Yield Farming with Dot.Finance
Anybody that has been in Decentralized Finance (DeFi) long enough has heard about yield farming. At its core, yield farming is the practice of using DeFi protocols to make your money work for you. Instead of having funds stashed in a zero-interest account or a hardware wallet hidden under your mattress, you can use them to lend, borrow, trade, or provide liquidity. DeFi platforms incentivize user participation by rewarding them with native tokens and/or a portion of the transaction fees.
Yield Farming Strategies
Yield farming strategies are in constant flux as farmers must continuously adapt to protocol changes, market demands, and gas prices. That being said, the primary goal is to earn the highest rewards by locking up your funds. This is accomplished by supporting Automated Market Makers (AMMs) through addition of funds to Liquidity Pools (LPs).
When liquidity is added you receive LP tokens that represent the amount of your contribution to the pool. The LP tokens can entitle you to a portion of the swap fees from that pool, but you can also stake the LP tokens in different farms to earn rewards. The staking rewards come in the form of a new token, (e.g. PancakeSwap rewards LP token stakers with CAKE tokens) that can also be swapped or staked in different farms and pools. The complexity of strategies increases quickly with all the different options and varying returns available.
Yield Farming Optimization
Keeping up with the fluctuating rates and ever-changing market conditions takes a lot of time and energy. If you make a mistake or miss the optimal compounding times, your APY drops significantly. If you farm on Ethereum, you also must worry about the crazy high gas fees eating into your yields with every transaction. Ethereum yield farming has become a space where only whales turn a profit.
Dot.Finance helps farmers avoid these issues and earn the highest returns possible with our yield aggregator. By working on Binance Smart Chain (BSC), the transactions are fast, and the gas fees remain low. Our smart contracts automatically compound your returns at the optimal frequency to increase your APY and the already low fees are shared across farms by batching the auto-compound transactions. We give farmers automation and compounding at scale. It’s like farming with a tractor instead of pulling a yoke on your shoulders.
How Dot.Finance Maximizes Yields
PancakeSwap (PCS) is the highest volume Decentralized Exchange (DEX) on BSC and one of the top platforms in the space. We’re leveraging these strengths and adding to them to enhance the yield farming experience.
Normally, after providing liquidity to a pool on PCS and receiving LP tokens, you can stake those to earn CAKE. The CAKE rewards incentivize people to add liquidity to the PSC pools but it takes a little more time and effort from the farmers. That CAKE can be converted to more LP tokens for compounding returns, or can be staked in pools to earn other tokens. PCS mostly doesn’t have auto-compounding pools or farms, so funds have to be manually converted and restaked.
Optimal compounding can be almost magical in how much it increases your returns. For example, if you were to auto-compound once a day for a year, the 40% APR from PCS becomes 49%. That’s almost a 25% increase in returns! Keeping your funds only on PCS is essentially leaving money on the table.
Our yield aggregator auto-compounds your CAKE yields for you by converting them to LP tokens then staking them. Using our platform means the smart contracts will compound your yields at the optimal rate and entitle you to a share of our performance fee — the Pink Distribution.
When you harvest your yields (collect rewards), we give you 70% of your earnings in LP tokens, and the other 30% we calculate their worth in BNB then issue our native PINK tokens based on the PINK/BNB mint ratio. This is based only on your profits, your principal remains untouched.
The 30% for which we minted PINK is the performance fee that goes to the PINK stakers (which will be explained below). Because we issue PINK instead, and PINK is unlikely to go under the IDO price, you will get more yields with the PINK Distribution as compared to the value of receiving just BNB.
PINK Distribution
Like mentioned above, if users claim their profits from our standard farms, 70% of the returns take the form of the original tokens (e.g., DOT-BNB LP). The other 30% of the profits get converted to PINK tokens and issued as per the designated mint rate of PINK to BNB. The mint rate will be monitored and adjusted periodically to accommodate the fluctuating price ratio of PINK/BNB.
The PINK token will launch at a price of $0.10, so to give a real world example of what the numbers could look like, we’ll assume a mint rate of 4000 PINK per 1 BNB for the PINK Distribution. This rate would be for the PINK $0.10 IDO price and BNB price of $400. Keep this in mind for the hypothetical below. The numbers may change but the math stays the same.
Let’s say you’re staking in one of our farms and you’ve earned 10 BNB of interest over time (not talking about principal amount). And let’s say 1 BNB = $300, so total interest earned, if only receiving BNB rewards, is $3000.
The payout on Dot.Finance wouldn’t just be 7 BNB ($2100) + $900 worth of PINK tokens.
Remember, PINK is issued at 4000 PINK for 1 BNB and 30% of your profits is 3 BNB. So, when you withdraw, you get 7 BNB + (3 * 4000 PINK) or 7 BNB + 12,000 PINK.
For example, if the PINK price is $0.10. At this price, the return would be 7 BNB worth $2100 + 12,000 PINK worth $1200, for a total of $3300. That’s $300 more than just getting the BNB!
PINK only has to be worth $0.075 in the above example to beat the return of $3000. The PINK distribution will always act as a multiplier on top of the APR as long as 1 PINK is worth more than the mint ratio of PINK:BNB.
The auto-compounding + PINK Distribution makes your APY even higher.
PINK Decentralized Staking Mechanism
Another distinctive feature is the token staking. There will be a separate PINK Staking farm that will allow you to stake your tokens and receive a share of PINK Distribution profits. These profits are where the 30% BNB go that were taken from users’ withdrawn profits. This is an automatic process that happens with every withdrawal, e.g., a user takes profits, the smart contract executes and 30% of those profits are converted to BNB and given to everyone with staked PINK tokens. We chose this mechanism to share the earnings of the protocol with all the PINK holders. We prioritize community and want everyone to benefit from the growth and success of the protocol.
Simply put, when you stake PINK tokens in the original PINK farm, you receive a share of the PINK Distribution for the entire community.
Governance
Staking PINK tokens will also allow you to participate in DAO governance protocols. When future changes are proposed for the platform, you’ll be able to vote and help steer protocols in a direction you think is best for the project.
Supported Farms
When our platform goes live we will support the farms listed below. This is just the beginning. We will be adding more farms for projects in the Polkadot ecosystem as we evolve and grow.
● DOT-BNB LP
● LINK-BNB LP
● REEF-BNB LP
● LIT-BNB LP
● RAMP-BNB LP
● LINA-BNB LP
We will also have two stablecoin farms. While we know BUSD is not on Polkadot, we’re adding this as a tribute for hosting the Polkadot ecosystem and helping it grow into something great.
● USDT-BNB LP
● BUSD-BNB LP
Getting Started
All you have to do to start farming the sweet yields is head over to PancakeSwap, connect your wallet, and provide liquidity for one of the pools supported in our farms. Once you get your LP tokens for this, head over to Dot.Finance and stake the tokens to start farming. With our auto-compounding, you can set it and forget it, you don’t have to babysit your tokens to get the best returns.
Fees & PINK Token Mechanics
Our native PINK token is more than just a regular governance token. PINK incentivizes liquidity provision and helps increase returns when using our platform. It can be staked to earn WBNB and is used as an APR multiplier when claiming profits.
We are focused on the growth of the PINK token and the project as a whole. To this end, we will start with the following fee structure:
● 30% performance fee (the PINK distribution) — This means 30% of profits will be converted and issued as PINK tokens upon user withdrawal. The original BNB profits are used to reward individuals that staked their PINK tokens in the PINK staking farm.
● 0.5% withdrawal fee if the withdrawal happens within 72 hours of deposit.
Token Economics
● Token: PINK
● Total Supply: 100,000,000
● Circulation Supply on TGE: 5.1%
● Initial Market Cap: $297,000
Allocation:
● Staking — — — — — — — — — — 18,000,000 PINK (18%)
● Liquidity — — — — — — — — — 15,000,000 PINK (15%)
● Ecosystem Growth — — 18,000,000 PINK (18%)
● Private & Public Sale — 25,000,000 PINK (25%)
● Marketing — — — — — — — — — 5,000,000 PINK (5%)
● Team — — — — — — — — — — — — 14,000,000 PINK (14%)
● Advisory — — — — — — — — — — 5,000,000 PINK (5%)
Private & Public Sale Prices/Vesting:
● Seed — — — 7,000,000 @ $0.050
o Vesting — 2 months locked, then 10% monthly
● Private — — — — 13,500,000 @ $0.065
o Vesting — 10% on TGE, then 11% monthly
● Public — — 4,500,000 @ $0.0825
o Vesting — 50% TGE, 50% after 1 month
