Harvest automatically farms the highest yield available from the newest DeFi protocols, and optimizes the yields that are received using the latest farming techniques.
What is FARM
FARM is Harvest Finance’s governance token which allows token holders to influence Harvest’s treasury and the future direction of the protocol. FARM token holders are entitled to the 5% protocol fees.
Who created Harvest Finance?
Harvest Finance was built by a group of anonymous developers. The only visibility to the team is via a handful of community managers that volunteer their time.
What problem does Harvest Finance solve?
The DeFi space is becoming more complex as more protocols are being introduced. Harvest Finance aims to help non-savvy users yield farm and get the highest DeFi yield while saving time and money.
For users who are yield farming with small amounts of capital, it may not be the most effective use of time to constantly harvest yield from the various DeFi yield farms. Constantly harvesting yield will also incur high gas cost. Harvest Finance collates capital from various yield farmers to do yield farming more effectively saving time and money for users.
How does Harvest Finance work?
Let’s use Harvest’s CRV strategy to understand how Harvest generates yield for its users.
Step 1) User deposits stablecoins (USDT, DAI or USDC) into Harvest’s yCRV stablecoin farm
Step 2) Harvest collects yCRV LP tokens
Step 3) Harvest deposits yCRV LP tokens into CRV pool to farm CRV
Step 4) Farmed CRV tokens are sold on Uniswap. Profits will be distributed between the yCRV strategy and Harvest depositors. 95% of profits will be reinvested into the yCRV strategy and 5% of profits will be rewarded to users in Dai.
This is 1 of the 24 strategies currently available on Harvest Finance. Harvest has created strategies for stablecoins, Bitcoin, SushiSwap, Uniswap, Ethereum, and FARM
How do you get FARM?
When users deposit assets into Harvest to farm, they receive fTokens which represent a yield-bearing version of the asset. For example, depositing USDC into Harvest will result in you receiving fUSDC. fTokens can be redeemed for the underlying asset at any time.
Depositors receive 70% of the profits generated from farming via Harvest as well as FARM token rewards. The remaining 30% is sent to a protocol token buyback and profit sharing program.
Harvest Finance Exploit?
On 26 October 2020, hackers used flash loans to drain $33.8 million from Harvest’s USDT and USDC vaults. The attacker took out a $50 million USDT flash loan, then used the Curve Finance Y pool to swap funds and stretch stablecoin prices out of proportion.
The attacker was able to withdraw more USDT because of the changed USDT price and this was made possible by the price calculation mechanism for deposits and withdrawals.
What was Harvest’s response to the hack?
Affected users from the hack were given GRAIN tokens in a pro-rata manner based on their deposits. They were also given a pro-rata share of the $2.5 million which was returned by the attacker.
For example, if a user had a 100 USDT loss from the hack, he would get approximately 7.39 USDT, and approximately 92.61 GRAIN.
The distribution was based on a total affected value of $33.8 million.
Is Harvest Finance safe after the hack?
Harvest promised to work on mitigation strategies to stop this kind of flash loan attack from occurring again in the future. They are also looking into insurance options and reparation strategies. Specifically, a new yCRV vault is open for deposits with the flash loan attack vector mitigated so it can no longer be used.
However, that being said, it is still very risky to use DeFi protocols and users should be aware of the various risks before interacting with these smart contract protocols.
Sources: https://www.coingecko.com, https://harvest.finance/faq
Grain: https://www.coingecko.com/en/coins/grain-token
FARM: https://www.coingecko.com/en/coins/harvest-finance
Harvest Finance: https://harvest.finance
