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The appearance of yield farming since 2020 has drawn huge attention to crypto investors and still retains high popularity today. It is really a great innovation and mechanism that enables the token holders to earn some money by staking their altcoins into different vaults. Generally speaking, simply deposit their crypto assets is able to earn certain percentage of transaction fees. For example, each transaction on Uniswap v2 will be charged 0.3% of the transaction fee which is distributed to these liquidity providers based on their share of the pool. The liquidity providers are given LP tokens as the demonstration of their share of the pool. Moreover, these LP tokens could be used to deposit into another vault to earn new tokens provided by the platform itself. The new tokens are usually the native tokens published by the platform. The whole process above is commonly known as yield farming. Yield farming is more attractive since its reward is usually higher than staking. The advantage of yield farming is that it does not increase any pressure to the platform since the platform could issue its native tokens with no cost, and the native tokens are really perfect assets used for the reward to investors who supply their crypto tokens. Such token economic patterns are commonly applied on many projects on Ethereum, BINANCE Smart Chain (BSC), Fantom and so on.
I am going to discuss some popular yield farming projects on BSC. There are lots of projects running on BSC, including decentralized exchanges (DEX), DEX aggregators, lending, NFT, yield farming, prediction and so forth. The instant data analysis of the major projects on BSC are available by Defistation. Before the middle of May this year, both TVL (Total Value Locked) and transactions increase stably. The figure shows the dramatic decrease of TVL after the middle of May due to bear market at this time.
First of all, let’s talk about PancakeSwap, the famous project on BSC, which is not just an AMM (Automated Market Maker) DEX but integrates lots of amazing functions such as collectibles, lottery, IFO (Initial Farm Offerings), team battle and prediction. According to the statics of Coinmarketcap on 20th Feb 2021, the daily trading volume on PancakeSwap was larger than the Uniswap, which is the number one DEX on Ethereum network. The price of its native token known as Cake also pumped dramatically from end of January. BscScan reveals that PancakeSwap was launched on 23rd Sep 2020. It merely takes a few months to gain huge popularity. The market trend indicates that lots of money flow into BSC partly due to expensive gas fees on Ethereum network.
The value of Cake, the native taken of PancakeSwap, relies on its application scenario. The benefit of holding Cake is not only the vote right of proposals, but also extra earning opportunities. In addition to the expectation of Cake price to the moon, which is not guaranteed, PancakeSwap has both staking and liquidity mining features available. That is, Syrup Pools and Farms are provided for Defi users staking their Cake tokens as well as depositing their LP tokens to earn rewards. Moreover, to avoid inflation, Cake token has burned mechanism. PancakeSwap is a nice DEX that provides various BEP20 tokens with good depth. The figure provided by Defi Llama on 22nd May 2021 shows that the TVL ranking of PancakeSwap is number two, only behind Aave.
In addition, PancakeSwap conducted a LP migration on April this year due to its new smart contract deployment. Users need to unstake their LP from old farms, remove liquidity, and then add liquidity as well as deposit new LP on v2 version. The LP migration not only affects PancakeSwap users but a lot of other projects because these projects make use of PancakeSwap’s LP tokens as source for yield farming. Projects that are affected including PancakeBunny, AutoFarm, Beefy, Swamp, Popsicle Finance and much more. They have to update their vaults to accept the v2 version of PancakeSwap LP.
Cake holders are able to earn new tokens on PancakeSwap’s Syrup Pools, or alternatively, earn Cake tokens on Farms by depositing LP tokens. However, besides the benefit of PancakeSwap, Cake holders might be more interested in another BSC project known as PancakeBunny. PancakeBunny (or abbreviate as Bunny) is a yield farming aggregator and yield optimizer which auto compounds LP from the native farm of PancakeSwap. Bunny might be more attractive due to two kinds of rewards. For those who are mining on Bunny can get both Cake and Bunny tokens. Bunny token is the native token of Bunny project, and the APR (Annul Percentage Rate) is much higher than PancakeSwap on its early period such as Feb 2021. In fact, Bunny launched on 17th Nov 2020 but the significant growth of Bunny token was from Feb 2021.
Bunny had really high APR on February and March this year. Its TVL was approximately 365 million USD on 19th Feb 2021 as shown on the following picture. Even before the middle of May its TVL had reached 7 billion USD. That is 20 times growth within 3 months. However, recently the unexpected bear market happened during the middle of May, followed by encountering the attack of flash loan on 19th May 2021, Bunny’s TVL together with its token price declined dramatically. The team of Bunny has provided the compensation plan and its new token pBunny will be issued.
Interestingly, Bunny also sells its real products on Bunny Store that can be found via its official site. Several types of T-shirts with Bunny logo or text related to this brand are available for purchase. Since these T-shirts will be printed once an order has been confirmed, buyers need to wait for longer for their Bunny T-shirts to be delivered.
In fact, in addition to Bunny, many projects on BSC such as AutoFarm, Beefy, Swamp etc. are also yield farming aggregators. Bunny borrows the liquidity from PancakeSwap, or in other words, Bunny makes use of LP tokens from PancakeSwap, and enables these LP deposited on Bunny to earn rewards. Bunny focuses on PancakeSwap platform only. However, for some yield aggregators, they integrate more than one platform. The projects themselves do not have their own pools, so they make use of other platform’s LP tokens for yield farming, and give their native token as a reward.
For instance, the new project Swamp Finance launched on 12th Mar 2021 has integrated PancakeSwap, ApeSwap, MDEX etc. platforms for yield farming. Defi users could obtain the rewards from the original platform plus the native token of Swamp, known as Swamp token. For example, if users provide liquidity on ApeSwap they will obtain the specific LP token of ApeSwap. This LP token could be deposited into Swamp’s vault to receive Swamp token as a reward. Moreover, the quantity of LP will increase gradually as time passes by since Swamp uses yield optimizer so the reward from the original farm is compounded.
If not take into account the previous attack of flashloan, Bunny has gained user’s support which leads to fast growing TVL. Does Swamp be successful like Bunny? Unfortunately, although Swamp has the similar token economic pattern, and offers pretty good APR, the TVL and the price of Swamp token are not good.
The performance of Swamp is just like the name itself, falls into the swamp. Interestingly, a quick fork of Swamp known as Frankenstein appeared just a few days ago. Frankenstein has the same green color, the same interface, and even the same integrated platforms like Swamp. The only difference from Swamp is that Frankenstein offers both BSC and Fantom versions for yield farming, but the prices of native token Frank between BSC and Fantom are quite different.
Generally speaking, the same altcoin is supported to have the same price over different public chains. For instance, the multi-chain project known as Popsicle Finance currently supports Ethereum, BSC and Fantom. Its native token ICE has nearly the same price over these blockchains. Also, DEX aggregator 1INCH has issued its native 1inch tokens on both Ethereum and BSC, and the price of 1inch tokens keeps the same on these two public chains. However, recently we see some altcoins have different prices on different public chains. Wasabix is an example that its native token has different prices between Ethereum and BSC.
Finally, let’s talk about ApeSwap which draws lots of attention between late April and early May in 2021. ApeSwap launched on 21st Feb 2021, but it gained more attention from late April might due to the event conducted by Onto Wallet. Onto Wallet partnered with ApeSwap published an event on 19th Apr 2021 to encourage its users going to Apeswap and staking their tokens for rewards. The native token of ApeSwap known as Banana started to pump within a short period of time, but only maintained good prices shortly. The style and interface of ApeSwap are very similar to PancakeSwap, but it adds more animation which looks cute. ApeSwap has its own liquidity pools, and indeed is an AMM DEX.
To sum up, Binance Smart Chain provides fast transaction speed and low transaction fees compared with Ethereum network. The ecosystems on BSC are also abundant that we see plenty of projects run on BSC, and people do not lack of opportunities searching for yield farming items. However, always remember that the market changes dynamically. All of the projects are not guaranteed the safety. In fact, numerous BSC projects are really bad and rug pull happened very often. The above case studies are for the research purpose related to yield farming. It is not any investment advice, nor the safety guaranteed. Always do your own research before trying a project.
