Yield Farming Report # 7

Yield Farming Report # 7

Farming with Pangolin, Crodex, Inverse Finance

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.

Introduction

This week's farming opportunities span across Ethereum, Avalanche, and Cosmos ecosystems. The 3 opportunities we cover include the following:

Farms

Avalanche

Pangolin

Is a community-driven decentralized exchange for Avalanche and Ethereum assets with fast settlement, low transaction fees, and a democratic distribution–powered by Avalanche. It has very active marketing and just released their V2 farms, with boosted rewards which will last for another 2 weeks before getting reweighted every 2 weeks after that. There are farms for many Avalanche native tokens, but also some stable farms yielding around 20%.

Cronos Network

Crodex

Is a DEX on the Cronos Network, which is an EVM compatible chain running in parallel to the Crypto.org Cosmos Zone. Crodex is one of many DEXs that are generic forks of Ethereum counterparts like Uniswap and offer incentives across a number of pairs with their native governance token $CRX. Around $20M TVL at the time of writing, we will focus on stablecoin yields across Crodex and other DEXs such as VVS and CronaSwap within the Cronos ecosystem.

Ethereum

Inverse Finance

Inverse.finance is a suite of permissionless decentralized finance tools governed by the Inverse DAO. There are three main products offered by the Inverse team. They include Anchor, DOLA and DCA Vaults. Anchor is a money market and synthetic asset protocol enabling capital efficient borrowing & lending. DOLA is a stablecoin and DCA Vaults enable you to invest your tokens into yield bearing strategies while continuously buying a target asset of your choice with the proceeds, allowing you to dollar-cost-average (DCA) into an asset such as ETH, WBTC or YFI over time.

Farming Guide

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.

Format

Each farming opportunity will follow the same format:

  1. A brief summary of the protocol we are focusing on
  2. An overview of the popular pairs and their respective yields and risk
  3. Key takeaways from the pools mentioned
  4. Tutorial on how to LP/Farm in the given pool

If we utilize Nansen dashboards, we will give a tutorial/guide on how to recreate the dashboards for your farming activities.

Image

Pangolin

(website/twitter)

Pangolin is a community-driven decentralized exchange for Avalanche and Ethereum assets with fast settlement, low transaction fees, and a democratic distribution–powered by Avalanche. It has very active marketing and just released their V2 farms, with boosted rewards which will last for another 2 weeks before getting reweighted every 2 weeks after that. There are farms for many Avalanche native tokens, but also some stable farms yielding around 20%.

V2 mostly focuses on tokenomics, so conceptually the farms still work like most other DEX LP farms. The APY consists of trading fees paid in LP tokens and $PNG emissions, which is Pangolin’s governance token.

Pangolin Farming Exposure Summary

As for most DEX there are a multitude of farms, we showcase our favorites which have either impressive overall APY or good APY for a specific token or token “family” (e.g. stables) compared to other products. Note that all the farms are for tokens on Avalanche.

Takeaway

At least during the period of boosted rewards, Pangolin offers very attractive yields in their native token $PNG. V2 offered massive changes to the $PNG tokenomics, aiming at putting more long-term value on the token itself. However, with these heavy emissions right now there is attractive yield with $PNG incentives.

Tutorial on Farming on Pangolin

  1. Reference our Avalanche Wallet/bridging setup here if you are new to Avalanche
  1. Head over to https://app.pangolin.exchange/#/png/2 and connect your wallet with the Avalanche network selected
  1. Select the farm you want to enter. Click “Deposit” 
  1. If you do not have LP tokens yet click “Add liquidity” and add the liquidity
  1. For liquidity provision you will receive PGL LP tokens, which you can then stake to farm $PNG


Image

Cronos Farms

(Website/Twitter)

Cronos launched their mainnet a month ago and have seen an explosion in growth with over $1.4B in TVL and a maturing ecosystem that include many native DEXs. We will focus on some of the stablecoin yields for these DEXs as they offer competitive yields.  Cronos Network is an EVM compatible chain running in parallel to the Crypto.org Cosmos Zone - the first EVM compatible chain on Cosmos. It is built on the Cosmos SDK and leverages Tendermint for consensus.  

Crodex is one of the few DEXs on Cronos and it is very similar to its Ethereum counterparts like Uniswap. It currently offers incentives across a number of pairs with their native governance token $CRX and has around $20M TVL at the time of writing. Although we will highlight Crodex, we will focus on stablecoin yields across other DEXs such as VVS and CronaSwap, which are also within the Cronos ecosystem. 

Cronos Farming Exposure Summary

Data as of 12/7/2021
Source: Crodex

Takeaway

The stablecoin rewards are decent across all of these DEXs in addition to some of the majors like ETH, BTC, AVAX and MATIC to name a few. Note, there are other farms not mentioned where users can earn higher yield on their $BTC and $ETH but they would require taking on exposure to the native protocol token. Once a user bridges funds over to the Cronos Network, you can participate in any of the DEXs mentioned. Note, gas fees are paid out in $CRO so ensure you have enough $CRO in your wallet. We would recommend having at least $5 worth of $CRO to start. This report was written during a very uncertain market, so we wanted to ensure members can get a diverse set of stablecoin opportunities such as the ones mentioned above.

Tutorial for Participating in Cronos Farms

In order to participate, you will need to add the Cronos Network and transfer funds over. There are multiple ways to do this and we will go through each.

  • Transfer Assets From Crypto dot com - the App or Exchange 
  • From Crypto.org Chain - using the Bridge Web app and Defi Wallet
  • Utilize Anyswap or Relay Bridge (if supported)

Please reference our in depth guide that provides step by step instructions on how to get started with the Cronos network. When you are finished transferring your funds, you will then need to provide liquidity to your desired pools. We will have our farming guides below for each DEX.

Farming on Crodex
  1. Head over to Crodex here and connect your wallet at the top right.
  2. Next, provide liquidity to your desired pool in the pool tab here
  3. Once you deposit funds into an LP, you will need to stake the LP tokens to start earning rewards. Head over to the ‘Rewards’ tab here and click ‘Deposit’ on the LP pair you'd like to stake
  4. Once you deposit the LP tokens, you will begin earning rewards!
Farming on CronaSwap
  1. Provide liquidity to your desired pool here
  2. Input the two tokens you'd like to LP for
  3. Next, head over to the ‘Farm’ tab here
  4. Navigate to the farm you'd like to stake your LP tokens and earn $CRONA tokens
  5. Click ‘Enable’ to allow CronaSwap to withdraw your LP tokens. It costs around ~$0.10-$0.15 for a txn and click confirm. This must be paid in $CRO, so ensure you have enough $CRO in your wallet. We would recommend having a minimum of 10 $CRO ($5) to start
  6. Finally, stake the LP tokens in the desired farm and begin earning $CRONA rewards
  7. For more information about CronaSwap, reference their documentation
Farming on VVS
  1. Head over to VVS here and connect your wallet at the top right
  2. Next, provide liquidity to your desired pool in the ‘Trade’ tab here. Input the amount of either tokens you would like to provide liquidity for. Note, this will automatically set the amount for the other token. Once you decide on the amount of tokens you want to provide, click ‘Supply’ to initiate the transaction and confirm it in your Metamask wallet
  3. Once you provide liquidity to a pool, navigate over to the ‘Earn’ tab here.  If it is your first time interacting with the farm, click ‘Enable’ on the LP pair you'd like to stake in order to enable the farm. You will be asked to give permission to access your LP tokens. Click confirm and pay the associated transaction fee which is around .22 CRO (around $0.13)
  4. Next, click ‘Stake’ to open up the staking window. Select the amount you'd like to stake and confirm it. Once it is confirmed, you will begin earning rewards!
  5. To claim rewards, simply navigate back to the farm itself in the farms page and click ‘Harvest’ and confirm the transaction in your wallet
  6. To remove the staked LP tokens, head over to the farm and click the minus button. Select the amount you'd like to unstake and click ‘Confirm’


Image

Inverse.Finance

(Website/Twitter)

Inverse.finance is a suite of permissionless decentralized finance tools governed by the Inverse DAO.

There are three main products offered by the Inverse team. They include Anchor, DOLA and DCA Vaults. Anchor is a money market and synthetic asset protocol enabling capital efficient borrowing & lending, while DOLA is a stablecoin. DOLA can be borrowed by using other assets on Anchor as collateral or it can be bought directly. It can also be used as collateral to borrow other assets on Anchor. DCA Vaults enable you to invest your tokens into yield bearing strategies while continuously buying a target asset of your choice with the proceeds, allowing you to dollar-cost-average (DCA) into an asset such as ETH, WBTC or YFI over time.

Lending - Earn interest on your deposits

Data as of 08/12/2021
Source: Inverse Finance
*xINV withdrawals are subject to a 10-day escrow

By depositing to Anchor you are making your asset available for borrowers to borrow. You can also use your deposited assets as collateral to fund your own borrowing from the protocol.

  • Earn interest on your deposits
  • Use your deposits as collateral for borrowing 

Borrowing - Borrow against your supplied collateral

Data as of 08/12/2021
Source: Inverse Finance

DCA VAULTs

Inverse.finance DCA Vaults generate yield on stablecoins and continuously invest the yield in a target token e.g. ETH, WBTC or YFI.

When you deposit a stablecoin, you receive a vault token at a 1:1 ratio. As long as you hold that token, you continue to earn interest. When you withdraw your stablecoin, the vault token is burned, and you receive the deposited stablecoins back. You can claim your earnings at any time without having to withdraw your stablecoin.

There are currently four Vaults:

  • USDC to ETH
  • DAI to WBTC
  • DAI to YFI
  • DAI to ETH

In simple terms Earn X token (as interest) on your Y token (principal)

Data as of 08/12/2021
Source: Inverse Finance

Takeaway

Inverse.finance is an interesting project introducing innovative financial tools and concepts. The yields being offered are all based on the Ethereum network. There are good yields being offered by the project, especially for WBTC and ETH. The stablecoin yield is also decent which naturally comes with lower risk. Being able to use deposits as collateral on Anchor is also an additional benefit that enables leveraged positions. The DCA vault is one of their flagship products and is suited for low-risk strategy implementations. The option of depositing a stablecoin and getting the interest paid in another asset could be attractive during the bear market. This strategy allows the accumulation of ETH, BTC or YFI using dollar cost averaging, while protecting the principal from volatility. Additionally, this vault is also attractive to investors that are not willing to take the risk of buying the target token directly but want some exposure to it.

It is important to note some risks, however. Smart contract failure, arbitrage and liquidation are all possible. Furthermore, failure of the DOLA stablecoin USD peg due to market conditions is also an additional risk to take note of.

Tutorial for Inverse.Finance Anchor and DCA Vaults

Depositing with Anchor
  1. Ensure that you have ETH in your wallet and navigate to the Anchor Banking page
  2. Connect your wallet using the button in the top right-hand corner of the exchange
  3. In the 'Supply' table, click on the name of the asset that you would like to deposit/supply. The table will expand to show you an 'enter quantity' box
  4. Enter the amount of asset that you would like to deposit  and submit the transaction
  5. You are now lending on Anchor!

If you wait a few seconds or refresh the page, you should see confirmation of your supplied assets.

Borrowing with Anchor

You can borrow up to 70% of your loaned USD asset balance. Borrowing less amounts results in lower liquidation risks.

  1. Ensure that you have ETH in your wallet and navigate to the Anchor Banking page
  2. Connect your wallet using the button in the top right-hand corner of the exchange
  3. In the 'Borrow' table, click on the name of the asset that you would like to borrow. The table will expand to show you an 'enter quantity' box
  4. Enter the amount of asset that you would like to borrow and submit the transaction
  5. You are now Borrowing on Anchor!

The interest accrued from your borrowings is added to your borrow balance, therefore the balance of borrowed assets that you need to repay will grow over time.

Depositing to DCA Vault
  1. Ensure that you have ETH in your wallet and navigate to the Vaults page
  2. Connect your wallet using the button in the top right-hand corner of the exchange
  3. In the 'Vaults' table, make sure the tab 'Deposit' is chosen
  4. Click on the little arrow inside the ‘enter quantity' box to select either DAI or USDC
  5. Next click on the little arrow below the 'enter quantity' box to select your target token with the equivalent APY
  6. Enter the quantity you would like to deposit on the 'enter quantity' box
  7. Submit the transaction
Acquiring DOLA

DOLA can be acquired using any of the following methods:

  • Via the Anchor Stabilizer. The Stabilizer can be used by market participants as a source of liquidity to arbitrage away price differentials if DOLA moves away from a 1:1 peg against USD
  • Borrowing from Anchor Banking; or
  • Buying from external pools. Tip: the best rates for DOLA are on CRV

Closing Thoughts

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!

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