Hello HODLers,
This is my 2nd article on stablecoin farming.
In my last post, I explained Where to earn BIG with your Stablecoins? Up to 47% APY !.
We covered Venus, Belt and CubFinance protocols.
In this post, I will take you to the next level: Leveraged Stablecoin Farming!
This is the process to borrow some assets and pool them with your owned assets in order to farm a bigger position and therefore get a better yield on your owned assets
Today we will look at AlpacaFinance
AlpacaFinance, the market leader !
I have been leverage farming on AlpacaFinance for a while. I have earned money mostly using the $CAKE 2.5x leverage.
The project has $1.7bn in TVL ranking 3rd in the BSC ecosystem.
But today, we are looking into Stablecoins. I have to first do a caveat, if I had done this post a week ago, yields would have been higher. They have come down a lot over the past few days.
Alpacafinance allows you to leverage up to 4x your stablecoins pairs. As you understand, the leveraged pair is not too risky as it is supposed to be between 2 assets c.1$.
It uses PancakeSwap and WaultSwap.
So apart from the hack, scam or fud risk; it seems quite safe.
One feature that I like very much is that you can mostly choose the assets that you will be borrowing.
As an example, the stablecoin that I like the least is USDT, therefore I always try to borrow this one against my holdings in the other stablecoin.
In case I am right and this is the most sketchy and it goes down, I will not be liquidated and would even earn some capital gains as the $value that I would have to payback is lower than the one I took as loan in the first place.
Decomposing the APR
AlpacaFinance shows:
The leveraged Yield Farm APR +
The trading fees APR +
Alpaca rewards APR
Minus
Borrowing Interest APR
And then gives you a total APR subject to future market changes.
At the moment, I would not open a position in these pairs as the APY% is the lowest I have seen.
I used to have 30-40% APY on these 4x leveraged farms.
I used to provide liquidity for USDT-BUSD, I was providing BUSD and borrowing USDT (as I prefer BUSD). The liquidation risk is at 80% meaning that if my asset (BUSD) loses 20% versus USDT, I would be liquidated. This is as you understand, quite unlikely.
AlpacaFinance is also allowing Lending
This is a more classic financial service that is provided by many platforms but looking at the low leveraged farming yield, it is a better option at the moment.
15.5%APY on single BUSD is not so bad right? Especially if you are looking for a small dip coming up.
Stay safe out there !