ADVANCED YIELD FARMING STRATEGY WITH 0VIX PROTOCOL

INTRODUCTION

Liquidity is the soul of DeFi and for DeFi protocols, there's always a silent war for this liquidity.

Protocols, therefore, In a bid to incentive liquidity, offer juicy rewards and Yield farmers, consequently, are always on the lookout for strategies that will maximize the best yield on their crypto assets.

That’s the reason I am writing this article: to show you a DeFi yield farming strategy that will help you make a good yield on your crypto assets if you follow all of the steps accordingly.

If you are ready, let's dive in!

The first protocol we will talk about is our base layer, and the most important as it presents an opportunity for us to have the liquidity needed to earn more yields.

0VIX PROTOCOL

0vix protocol is a DeFi Money Market enhanced with smart tokenomics and built with security in mind.

It aims to become the leading lending and borrowing protocol on POLYGON with Total Value Locked currently >$9.5 million, and >15,000 cumulative unique active daily users.

The second protocol we will use for this strategy

THE BALANCER PROTOCOL

We chose Balancer because its one of the largest decentralized exchanges in decentralized finance, it allows users to instantly swap ERC20 tokens without the need to rely on a centralized party.

Yield farmers are incentivized with protocol fees to provide liquidity to the Balancer pools and Bal tokens When they stake their LP tokens on the Platform.

“For this strategy, We won’t stake on Balancer, because we want to use a Yield Aggregator to automate and auto-compound our Yield and help us save gas costs"

The Balancer Protocol is unique because of its flexibility and ability to allow users to create their private liquidity pools.

Lastly,

HARVEST FINANCE

Harvest Finance is a Yield Aggregator on Ethereum, Polygon, and Arbitrum that automates the process of yield farming and helps yield farmers save gas costs and time.

We chose Harvest because it will help us automate the process of harvesting our yield and re-staking the LP tokens, thereby saving us gas costs and time.

Confused? Don’t be!

Here’s a step-by-step Video on the Yield farming process
https://youtu.be/5swXUaGjC8Y

WHAT NEXT?

Every yield farming strategy has risks, as well as rewards. Now, We will discuss in detail all of the risks and rewards that comes with this strategy.

REWARDS STRUCTURE

1. 0VIX PROTOCOL

• By supplying 50 $Matic on the 0Vix Protocol, we earn 1.62% APY on our capital and 9.74% $VIX APR.
• We pay 4.97% APY on our borrowing position but receive 13.23% APR on our $Vix rewards, which essentially means we are getting paid $Vix to borrow but still have to pay the borrow APY in $USDC
• We keep our long exposure on $Matic and earn pre-mining rewards on the 50 $Matic and 25 $USDC
• Make more money from the borrowed $USDC by depositing them into the “B-PolyBase pool" on Balancer to earn a share of the trading fees.
• We pre-mine $Vix at a rate of 22.97% from our lending and borrowing positions to increase our chances of additional yield when the $Vix token is launched.

"Pre-mining is the creation of a cryptocurrency before it’s launched to the public."

Find out more about the $Vix pre-mining here.
https://docs.0vix.com/developers/usdvix-pre-mining

RISKS INVOLVED

The risks associated with the first phase of our strategy, is that we run a risk of liquidation if the Price of $MATIC currently worth $46 falls below $30.

Thanks to the 0VIX Liquidation dashboard, we can now see the likelihood of our positions being liquidated in the next 24 hours.

We can also reduce our risk of liquidation by adding more $MATIC or repaying our $USDC loan.

2. BALANCER PROTOCOL

The Balancer Polygon Base pool where we supplied our assets is a weighted pool called the B-PolyBase pool and it contains 25% each of $USDC, $WETH, $WMATIC, and $BALANCER tokens.

"Weighted pools are great for tokens that don’t necessarily have any price correlation (ex. USDC/WMATIC)."

• This pool has a 0.25% APY dynamic swap fee on every trade set by the pool owner.
• Currently, the pool has over $3M in TVL, a 90 Days volume of over $30M, and over $76K in Fees earned by Liquidity Providers.
• By providing the $USDC on this pool, we earn 4.64% APR from the fees earned by the pool from traders. Here’s a link to the pool https://polygon.balancer.fi#/pool/0x0297e37f1873d2dab4487aa67cd56b58e2f27875000100000000000000000002

¶The drawback of using this strategy is that even when we supplied USDC, it gets evenly distributed to all the tokens in the pool by 25%. whereas in a traditional decentralized exchange it’s distributed 50/50.

This increases our exposure to the tokens, and we could suffer a great Impermanent loss if one of the tokens goes down by a huge percentage.

3. HARVEST FINANCE

• Harvest Finance is a Yield Aggregator that automatically 'harvests' reward tokens on behalf of users who deposit and stake on the Platform and exchange them for more of other underlying assets thereby compounding interests earned
• They save users both time and gas fees with making multiple transactions in harvesting Yields and have saved over $216M in gas costs and $51,000 in monthly Yield farmer’s income
• With over $18M in deposits and $42K in our choice pool (B-PolyBase Pool). When we deposit and stake our LP tokens, we earn 12.66 APY, which is broken down into 10.97% liquidity provider APY, 0.07 miFARM Rewards, and 1.62% auto harvested in Bal tokens. Here, we can find the Harvest Finance pool; https://app.harvest.finance

"miFARM is the yield-bearing token for Harvest Finance on POLYGON. It can be acquired by staking our LP token on the Harvest Finance platform".

While using the protocol, also remember that The box for "Stake for Rewards" should remain checked to ensure we receive you yield farming rewards.

The risks of using Harvest Finance are similar to other DeFi Protocols. Read more about it on the Harvest Finance Website.

Note: The more protocols we interact with, the more smart contract risks we are exposed to, and no protocol should be considered 100% safe.
This article is only for informational purposes.

Thanks for reading, and I hope you have a Triple Yield Day!

Get started,

Official Links

• Website: https://www.0vix.com
• Twitter: https://twitter.com/0vixProtocol
• Telegram: https://t.me/OVIXProtocol
• Discord: https://discord.gg/0vix