Stemming from that trend, a new incentivisation layer was built on top of that called yield farming. Protocols are competing against liquidity were Synthetix initially made the concept of yield farming popular. They were incentivizing the creation of Synths through giving away their native governance token to liquidity providers. This whole primitive achieved a tipping point during the 2020 DeFi summer when Compound incentivized lending and borrowing through giving out the governance token COMP to participants in their protocol. Started from there we saw billions of dollars deposited into yield farming smart contracts.
Yam Finance secured over 400 millions USD in less than 24h
In addition to that we have seen the emergence of AMM (Automated Market Makers) such as Uniswap, Sushiswap and Pancakeswap. Those AMMs allow anyone to become a liquidity provider/market maker.
Users deposit tokens to both sides of the liquidity and earn fees for people trading using their liquidity. This liquidity again was incentivised through giving out the native token of the protocol in Uniswap, Sushiswap and many other protocols. New DeFi projects also started to give out their native governance token to people who provide liquidity for their own projects. The Ampleforth project started this trend with their famous Geysers contracts, Sushi Swap followed suit with their famous Masterchef contract. Now hundreds of projects have liquidity mining incentives in place to bootstrap liquidity for their own crypto tokens. This was pretty much the beginning of a big and long lasting trend called yield farming or liqudity mining.
Yield farming continued to grow into the billions of dollars and also across several blockchains. Today there is yield farming activity on almost every layer one blockchain. In order to automate the yield farming process, there has been a recent advent of so-called yield aggregators as well as industrial yield farming. Those platforms essentially deposit your funds automatically for you into yield farming contracts and automatically sell the liquidity rewards once a day in order to auto-compound your position. Due to the high amount of transaction fees, it makes more sense for users to pool their funds in yield-aggregators and let them do the harvesting and auto-compounding collectively for their users and charge a small fee for doing so. Notable examples of this are yearn.finance, harvest.finance and autofarm.network.
However the decision for users where to deposit their funds is getting increasingly difficult. Not only if they should put their money into yield farms, yield aggregators or lending protocols. Also variables such as impermanent loss, security, fees as well as activity across various blockchains makes it very complicated to do so.
$50 mln USD deposited earning zero rewards
Also the yield rates are dynamic and it's quite hard to compare them, or find the platform who pays the most. We found that markets are quite inefficient in deploying their capital. We also think this is also due a lack of information.
That’s why we started Multifarm.fi, a yield discovery platform. We show users yield opportunities as well as give the necessary data points so users can do their best investment decisions.
- 1.First weeks of June 2021
- 2.Only 50 spots
- 3.Community launch
- 1.Begins mid-July
- 2.Access publicly
- 3.Add more farms
- 4.Iterate on feedback
- 5.Launch additional features
The team is currently lead by MSM, Pool2Warrior and DegenX