DeFi Needs Don-key
Compared to the adoption ahead, a large minority of people own cryptocurrency; smaller still, a tiny minority of people effectively use their crypto through DeFi (decentralized finance.) Considering that DeFi is the very best current real-world use case for cryptocurrency, creativity in overcoming this barrier poses an exciting opportunity.
What is Decentralized Finance?
Innovation always answers a need; and the need for decentralized finance answers the need for a finance that is free from overgrown, and highly opaque centralized infrastructure. As it stands today, the global economy is totally dependent upon a class of overpaid and self-interested middlemen. They control the flow of capital, and likewise influence over the general market and the way that society organizes itself. In terms of financial choice, the result is anything but a free market.
Thankfully, now the world has decentralized finance; an emerging solution that is now possible due to the magic of blockchain. For the first time ever, the retail market has an equally scalable alternative to untrustworthy intermediaries.
DeFi is a category that refers to a general group of blockchain based protocols that enable much of the same financial products, with the key difference being that they are intermediated through smart contracts, instead of other human beings. The power of this is that it redistributes centralized wealth, power, and influence, and gives it to ordinary individuals. With DeFi, retail investors are truly free to enjoy the full benefit of their capital, without having to give away a large chunk of it to big institutions.
All things considered, DeFi is pretty intuitive; it refers to the basic basket of financial tools, like borrowing, lending, investing and exchanging, but with the added twist that they are decentralized. Simple. Yield farming on the other hand, is quite a bit more complicated — breaking it down, we will see it as the general mechanism that enables the large-scale growth of the entire DeFi ecosystem.
What is Yield Farming?
When most people first hear of yield farming, they may mistake it for some kind of obscure agriculture jargon. In reality, it refers to a reward structure that incentivizes the proliferation of DeFi. Let’s break it down into layers.
At the top, just like in centralized finance, people want to lend, borrow, invest, and exchange their capital. Through blockchain, decentralized protocols make this possible. Donald Donkey, for example, may want to borrow some crypto through a platform like Compound so that he can invest it in his favorite degenerate alt coins. As long as he supports his borrow with adequate collateral, he’s good to go. In normal finance, and in crypto as well, Donald would have to pay interest on his loan so that the lender makes profit. This makes the lending/ borrowing dynamic possible by incentivizing the lender.
Taking it one step further, DeFi yield farming supercharges borrow/lend interactions by adding an additional layer of incentives. Both lender and borrower are awarded governance tokens for using the platform, Compound’s COMP in this example, in proportion to the amount borrowed/lended. These governance tokens allow their owner to vote and make important decisions about how the given protocol is managed. Importantly, because they have utility, they can be traded, staked, lended, and borrowed. With this additional layer of investment, we see the mechanism of scalability. Each layer of investment rewards the user with governance tokens which can then be reinvested and compounded in the DeFi ecosystem.
For the knowledgeable farmer, the ability to stack DeFi strategies carries the promise of great profit. With yield farming, our friend Donald Donkey can lend his awarded COMP tokens and earn on top of his initial borrow — hence he can earn APY on his borrow, and make even more money tacked onto his alt coin gains, for which he borrowed the crypto. The more value involved and the more complex the strategy, the more a yield farmer stands to make.
A yield farmer’s only two limitations are:
1)How well researched they are, and 2) how much funds they have to play with.
- Lending/borrowing and liquidity providing risks and rewards constantly shift, making yield farming incredibly complicated. In order to be successful, yield farmers need to constantly keep themselves abreast of DeFi’s changing dynamics.
- Yield farmer profits are limited by how much funds they have to work with because staking and governance tokens are earned via an APY percentage that is dependent upon value involved. Naturally, only those who play with big money can earn big money.
Don-key recognizes that in limitations there are needs, and in needs there are opportunities.
Don-key is the Solution
Everyone wants high APY: Talented yield farmers need funds, and retail investors need skill. Don-key Finance was born from the idea of pairing them together, to solve both of their needs. By creating a system in which farmers compete for retail money, Don-key opens the door for untapped hundreds of thousands if not millions of dollars to pour into yield farming. This is crucial because the growth of DeFi relies entirely upon its ability to make itself accessible to retail investors; in achieving this end, Don-key makes itself integral to the overall ecosystem.
Don-key’s intuitive interface and one click copy- farming makes yield farming a breeze, so that you can enjoy yield farming’s high profitability without having to sacrifice the time and energy needed to do it actively.
Our farmers echo our vision. Don-key’s newest, nickbtts said of the platform: “Yield farming is a full time job; discovery, risk analysis, protocol swapping and harvesting all take time and knowledge to safely maximise returns. Don-key gives users the ability to reclaim that time, whilst maximising yield and giving DeFi projects with strong security and tokenomics access to deep liquidity.”
