Cross-Chain Yield Farming
Cross-Chain Yield Farming
Yield farming is inherently risky. Besides being exposed to the asset risk of holding cryptocurrencies, yield farming generally incurs additional layers of risk that you can discover in section « 13: Risks ».
However, as DeFi protocols enabling yield farming continue to grow, users will have more options to reduce their risks by choosing mature projects with a history of success and lower fees by using alternative blockchains.
Farms Aggregation
The solution is to connect secure Farms, Bridges and DEXs spread over multiple blockchains within a single interface. We also need to sort these protocols in order to present only the most robust yield farming opportunities to clients to limit due diligence and potential risks.
See section « 5. Intelligent Data Selection » to understand methods used by EGG to filter presented data.
Mine Liquidity with 1 Asset Instead of 2
To provide liquidity in pools on Uniswap (Ethereum-based) or Quickswap (Polygon-based), one has to prepare a 50/50 provision of 2 tokens in advance, that adds friction to the whole process.
On EGG.FI, one can deposit a single asset that automatically gets split 50/50 before depositing into DEXs. The program checks which token is more in demand in the liquidity pool so that we can ensure the provision maximizes your share of the pool.
An example below would be that you're zapping into the USDC/ETH LP in Uniswap with ETH. The Zapper will swap 50% of your ETH into USDC and then deposit the 2 tokens into Uniswap so one can become a liquidity provider earning market-making fees and potentially LP rewards.
Bridges play a crucial role in yield farming with a view to reducing fees and frictions.
Adding liquidity through EGG becomes much easier than adding liquidity manually. Zap features can also be applied to « Concentrated Liquidity » that we explain below.
Concentrated Liquidity
When providing liquidity to a Uniswap market, liquidity providers are able to select a range where their liquidity will take effect. Now the liquidity can be concentrated in a smaller area that allows for higher volume trades with less slippage since everyone's liquidity no longer needs to be stretched all along the price curve.
EGG is embedding this feature within the Zapper, so that it can enable a single asset provision across price ranges and finally allowing unequal proportions between the 2 assets of a pair, when it was mandatory to be limited to a 50/50 proportion in the previous DEXs era.
Liquidity Staking
For a liquidity provider, you are now doubly incentivized to maintain your LP token, because you are not only earning the trading fees, you are also earning rewards on top of that in the form of reward tokens. Rewarding projects bene fi t from the increased liquidity maintenance and slippage reduction, that can in turn increase trading activity.
Proof-Of-Stake
Staking is the process of actively participating in transaction validation (similar to mining) on a proof-of- stake (PoS) blockchain. On these blockchains, anyone with a minimum-required balance of a specific cryptocurrency can validate transactions and earn Staking rewards . Secure, Non-Custodial Staking EGG helps users compound cryptocurrency investments through secure staking. We connect you to the best-in-class validators that offer high-uptime, secure staking with advanced monitoring & support.
LP and Staking Rewarding farms are added on EGG.FI and ranked by ACY (Annual Confirmed Yield) thanks to data acquisition from final wallets.
Annual Confirmed Yield
Choosing between the various farms is a difficult decision to make. The EGG dashboard becomes useful in analyzing and comparing how other users are making their farming decisions . The traditional definition of APY is the real rate of return earned on an investment taking into account the effect of compounding earnings.
Using this terminology would indicate that the yield farm was compounding earnings for you. That is simply not the case. It is hard to estimate the returns of yield farming even in a short term period. As many factors could contribute to these uncertainties, some of the reasons include the volatile fluctuations in yield farming and the relentless competition. So, if one of the yield farming strategies is overpopulated, naturally, the returns will dwindle.
A more applicable terminology to use would be ACY (annual confirmed yield), meaning the annual yield earned, whose reception actually reached the user's wallet, that gives a more appropriate ranking on most rewarding opportunities. The reward that is calculated is pegged in USD.
The tools developed by EGG Finance make it possible to prove that the gains promised by our partners were generated directly in the portfolios of the users and update the returns according to this evidence and in real time.
Last modified 1yr ago