*The information published in this article is not financial advice. I am not a financial advisor, and all information in this article is my own personal opinion based on my own personal research. You should always do your own research and/or consult a professional financial advisor prior to making any financial decisions.*
One of my goals with the Apex Haus platform and YouTube channel is to help people make more money. While many people still question and/or fear cryptocurrency, if you’re serious about wanting to increase your wealth, then I believe it’s crucial to realize that crypto is real and it’s not going anywhere. You may not like it, you may not “get it,” but that’s irrelevant. If you’re actively choosing not to at a minimum get educated on it, then you are denying yourself an incredible opportunity of a lifetime.
In a previous article I showed you how you can get invested in the Star Atlas DAO governance token $POLIS, where I believe we’re going to see a massive gain upwards of 1000%+ within the next 6-12 months. While you can let it just sit in your wallet and do it’s price changes naturally, there are also additional ways you can make it work for you to earn even more.
When it comes to the incredible opportunities cryptocurrency affords us, one of these opportunities is called yield farming, where if done right and done consistently, can amass large amounts of money due to insanely high APY rates.
What is Yield Farming?
Defined by one article from the trusted CoinMarketCap.com, “Yield farming is the practice of staking or lending crypto assets in order to generate high returns or rewards in the form of additional cryptocurrency.”
Yield farming is when you use the benefit associated with smart contracts on the blockchain in order to essentially offer up your cryptocurrency holdings as liquidity for other people to use to perform token exchanges/swaps, or for loans.
As a reward for offering up your tokens as liquidity, you get yield in return as a reward, thus earning more of the tokens you’re offering up. The crazy thing is some of these liquidity pools offer ridiculously insane APYs, anywhere from 50% to sometimes 1000%+.
Don’t worry, it sounds far more complicated than it actually is. All of the messy, confusing, hard work is done completely invisibly in the background. You just input your tokens into an account, and the smart contracts (the benefit of blockchain technology) take care of all the work for you.
Now please note that in order to stake in these what are called “Liquidity Pools,” or LPs for short, there is an associated token pair meaning you’re required to input your token as well as it’s associated pair token, based on the pool you’re adding to. This must be done in an equal amount.
For example, if you’re going to deposit $100 worth of $POLIS tokens into a POLIS/USDC liquidity pool, you must also deposit $100 worth of USDC with it.
To learn more about why this is and how it works, check out this article from Medium that explains liquidity pools it in great detail.
How To Start Yield Farming $POLIS
If you’ve decided to join those of us who are bullish on the Star Atlas project and have bought yourself some of the $POLIS token, I now want to show you 3 platforms that you can use to start earning passive income on your current holdings by providing your tokens as liquidity.
Now eventually, once the game’s DAO (Decentralized Autonomous Organization) is out (currently targeted for February 2022 at the time of writing this article according to the Star Atlas Official Roadmap), you’ll be able to stake your $POLIS right inside of the game platform and won’t need to do so on third party platforms, but for now these are our best options of earning on our current holdings.
Since everything on the Web3 (blockchain) ecosystem uses your cryptowallet to login/connect to, you will need to have a Solana based cryptowallet installed on your browser. If you already own some $POLIS tokens, then you most likely already know what that is and already have one. If you do not, I suggest going back and watching my video on Buying the $POLIS Token, where I show you the step-by-step process on installing the Phantom wallet and getting yourself some $POLIS.
Once you have $POLIS inside your Phantom (or other Solana based) wallet, along with an equal amount of USDC (as that’s what we’re going to be using in this example), the next step is to connect to one of the lending platforms below:
Where to Start Yield Farming
The three platform options we have for yield farming the POLIS token are Orca, Raydium, and Tulip, which are also known as DEX’s (short for Decentralized Exchanges).
At the time of my writing this article, their APY rates are as follows:
- Return APY of 85% in ORCA Tokens
- with Double Dipping, POLIS Return additional APY of 73%
- Total APY = 138% Between ORCA and POLIS tokens
- with Double Dipping, POLIS Return additional APY of 73%
- Dual Yield with RAY at APY of 102%
- Regular Yield with USDC at APY of 65%
- 89% with USDC Pair
- 175% with RAY Pair
The process for staking in each of their liquidity pools is pretty much the same.
First, go to their respective websites and use the “Connect Wallet” button on the top right to connect your Phantom/Solana wallet:
Once your wallet is connected to the platform, navigate to their “Pools” link at the top of the page (or “Vault” in the case of Tulip).
Next, use their Search feature or scroll down until your find the POLIS-USDC pair and select it.
You will then be presented with a screen to deposit both POLIS and USDC. Input the amounts of each you’d like to deposit (they must be equal to one another, it should auto calculate your required USDC amount based on the amount of POLIS you input).
Once you have deposited your POLIS-USDC pair, in return you will receive what is known as an LP Token. This LP Token represents your stake inside the liquidity pool.
Next, you want to deposit your LP Tokens into one of the farming pools:
- For Orca, select the “Double Dip” tab at the top. Scroll down to the POLIS-USDC pool and select the Double-Dip button to deposit your LP Tokens.
- For Raydium, select the “Farms” link at the top. Scroll down to the POLIS-USDC LP pool, select it, and deposit your LP Tokens.
- For Tulip, select the “Vaults” link at the top. Scroll down to the POLIS-USDC LP pool, select it, and deposit your LP Tokens.
That’s it, you are now officially yield farming the POLIS token and earning APY on your holdings.
What Are The Risks of Yield Farming?
Now of course, you can’t have the good without the bad, and with higher rewards comes higher risk. So with that being said, there are some things you should be aware if you’re going to consider staking your tokens into liquidity pools.
- Impermanent Loss – Because of the way liquidity pools work, there must always be an equal balance of both tokens in a pair. So what happens when the value of those tokens change in either a positive or negative direction from each other? The smart contracts are constantly having to re-balance the value of each token, which can cause the amounts you have in there to fluctuate. Check out this video on YouTube by Finematics that does an amazing job explaining what impermanent loss is.
2. Bugs, Hacks, and Beta Software – Because much of this new blockchain and web3 technology is so new, it can still be susceptible to programming and security issues. With this in mind, I always suggest people split their tokens between several platforms instead of putting everything into a single one. This way, if one platform is hacked or has some kind of software issue, at least not all of your tokens are affected.
Yield farming can be an incredible way to earn extremely high returns on your crypto holdings, but do so cautiously. I always suggest doing a lot of research and learning about all of the risk factors, as well as how to negate them as much as possible to protect yourself and your assets.
Unlike the traditional web and finance world, crypto returns power to the people, and with that power also comes responsibility. There are no help desk or customer service numbers to call. As such, you want to make sure you know what you’re doing to avoid hacks, scams, or theft as much as possible.