DeFi Yield Farming Guide
AscendEX DeFi Yield Farming supports flexible deposit & withdrawal and timely distribution of yields.
How to Farm Yield on AscendEX
1. Visit ascendex.com - [Investment Product] – [DeFi Yield Farming].
2. Select a project you want to participate in and click [View Now] for details.
3. Click on [Deposit Now], enter a deposit amount, tick the Agreement box and click on [Confirm].
- Token: the token you want to mine.
- Deposit Amount: the amount of asset you want to allocate to the protocol. Please make sure there are enough assets available for deposit.
- Minimum Deposit Amount: the minimum amount of asset required for deposit.
- Maximum Deposit Limit: the maximum amount of asset allowed for deposit.
- Est. Annualized Return: the estimated annualized return on capital based on current strategies.
4. Click on [My Yield Farming] on the DeFi Yield Farming page to view farming details. Click on [Deposit] and continue to deposit. Or if you want to take back the tokens, click on [Redeem].
- Token: the token you want to take back.
- Redemption Amount: the amount of asset you want to take back from the protocol. Please make sure there are enough assets available for redemption.
- Minimum Redemption Amount: the minimum amount of asset allowed for redemption.
- Est. Completion Time: the actual date for you to receive the redemption.
5. Click on [History] on the DeFi Yield Farming page to check your returns.
1. DeFi Yield Farming Explained
Yield Farming is a process generally designed to maximize return on capital by leveraging different decentralized finance (“DeFi”) protocols, including, but not limited to:
A. Lending protocols
B. Decentralized liquidity pools
C. Derivatives protocols
A “Yield Farmer” who allocates capital to any of these protocols is rewarded for their “liquidity contribution.” Rewards are granted to Yield Farmers in a variety of tokens from relevant DeFi protocols issued as fees, interests, or incentives and distributed to liquidity contributors.
2. What makes AscendEX DeFi Yield Farming unique?
A. No Gas Fees
Yield Farming is a resource-intensive process. Every action involved in Yield Farming as an individual (“approve”, “deposit”, “reward claim”) involves gas fees paid on the relevant DeFi network. These fees reduce profit margin and therefore negatively impact yields generated by an individual Yield Farmer. By farming with AscendEX you enjoy the benefit of paying no gas fees, thus maximizing your yield.
B. Seamless Farming Experience
Yield Farming requires extensive interactions with smart contracts and knowledge regarding coding and blockchain infrastructure to intelligently identify lucrative yield farming opportunities. At AscendEX, our team handles all backend integration with DeFi protocols, thus allowing users to farm yield via a simple and easy-to-use “one-click” function.
C. Timely Distribution and Flexible Deposit & Withdrawal
Unlike some other platforms that require a pre-determined lock-up period for yield farming participation, and only distributes rewards after the conclusion of the lock-up period, AscendEX allows users to deposit and withdraw their assets anytime, with the ability to receive yield farming rewards in a timely manner.
3. Is there a minimum or maximum amount for yield farming?
Minimum asset allocation to engage in yield farming varies from project-to-project. Similarly, a maximum asset allocation exists from project-to-project. Accordingly, AscendEX users will encounter subscription minimums and maximums for each protocol that they interact with on AscendEX's Yield Farming portal.
4. What are the yield farming strategies “Lending & Borrowing”, “decentralized liquidity pools”, “derivative protocols” and “yield optimization vaults”?
“Lending & Borrowing” strategies require lending assets to be deposited with pools in exchange for lending interest plus additional token incentive issued.
“Decentralized liquidity pool” strategies involve acting as a liquidity provider by contributing assets to pools and earn transaction fees in return.
“Derivative protocol” strategies also involve acting as a liquidity provider, either by minting assets, or contributing liquidities to the pool, and earn transaction fees in return.
“Yield optimization vaults” strategies are a combination of different farming strategies, which usually involve selling of yield farming rewards at appropriate timings to maximize yield on principal capital.
While AscendEX users are certainly encouraged to educate themselves on the underlying protocols and mechanics that each yield farming strategy utilizes to generate returns, they are not required to directly interact with the DeFi protocols, instead, AscendEX acts as a service provider farming on behalf of users.
5. Can I withdraw my tokens at any time? Is there a unlock period?
Yes, AscendEX users can quit farming and withdraw tokens anytime; however, there is an unbonding period that varies from project-to-project.
6. Are there any additional fees associated with the AscendEX Yield Farming?
There are no additional fees for yield farming with AscendEX. The estimated annualized reward posted on the AscendEX website is an estimate on the net farming yields that users can expect to receive, though the actual rewards may vary slightly due to network conditions and changes implemented by each supported project.
7. How are yield farming rewards distributed?
Reward distribution mechanisms vary from project-to-project. Because AscendEX aggregates yield farming interest from users and participates in farming as a single counterparty, rewards are distributed directly to AscendEX. Once received, AscendEX will make best efforts to credit individual users’ accounts in a timely manner. Rewards are distributed proportionally based on individual contribution to the yield farming participation pool.
8. Is there any minimum farming time or lock-up period required for yield farming?
AscendEX does not require minimum farming time, nor any pre-determined lock-up period for participation.
9. Why does yield farming generate such lucrative returns on capital?
There are usually two sources of yield for a “Farmer”: (1) fees or interests distributed to “Farmers” for allocating capital (i.e., “contributing liquidity”) to pools, and (2) additional DeFi token rewards issued and distributed to farmers. The aggregate yield for a farmer is therefore more lucrative given multiple revenue streams.
Additionally, yield farming often involves leveraged strategies, for example, participating in yield farming with borrowed funds can allow farmers to further increase capital allocation to a particular DeFi protocol, thus further maximizing yields. Leveraged yield farming strategies of course bear higher risk.
Higher yields are not likely to sustain forever, especially given that most of the yields come in the form of additional DeFi token reward issued, wherein token price is highly volatile. Furthermore, as yield farming gains more widespread adoption within the cryptocurrency ecosystem, yields will likely decline.
10. What are the risks associated with yield farming?
There are multiple risks associated with yield farming, including, but not limited to: (1) smart contract bugs and vulnerabilities, (2) liquidation risks, especially for strategies that involve leverage, and (3) manipulation, such as adminkey risk and attacks on liquidity pools.
11. What happens if the DeFi protocols or pools got hacked?
If a DeFi protocol is hacked, funds deposited in the relevant smart contracts might be subject to permanent loss and Yield Farmers allocating capital to the protocol will assume the loss. AscendEX does not assume liability for any losses incurred due to smart contract vulnerability and only acts as a service provider farming on behalf of users.