I have been dabbling in crypto since 2017. In 2020 I had all but given up on my crypto stash and I missed the birth of DeFi and Yield Farming. It was early 2021 when I realised my crypto was worth something AND that I could earn ‘yield’ or ‘interest’ on said assets. My interest was peeked again.
Surely a crypto use-case of being able to earn passive income on an appreciating (or even depreciating) asset was too good to be true? One quick glance and I could see APR’s of 30%, 100%, sometimes over 1000%. Like a Real Estate asset kicking off rental income - I had to know more.
I had thrown a few dollars into Pancake Swap and Beefy Finance at the beginning of the year, these seemed to have done well, but I wanted to establish a strategy, a plan to invest more significant amounts of capital.
It’s now been exactly 1 month since I started logging all my plays, together with deeper analysis and research on the space.
My first two farms were Polycat and Rushmoon. I blindly chucked a thousand bucks in each. Funnily enough, both farms were super succesful and I made $300/$400 overnight on each. This is easy I thought!
But clearly it is not as easy as that. The learning curve has been steep. There is an old saying you may have heard of…
The real truth is that the majority of farms will lose you money if you go in blindly. A combination of falling native token price, falling APR’s and Deposit/Transaction fees will see to that.
To be successful at Yield Farming is much like anything else — it takes knowledge, understanding, time, research, practice etc etc.
I’m aware that some of you don’t have the time for that. So in this article I share with you a month’s worth of research, trial and error, so you don’t have to. How nice of me. No honestly, really it’s ok. Fucking retards.
On with business… Some of the questions I was asking were…
Which farms to participate in?
Are they safe?
Which tokens/coins to stake?
Should I pay a deposit fee or enter the 0% fee farms?
What should I do with the winnings?
Should I use Stablecoins?
How often should I harvest?
The list goes on.
Overall strategy
Initially, based on the APR’s I could see banded about, I thought I’d target 1% per day on my capital. So if I threw £10,000 in, compounded, it’d look like this…
Right… so £377k by the end of the year and £72k pcm ! Something not right there. Maybe I can’t make 1% per day! But it looks so easy! All these farms have loads of pools at 300% APR ++, what’s the catch?
What you need to know now
Those APR’s don’t last long. Continually dropping, often rapidly.
The native token price always (nearly always) plummets at launch, affecting gains whatever token you farm with
So it follows that you never buy the native token
Meaning that you’ll likely be paying a Deposit Fee of 4% to farm with an established token (such as BNB, USDC etc.)
It’s a race between a falling native token price, a falling APR and your Harvesting ability in order to recoup your deposit — that’s even before you can get into profit.
So in practice this means being reasonably selective (but not too rigid) on farm selection, noting the exact launch time, having your funds in place and then literally harvesting like a mad man — Daley Thompson style- in a race to beat the drop and get into profit. That said, you should manage to do this on most farms. You then have the luxury of farming profits.
This is the promised land — Free crypto!
I’m still formulating how I play it from here. But in a nutshell it’s a combination of stablecoins and major pairs, such as BNB-CAKE, BNB-ADA, MATIC-QUICK, MATIC-WBTC. I’m staking predominantly USDC, DAI , ADA, BNB and then putting the profits back into the major coins — NOT stables. All my profits are being used to buy more BNB, WBTC, MATIC etc. Much more upside to them than USDC. Plus, in general, APR’s on stables tend to be lower. So I make my deposit fee back on the dollar amount, normally takes a day or two and then it’s free crypto from there.
I’ve been there, done that on farming with the Shitcoin or the native token — just don’t do it, you will lose.
Do not buy the native token
Minting or farming it is ok and then staking it, but never swap your dollars for it. Enter the farms with the type of coins I mention above, whatever you want to accumulate, just not the shitcoin, ok? Got it, retard?
Realistically, if I can make 0.1% -0.2% per day, compounded, my year will look like this…
There’s plenty of caveats to that, not least initial capital and inevitable rug pulls, that will affect performance. But an average of 0.15% per day, as in the chart above, takes into account all the ups and downs and is a reasonable target for anyone. Anymore feels like a tough ask at the moment, any less means you might not be taking enough risk. You could feasibly make 0.07%-0.1% per day quite passively if you really wanted.
A typical example
One Friday afternoon, followed RugDoc calendar, SuperMannion farm launch soon, nothing special, no great team or history behind it, but clean code review, give it a shot.
11pm I stake $1k worth of ADA-BNB and $1k worth of BUSD-DAI. Both attract a 4% deposit fee. So I’m down $40 on each to start. APR’s are stupid high as usual. Farming starts and the native token price holds for an hour or two — gold! On the stable pairing I harvest $5, $5, $3, in the first half hour before going to bed and then $16, $29 the next day = $58. I put the $40 back into the BUSD-DAI pairing, so that’s re-paid and then for the next couple of days I’m selling the native token harvest for BNB-ADA that I stake in one of the more established farms (like BiSwap or PCS) and get 0.15%-0.2% per day. The ADA-BNB pool was a similar story. Note that these profits, even at 0.15% per day, compounded over several months will amount to sizeable sums. So it might only be a $100 win — but long term that’s worth a lot, especially if there are several of them!
The other farm play is to enter the 0% fee farm, in this case SMAN-BNB but you only do this when the SMAN price has bottomed out. If you are really lucky you’ll get an uplift on this too, that’s a price action play, a bit more advanced, something I’m starting to get a handle on.
The above screenshot was taken after about 24hrs of the farm being open. Token price had crashed from $45 to 21c. So you make all your money in the first few hours. Not really much point in joining this farm after this point, paying 4%, the APR’s are way down. Some of these farms transition into medium/long term projects, but the APR’s always level out — 0.05% — 1% per day. I’ll stay in this farm until APR drops to around 0.1% per day OR if the telegram chat gets edgy, maybe the Developer goes AWOL etc.
Which farms?
You can split this into 3 categories…
- New farms
- Established farms
- Dead farms
Obviously you can forget 3. Established farms offer relative safety but with lower potential returns. New launch farms are exciting to join, good fun to farm, can be profitable but are time consuming, you’ll need to be at your desk for a start. There are new farms every single day, too many to join. A bit like stock picking, after a while, you get a sense for which ones are likely to be good and which ones are likely to crash and burn within a couple of days. I can’t give you a recipe here, save for experience. But I am now using a filter based on RugDoc.io, TVL and general space awareness. I am spreading my plays across both 1. and 2. in the hope that I’ll find a 1. that turns into a 2. like Polycat for example. The longer a farm runs, the more money you’ll make.
I am predominantly on the Polygon and BSC chains, split 50:50 between the two, save for a small holding on Fantom (which is actually one of the easiest and stress free farming environments, just a little quiet).
Safety
First and foremost you have to educate yourself on how to analyse a new farm launch. RugDoc.io now has an amazing resource, check out their Trello I’m gradually reading through this. You should also check their Twitter before entering any farm.
I have been rugged a few times now, not so many recently — touche bois — but it will happen and I factor in 20% loss of capital for this. So that’s 1 in 5 farms will rug. A popular YouTuber told me he works on 1–5, but for me it’s about 1–10. I’m hoping that the work of RugDoc continues to prove effective.
I have saved myself on more than one occasion by knowing how to Emergency Withdraw. One time the telegram chat was going ballistic, the dev had hard rugged, literally stealing funds, but somehow I swiftly withdrew from the contract and saved myself over $1k! I couldn’t believe it. That was a nervous wait for “Transaction Complete”!
You absolutely must know how to do this piece of surgery!
It’s all in RugDoc. Enuff said.
My toolkit & resources
Fave Youtubers…
All the Telegram channels of each farm plus https://t.me/apeoclock for release schedules.
https://apeboard.finance/dashboard
https://www.thecalculatorsite.com/finance/calculators/compoundinterestcalculator.php
Summary
I think I’ll leave it there. I could go on forever! I do enjoy it. I do enjoy the humour, the colourful environment, the constant innovation, the fast pace, the risk, the wins. The skills I learnt in Real Estate can last decades, a worthy investment of time. What I’ve learnt over the last month may not be relevant in 10 days! Who knows, let’s hope it lasts. This meme you’ll see everywhere…
