pool increases exposure to the price of FTM and reduces the impact of impermanent loss while allowing the LP to capture high yield.
Farms currently range from 20% - 190% with a total TVL of $130m at the time of writing.
If you want to learn more about the $BEETS token you can check out their GitBook where you can find information regarding their tokenomics and token emissions.
The $BEETS token is ~80% off ATH and remains at a relatively low market cap of ~$26m and FDV of ~$142m. This certainly gives room for strong growth. It will also soon implement an xSUSHI (fBEETS) model whereby 30% of protocol fees are distributed to LPs of the 80:20 BEETS/FTM pool. In addition, fBEETS holders now will have bi-weekly votes to determine the distribution of 30% of $BEETS incentives in the pools. This gives the token good utility.
However, token emissions are high. There is currently a circulating supply of ~46m and a maximum supply of 250m. All tokens will be in circulation within 4 years of TGE (which was October 8th 2021).
For those bullish on the Fantom ecosystem and the potential of Beethoven X to become a leading AMM on Fantom - hodling and compounding $BEETS makes sense. While it may moon, it is important to bear in mind it is a highly risky and volatile asset that could easily plummet in value.
For those with a lower risk profile, and who are primarily chasing farming returns the natural strategy would be to cash out $BEETS rewards.
Note that you will need FTM in your wallet in order to participate on the Fantom Opera Network. You can bridge your assets to Fantom here from most EVM chains.
Loop Finance is a DEX built on the Terra ecosystem that is offering incentivized farms through their native governance token $LOOP. We focused this report on Loop because they just added new farms for $aUST pairs and many members use the Anchor protocol for yield already. In short, if you deposit $UST for 20% interest on Anchor, you can now earn dual rewards - 20% on your $UST deposits in Anchor and $aUST yield across multiple pairs on Loop. Of course, there is IL and you will later need the $aUST to redeem your $UST from Anchor later on. In this case, the yields are lucrative enough to be able to cover for any IL that may be incurred but of course DYOR as the yields will fluctuate.
Loop Finance has decent liquidity and is offering good yields on some of the majors on Terra - $LUNA, $ANC, $UST, and $MIR amongst others. To highlight, we think that the $aUST farms offer very competitive yields, and increase the capital efficiency of one’s Anchor deposits. They are relatively new as they were just added on January 4th, 2022 and offer high yields. In addition, if you take exposure to $LOOP then you can earn some higher yields on the majors - although this does take on more risk. Note, they are looking to add $BTC, $ETH and other tokens in the roadmap so that might be something to keep note of for future farming opportunities. Again, all of these pools are exposed to IL, including the $aUST pools, so please exercise caution with Loop and manage your risk accordingly. The farming contracts have been audited by a third party and by the Loop team but the official TFL audit is still in progress.
Rewards immediately accrue after you deposit funds and are distributed hourly. Note, there is a 2 week minimum staking period before rewards can be claimed. However, you can withdraw at any time.
Loop Farming Tutorial
Chest.fi is a project on Solana which helps users get exposure to complex strategies, by simply allowing them to deposit assets into a vault and earn yield. It uses options, futures and lending strategies to generate yield for different assets. At the moment, Chest vaults run weekly automated call-cover and put-cover options to earn yield for stakers. Each chest will have its own risk-reward curve, with riskier chests having a higher potential payout than less risky chests. A projected APY is displayed on each chest to estimate the vault returns for stakers and it currently ranges from 30-51.9% APY.
It is important to note that each chest has a time countdown and withdrawing funds before the time runs out is not possible. When a fund is withdrawn before the yield countdown expires, its status changes from "Locked" to "Withdrawable next," indicating that it is still participating in the current yield round but will be automatically removed from future ones. It is also possible to withdraw before the next chest begins at the end of the yield countdown.
The protocol charges a 10% performance fee on profitable chests and an annualized management fee of 2% (a reduced fee of 0.5% applies for SOL chests). The project’s total TVL stands at around +$10Million.
The project offers decent yields across the different chests. More specifically, the USDC Yield Booster chest offering an estimated 35% APY is very attractive for a stablecoin vault. The chests are free from risks such as IL and there is no exposure to the native token, however there are other risks that come into play. The project is still in the development phase and is an alpha build. The total value locked is still around $10 million. Additionally, it’s worth remembering that in some scenarios strategies can also lead to losses. On the other hand, using the project at an early stage - before the release of the native token could have some rewards such as potential airdrops.
Currently supported wallets include: Phantom, Sollet, Slope, Solflare, and Ledger (hardware)
Choose a chest based on the strategy and asset you wish to stake in. You can refer to the estimated APY and strategy descriptions to make your choice.
When depositing into a chest for the first time, you will also send an additional transaction to create a user account. This account is purely for backend purposes and is needed to keep track of your earnings. The cost of this transaction is a few cents. You will only need to do this once.
If an active chest is already underway, your deposits won't earn you yield until the next chest, but by depositing early, they will automatically be added to the next chest when the time comes. You can refer to the "Next Chest Starts" countdown to see when the next chest starts.
The yield countdown represents the amount of time left until yield is generated and redistributed to stakers. This countdown depends on the chest's strategy and parameters.
Ex: For a covered call chest, the yield countdown represents the amount of time until the option expires. If the option expires below the strike, the stakers will earn a premium. See more here.
You can collect your yield at the end of the yield countdown either by :
Note: If you choose to keep your yield in the pool it will automatically compound week over week.
We hope you guys found this report useful and feel free to recreate any of the above mentioned strategies for other farms. Please reach out in the Discord to let us know if there are any questions you might have or further opportunities you’d be interested in the Alpha team exploring.
These strategies involve smart contract risks, IL, and yields can fluctuate. Exercise these farms with caution and best of luck farming!
