Yield farming holds incredible profit potential. That’s why its operations increased manifold with the advent of decentralised finance. However, to earn the guaranteed yearly income, Decentralized Finance (DeFi) users on Ethereum have to manually manage all transactions. Also, rising gas prices incurred for farming operations is a major challenge. The realisation that these hiccups exist made developers create Harvest Finance. But what is it, and how does it work?
What is Harvest Finance?
Harvest Finance is an automated yield farming aggregator that helps farmers increase their revenues by utilising smart contracts on harvest vaults. It provides its users with the latest farming techniques and helps them earn high Annual Percentage Yields (APYs).
In simple words, it’s a money-making machine. It was launched by an unnamed core development team in September 2020. Within a month, the total value locked on the platform had exceeded $1 billion (Rs. 10,000 Lakh). The secret crew is in charge of putting all profit-boosting initiatives into action and creating new vaults.
How Does Harvest Finance work?
Let’s go into something that we’re all curious about. How does Harvest Finance work? It basically lets its users combine their deposits into vaults, which helps the farmers to lower their gas expenses and grow their yield.
Different vaults employ different farming techniques to pave the way for profit maximisation. Furthermore, the crypto investors have the option to withdraw, after the tactics for each vault has been disclosed.
What is a FARM token?
In return for the deposits, users receive Ethereum tokens called FARM tokens, which are ECR-20 compatible. FARM tokens are the native tokens of Harvest Finance and are representative of the users’ portion of the vault. It provides the farmers with the governance rights of the protocol.
Within the platform, the token is also used to receive cash flows. Users can stake their FARM tokens in exchange for additional FARM tokens. This staking takes place exclusively in a profit-sharing pool. Moreover, these FARM tokens are also used to promote liquidity mining at the platforms. Farmers who stake their Liquidity Program tokens in the Harvest Finance vaults earn liquidity incentives in the form of FARM tokens.
These FARM tokens are not printed, but rather purchased in the open market. This is a feature that is unique to this platform. This strategy also keeps the FARM tokens under constant purchasing pressure. Every week, new FARM tokens are created, with 70% of them going to liquidity providers, 20% to the development team, and 10% to the treasury.
Why Buy FARM Tokens?
Well, there are a host of answers to this question. Let’s read about them in detail below –
1. Simplified DeFi Investment
Firstly, it simplifies DeFi investment as you do not have to spend hours or months studying different yield-growing techniques. You can just deposit cash with Harvest Finance, and the rest can be taken care of by the project developers.
2. Higher Annual Percentage Yields (APYs)
Harvest Finance allows users to gain high annual percentage yield (APY) returns by pooling cryptos of different users together to get the optimal rates and fees. For example, the aggregator’s own asset, iFARM claims an APY of 18.67%.
3. Fee Splitting
Another advantage is the fee-splitting mechanism. DEX and agricultural fees are re-circulated around the community by the creators. These fees are used to fund buybacks and awards for stakeholders in profit-sharing pools. The community can also authorise network expenses through the governance system.
4. Stability of Investment Even During Volatility
FARM token contracts are audited by reputed and well-known auditors who ensure that the farmers’ investment remains stable even during high volatility periods.
Harvest Finance is an excellent illustration of how DeFi technologies enable ordinary people to band together and improve their earning potential. The protocol simplifies the process of profiting from DeFi farming. As a result, Harvest Finance’s services have continued to be in high demand since its launch. You can obtain more insights on the FARM tokens on the Zebpay crypto exchange and commence your crypto trading journey.