How to Farm Yield on BitMax
- Token: the token you want to mine.
- Deposit Amount: the amount of asset you want to allocate to the protocol. Please make sure there are enough assets available for deposit.
- Minimum Deposit Amount: the minimum amount of asset required for deposit.
- Maximum Deposit Limit: the maximum amount of asset allowed for deposit.
- Est. Annualized Return: the estimated annualized return on capital based on current strategies.
- Token: the token you want to take back.
- Redemption Amount: the amount of asset you want to take back from the protocol. Please make sure there are enough assets available for redemption.
- Minimum Redemption Amount: the minimum amount of asset allowed for redemption.
- Est. Completion Time: the actual date for you to receive the redemption.
1. DeFi Yield Farming Explained
Yield Farming is ae to maximize return on capital by leveraging different decentralized finance (“DeFi”) protocols, including, but not limited to:
(1) lending protocols,
(2) decentralized liquidity pools, and
(3) derivatives protocols.
A “Yield Farmer” who allocates capital to any of these protocols is rewarded for their “liquidity contribution.” Rewards are granted to Yield Farmers in a variety of tokens from relevant DeFi protocolsas fees, interests, or incentives and distributed to liquidity contributors.
2. What makes BitMax DeFi Yield Farming unique?
(1) No Gas Fees
Yield Farming isresource-intensive . Every action involved in Yield Farming as an individual (“approve”, “deposit”, “reward claim”) involves gas fees paid on the relevant DeFi network. These fees reduce profit margin and therefore negatively impact yields generated by an individual Yield Farmer. By arming with BitMax, you enjoy the benefit of paying no gas fees, thus maximizing your yield.
(2) Seamless Farming Experience
Yield Farming requires extensive interactions with smart contracts and knowledge regarding coding and blockchain infrastructure to intelligently identify lucrative yield farming opportunities. At BitMax, our team handles all backend integration with DeFi protocols, thus allowing users to farmvia a simple and easy-to-use “one-click” .
(3) Timely Distribution and Flexible Deposit & Withdrawal
Unlike some other platforms require a pre-determined lock-up period for yield farming participation, and only distributes rewards afterconclusion of the lock-up period, BitMax allows users to deposit and withdraw their assets anytime, with the ability to receive yield farming rewards in a timely manner.
3. Is there a minimum or maximum amount for yield farming?
Minimum asset allocation to engage in yield farming varies from project-to-project. Similarly, a maximum asset allocation exists from project-to-project. Accordingly, BitMax users will encounter subscription minimums and maximums for each protocol they interact with on BitMax’s Yield Farming portal.
4. What are the yield farming strategies “Lending & Borrowing”, “decentralized liquidity pools”, “derivative protocols” and “yield optimization vaults”?
“Lending & Borrowing” strategies require lending assets to pools in exchange for lending interest plus additional token incentive issued.
“Decentralized liquidity pool” strategies involve acting as a liquidity provider by contributing assets to pools and earn transaction fees in return.
“Derivative protocol” strategies also involve acting as a liquidity provider, either by minting assets, or contributing liquidities to the pool, and earn transaction fees in return.
“Yield optimization vaults” strategies are a combination of different farming strategies, which usually involve selling of yield farming rewards at appropriate timings to maximize yield on principal capital.
While BitMax users are certainly encouraged to educate themselves on the underlying protocols and mechanicseach yield farming strategy utilizes to generate returns, they are not required to directly interact with the DeFi protocols, instead, BitMax acts as a service provider farming on behalf of users.
5. Can I withdraw my tokens at any time? Is there a unlock period?
Yes, BitMax users can quit farming and withdraw tokens anytime; however, there is an unbonding period that varies from project-to-project.
6. Are there any additional fees associated with the BitMax Yield Farming?
There are no additional fees for yield farming with BitMax. The estimated annualized reward posted on the BitMax website is an estimate on the net farming yields that users can expect to receive, though the actual rewards may vary slightly due to network conditions and changes implemented by each supported project.
7. How are yield farming rewards distributed?
Reward distribution mechanisms vary from project-to-project. Because BitMax aggregates yield farming interest from users and participatesas a single counterparty, rewards are distributed directly to BitMax. Once received, BitMax will make best efforts to credit individual users’ accounts proportionally based on individual contribution to the yield farming participation pool.
8. Is there any minimum farming time or lock-up period required for yield farming?
BitMax does not require minimum farming time, nor any pre-determined lock-up period for participation.
9. Why does yield farming generate such lucrative returns on capital?
There are usually two sources of yield for a “Farmer”: (1) fees or interests distributed to “Farmers” for allocating capital (i.e., “contributing liquidity”) to pools, and (2) additional DeFi token rewards issued and distributed to farmers. The aggregate yield for a farmer is therefore more lucrative given multiple revenue streams.
Additionally, yield farming often involves leveraged strategies, for example, participating in yield farming with borrowed funds can allow farmers to further increase capital allocation to a particular DeFi protocol, thus further maximizing yields. Leveraged yield farming strategies of course bear higher risk.
Highyields are not likely to sustain forever, especially given most of the yields come in the form of additional DeFi token reward issued, wherein token price is highly volatile. Furthermore, as yield farming gains more widespread adoption within the cryptocurrency ecosystem, yields will likely decline.
10. What are the risks associated with yield farming?
There are multiple risks associated with yield farming, including, but not limited to: (1) smart contract bugs and vulnerabilities, (2) liquidation risks, especially for strategies that involve leverage, and (3) manipulation, such as adminkey risk and attacks on liquidity pools.
11. What happens if the DeFi protocols or pools got hacked?
If a DeFi protocol is hacked, funds deposited in the relevant smart contracts might be subject to permanent loss and Yield Farmers allocating capital to the protocol will assume the loss. BitMax does not assume liability for any losses incurred due to smart contract vulnerability and only acts as a service provider farming on behalf of users.