Altcoins Talks - Cryptocurrency Forum
Archive => Sorting Box => Topic started by: Farmacademy on November 07, 2020, 10:23:59 AM
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We, as professional traders who have come to the world of crypto assets in 2016, are often asked by regular clients from a past life to explain many things from blockchain technologies. At the same time, simple words like for five-year-olds are the most effective technology. So, what is decentralized finance and yield farming?
DeFi is understood as a system designed to carry out financial transactions without the participation of a centralized financial regulator. Unlike the system of world finance, this virtual system does not have a main bank that regulates activities and sets rules and restrictions for players. The organic development of a cryptocurrency market that is geared towards the needs of the common people, not the whales from Wall Street. Thus, participants in the DeFi system can interact with each other without being within the framework of the legal regulations of a particular state jurisdiction, as well as create new services and even entire segments of trade, relying on DeFi technologies. That is, at the moment, DeFi technologies are used for the purpose of loans and credits, the creation of trading platforms for the purchase of goods and services, as well as the implementation of monetary banking operations, only in the world of blockchain technologies (issuing coins, insurance of risks etc). Unlike state jurisdictions, in the DeFi world, all operations are regulated not by state regulations, but by smart contracts, which consist of software code functioning according to the principle of "if .... then ...", that is, do not depend from the will of the parties, as opposed to legally executed contracts. Thus, the fulfillment of a contract by one party entails its automatic execution by the other party.
What is Yield Farming?
Yield Farming is inextricably linked to systems called automated market makers. Farms for growing finance are designed to make money in a decentralized finance system by blocking cryptocurrency in exchange for a reward. In practice, this means participating in stock trading on decentralized exchanges such as Uniswap and Balancer. To make money on decentralized finance platforms, a user must become a liquidity provider (LP) by adding funds to the liquidity pool. This Pool is a smart contract that provides remuneration to the liquidity provider for the funds provided for use. The funds are used for lending and borrowing operations, as well as the exchange of cryptocurrencies. The amount of remuneration to a liquidity provider depends on the amount of funds invested by him. At the same time, strategies for making money are limited only by the technical capabilities of the AMM platform. For example, the received rewards can be used in other Pools, expanding the possibilities of the liquidity provider for earning. Also, you need to understand that the system of decentralized finance is at the initial stage of its development, although it is already showing exponential growth and today, in total, about $ 9.5 billion is blocked on all AMM sites. How is the liquidity provider's fee calculated? As a rule, the most common methods that are customary in classic trading are “Annual Percentage Rate” (APR) and “Annual Percentage Yield” (APY), the fundamental difference between which is the taking or not taking into account the total investment effect, that is, direct reinvestment of profits to increase profitability. This effect is calculated in the APY method and is not taken into account in the APR method. However, different AMM systems can simultaneously or alternately use both techniques for different operations. It should be borne in mind that decentralized finance systems are just beginning to emerge and are subject to very rapid fluctuations, which makes the use of the Annual Percentage Rate and Annual Percentage Yield methodologies not always accurately reflecting investment opportunities.
To ensure loan operations in the system of decentralized finance, as in the regulatory world, pledges are used, that is, crypto assets with a certain value. As you understand, the high volatility of crypto assets makes them not the most reliable collateral, therefore, AMM systems use their own rules to constantly maintain the collateral level corresponding to the amounts agreed by smart contracts. Often, the required value of the collateral exceeds the borrowed funds three or even four times, for example, to borrow the equivalent of one hundred dollars, you need to leave a collateral of 300 or 400 dollars.
Thus, despite the seeming ease of use, the ecosystem of decentralized finance is difficult to use correctly and requires permanent analysis of information, its collection and processing. A successful investor in the decentralized finance market must take into account a large number of factors in order to increase the profitability of their operations: borrowing, liquidity extraction, exchange features, code security, interest rates, profitability and dividend size.
It is in order to make life easier for investors in the decentralized finance system that our team is working on an application “Farm Academy DeFi” that will become a powerful and user-friendly tool that allows you to trade more efficiently in AMM platforms.
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Like the info about yield farming. Well done.
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We, as professional traders who have come to the world of crypto assets in 2016, are often asked by regular clients from a past life to explain many things from blockchain technologies. At the same time, simple words like for five-year-olds are the most effective technology. So, what is decentralized finance and yield farming?
DeFi is understood as a system designed to carry out financial transactions without the participation of a centralized financial regulator. Unlike the system of world finance, this virtual system does not have a main bank that regulates activities and sets rules and restrictions for players. The organic development of a cryptocurrency market that is geared towards the needs of the common people, not the whales from Wall Street. Thus, participants in the DeFi system can interact with each other without being within the framework of the legal regulations of a particular state jurisdiction, as well as create new services and even entire segments of trade, relying on DeFi technologies. That is, at the moment, DeFi technologies are used for the purpose of loans and credits, the creation of trading platforms for the purchase of goods and services, as well as the implementation of monetary banking operations, only in the world of blockchain technologies (issuing coins, insurance of risks etc). Unlike state jurisdictions, in the DeFi world, all operations are regulated not by state regulations, but by smart contracts, which consist of software code functioning according to the principle of "if .... then ...", that is, do not depend from the will of the parties, as opposed to legally executed contracts. Thus, the fulfillment of a contract by one party entails its automatic execution by the other party.
What is Yield Farming?
Yield Farming is inextricably linked to systems called automated market makers. Farms for growing finance are designed to make money in a decentralized finance system by blocking cryptocurrency in exchange for a reward. In practice, this means participating in stock trading on decentralized exchanges such as Uniswap and Balancer. To make money on decentralized finance platforms, a user must become a liquidity provider (LP) by adding funds to the liquidity pool. This Pool is a smart contract that provides remuneration to the liquidity provider for the funds provided for use. The funds are used for lending and borrowing operations, as well as the exchange of cryptocurrencies. The amount of remuneration to a liquidity provider depends on the amount of funds invested by him. At the same time, strategies for making money are limited only by the technical capabilities of the AMM platform. For example, the received rewards can be used in other Pools, expanding the possibilities of the liquidity provider for earning. Also, you need to understand that the system of decentralized finance is at the initial stage of its development, although it is already showing exponential growth and today, in total, about $ 9.5 billion is blocked on all AMM sites. How is the liquidity provider's fee calculated? As a rule, the most common methods that are customary in classic trading are “Annual Percentage Rate” (APR) and “Annual Percentage Yield” (APY), the fundamental difference between which is the taking or not taking into account the total investment effect, that is, direct reinvestment of profits to increase profitability. This effect is calculated in the APY method and is not taken into account in the APR method. However, different AMM systems can simultaneously or alternately use both techniques for different operations. It should be borne in mind that decentralized finance systems are just beginning to emerge and are subject to very rapid fluctuations, which makes the use of the Annual Percentage Rate and Annual Percentage Yield methodologies not always accurately reflecting investment opportunities.
To ensure loan operations in the system of decentralized finance, as in the regulatory world, pledges are used, that is, crypto assets with a certain value. As you understand, the high volatility of crypto assets makes them not the most reliable collateral, therefore, AMM systems use their own rules to constantly maintain the collateral level corresponding to the amounts agreed by smart contracts. Often, the required value of the collateral exceeds the borrowed funds three or even four times, for example, to borrow the equivalent of one hundred dollars, you need to leave a collateral of 300 or 400 dollars.
Thus, despite the seeming ease of use, the ecosystem of decentralized finance is difficult to use correctly and requires permanent analysis of information, its collection and processing. A successful investor in the decentralized finance market must take into account a large number of factors in order to increase the profitability of their operations: borrowing, liquidity extraction, exchange features, code security, interest rates, profitability and dividend size.
It is in order to make life easier for investors in the decentralized finance system that our team is working on an application “Farm Academy DeFi” that will become a powerful and user-friendly tool that allows you to trade more efficiently in AMM platforms.
Thank you very much for your information. From this post I and I understood something in the morning.
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Truly appreciate for this
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We, as professional traders who have come to the world of crypto assets in 2016, are often asked by regular clients from a past life to explain many things from blockchain technologies. At the same time, simple words like for five-year-olds are the most effective technology. So, what is decentralized finance and yield farming?
DeFi is understood as a system designed to carry out financial transactions without the participation of a centralized financial regulator. Unlike the system of world finance, this virtual system does not have a main bank that regulates activities and sets rules and restrictions for players. The organic development of a cryptocurrency market that is geared towards the needs of the common people, not the whales from Wall Street. Thus, participants in the DeFi system can interact with each other without being within the framework of the legal regulations of a particular state jurisdiction, as well as create new services and even entire segments of trade, relying on DeFi technologies. That is, at the moment, DeFi technologies are used for the purpose of loans and credits, the creation of trading platforms for the purchase of goods and services, as well as the implementation of monetary banking operations, only in the world of blockchain technologies (issuing coins, insurance of risks etc). Unlike state jurisdictions, in the DeFi world, all operations are regulated not by state regulations, but by smart contracts, which consist of software code functioning according to the principle of "if .... then ...", that is, do not depend from the will of the parties, as opposed to legally executed contracts. Thus, the fulfillment of a contract by one party entails its automatic execution by the other party.
What is Yield Farming?
Yield Farming is inextricably linked to systems called automated market makers. Farms for growing finance are designed to make money in a decentralized finance system by blocking cryptocurrency in exchange for a reward. In practice, this means participating in stock trading on decentralized exchanges such as Uniswap and Balancer. To make money on decentralized finance platforms, a user must become a liquidity provider (LP) by adding funds to the liquidity pool. This Pool is a smart contract that provides remuneration to the liquidity provider for the funds provided for use. The funds are used for lending and borrowing operations, as well as the exchange of cryptocurrencies. The amount of remuneration to a liquidity provider depends on the amount of funds invested by him. At the same time, strategies for making money are limited only by the technical capabilities of the AMM platform. For example, the received rewards can be used in other Pools, expanding the possibilities of the liquidity provider for earning. Also, you need to understand that the system of decentralized finance is at the initial stage of its development, although it is already showing exponential growth and today, in total, about $ 9.5 billion is blocked on all AMM sites. How is the liquidity provider's fee calculated? As a rule, the most common methods that are customary in classic trading are “Annual Percentage Rate” (APR) and “Annual Percentage Yield” (APY), the fundamental difference between which is the taking or not taking into account the total investment effect, that is, direct reinvestment of profits to increase profitability. This effect is calculated in the APY method and is not taken into account in the APR method. However, different AMM systems can simultaneously or alternately use both techniques for different operations. It should be borne in mind that decentralized finance systems are just beginning to emerge and are subject to very rapid fluctuations, which makes the use of the Annual Percentage Rate and Annual Percentage Yield methodologies not always accurately reflecting investment opportunities.
To ensure loan operations in the system of decentralized finance, as in the regulatory world, pledges are used, that is, crypto assets with a certain value. As you understand, the high volatility of crypto assets makes them not the most reliable collateral, therefore, AMM systems use their own rules to constantly maintain the collateral level corresponding to the amounts agreed by smart contracts. Often, the required value of the collateral exceeds the borrowed funds three or even four times, for example, to borrow the equivalent of one hundred dollars, you need to leave a collateral of 300 or 400 dollars.
Thus, despite the seeming ease of use, the ecosystem of decentralized finance is difficult to use correctly and requires permanent analysis of information, its collection and processing. A successful investor in the decentralized finance market must take into account a large number of factors in order to increase the profitability of their operations: borrowing, liquidity extraction, exchange features, code security, interest rates, profitability and dividend size.
It is in order to make life easier for investors in the decentralized finance system that our team is working on an application “Farm Academy DeFi” that will become a powerful and user-friendly tool that allows you to trade more efficiently in AMM platforms.
I agree with you. Thank you for giving me the correct information. If you have any information on such updates, please let us know in more posts.
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We, as professional traders who have come to the world of crypto assets in 2016, are often asked by regular clients from a past life to explain many things from blockchain technologies. At the same time, simple words like for five-year-olds are the most effective technology. So, what is decentralized finance and yield farming?
DeFi is understood as a system designed to carry out financial transactions without the participation of a centralized financial regulator. Unlike the system of world finance, this virtual system does not have a main bank that regulates activities and sets rules and restrictions for players. The organic development of a cryptocurrency market that is geared towards the needs of the common people, not the whales from Wall Street. Thus, participants in the DeFi system can interact with each other without being within the framework of the legal regulations of a particular state jurisdiction, as well as create new services and even entire segments of trade, relying on DeFi technologies. That is, at the moment, DeFi technologies are used for the purpose of loans and credits, the creation of trading platforms for the purchase of goods and services, as well as the implementation of monetary banking operations, only in the world of blockchain technologies (issuing coins, insurance of risks etc). Unlike state jurisdictions, in the DeFi world, all operations are regulated not by state regulations, but by smart contracts, which consist of software code functioning according to the principle of "if .... then ...", that is, do not depend from the will of the parties, as opposed to legally executed contracts. Thus, the fulfillment of a contract by one party entails its automatic execution by the other party.
What is Yield Farming?
Yield Farming is inextricably linked to systems called automated market makers. Farms for growing finance are designed to make money in a decentralized finance system by blocking cryptocurrency in exchange for a reward. In practice, this means participating in stock trading on decentralized exchanges such as Uniswap and Balancer. To make money on decentralized finance platforms, a user must become a liquidity provider (LP) by adding funds to the liquidity pool. This Pool is a smart contract that provides remuneration to the liquidity provider for the funds provided for use. The funds are used for lending and borrowing operations, as well as the exchange of cryptocurrencies. The amount of remuneration to a liquidity provider depends on the amount of funds invested by him. At the same time, strategies for making money are limited only by the technical capabilities of the AMM platform. For example, the received rewards can be used in other Pools, expanding the possibilities of the liquidity provider for earning. Also, you need to understand that the system of decentralized finance is at the initial stage of its development, although it is already showing exponential growth and today, in total, about $ 9.5 billion is blocked on all AMM sites. How is the liquidity provider's fee calculated? As a rule, the most common methods that are customary in classic trading are “Annual Percentage Rate” (APR) and “Annual Percentage Yield” (APY), the fundamental difference between which is the taking or not taking into account the total investment effect, that is, direct reinvestment of profits to increase profitability. This effect is calculated in the APY method and is not taken into account in the APR method. However, different AMM systems can simultaneously or alternately use both techniques for different operations. It should be borne in mind that decentralized finance systems are just beginning to emerge and are subject to very rapid fluctuations, which makes the use of the Annual Percentage Rate and Annual Percentage Yield methodologies not always accurately reflecting investment opportunities.
To ensure loan operations in the system of decentralized finance, as in the regulatory world, pledges are used, that is, crypto assets with a certain value. As you understand, the high volatility of crypto assets makes them not the most reliable collateral, therefore, AMM systems use their own rules to constantly maintain the collateral level corresponding to the amounts agreed by smart contracts. Often, the required value of the collateral exceeds the borrowed funds three or even four times, for example, to borrow the equivalent of one hundred dollars, you need to leave a collateral of 300 or 400 dollars.
Thus, despite the seeming ease of use, the ecosystem of decentralized finance is difficult to use correctly and requires permanent analysis of information, its collection and processing. A successful investor in the decentralized finance market must take into account a large number of factors in order to increase the profitability of their operations: borrowing, liquidity extraction, exchange features, code security, interest rates, profitability and dividend size.
It is in order to make life easier for investors in the decentralized finance system that our team is working on an application “Farm Academy DeFi” that will become a powerful and user-friendly tool that allows you to trade more efficiently in AMM platforms.
I support your post. You have explained a lot about Daffy. Thank you for such a post.