DEFI 2.0 YIELD FARMING STRATEGY WITH 0VIX PROTOCOL
0vix protocol is DeFi 2.0 next-generation money market built on polygon Network.
In this article, I’m going to introduce a Defi strategy that will help us enjoy multiple yields on our capital using 0vix protocol, curve finance, and beefy finance.
TL;DR
Deposit 20 Matic or more on 0vix protocol
Take out 50% in USDC
Provide Liquidity with the USDC on Curve Finance
Deposit the LP tokens we get from providing liquidity on curve finance into Beefy finance to auto-compound our yields
But before we go into the strategy, let's quickly understand these different protocols
~ 0vix protocol is a DeFi 2.0 lending and borrowing protocol native to the layer 2 network polygon
~ Curve finance is a decentralized exchange used mainly for stablecoins and relatively stable assets.
~ Beefy finance, is a multi-chain yield optimizer that allows users to auto compound interest on their LP tokens.
Now, that you get it, let’s dive in
The video tutorial attached below will teach us a guide in easy steps on how to earn multiple yields using 0vix as our base layer.
Now that we understand how to supply our capital and earn yield, let's talk about the rewards and risks that we can encounter from using this strategy.
First, we will talk about the rewards, and next, we will take on the risks.
Rewards structure
Let's start from the 0vix protocol
~By supplying 20 Matic on 0vix protocol, we earn APY which is the annual percentage yield on our deposit
~We keep our long exposure on our Matic
~We can make more money from the USDC we take out
What are the risks that come from this strategy on 0vix protocol?
We run a risk of liquidation if the price of Matic moves quickly against us. our Loan can be liquidated when our health factor drops below 1 and the Matic deposit decreases in value against our USDC. Our collateral will be sold and used to repay the loan.
The loan-to-value ratio tells how much loan we can take out based on our collateral. So, for example, if the loan to value ratio of USDC is 60% when we deposit $100 worth of USDC, we can only take out $60 worth of loan
The health factor is an indicator that helps us monitor the health of our loan and can indicate the risk of liquidation if it drops below 1. To increase/maintain our health factor, we can either repay the USDC loan or we can deposit more MATIC
how do we benefit from curve finance?
~ Curve finance is one of the largest decentralized exchanges for stablecoins in DeFi. it offers reduced slippage and low transaction fees
~ By providing liquidity on Curve Finance with our USDC loan, we earn 50% of the trading fees
Risks on Curve Finance
By Depositing any assets on the Curve Finance liquidity pool, we also gain exposure to the other assets in the pool which include $USDT, $USDC, $DAI $ETH, and $BTC and if any of the assets go to zero, our funds will also be affected.
Lastly, let's talk about
Beefy Finance
~Beefy finance is one of the largest and most trusted multichain yield optimizers.
~Currently, beefy finance has 664 vaults with over $348m in TVL. The vault which has our LP tokens, the atricrypto3 (BTC, ETH, USDC, USDT, DAI) pool is rated ‘low risk’ on the beefy finance platform, with a 9.4% safety score and over $7.70M in TVL currently.
~beefy finance generates and auto compounds yields on our LP tokens by depositing our LP tokens(atricrypto3 pool token which includes BTC, ETH, USDT, USDT, DAI.) into the curve platform, and the rewards are converted into the underlying LP tokens and added back into the pool for more rewards. This automates the process and saves users time.
RISKS
It’s important to note that as we interact with these different protocols, we are exposed to Smart contract risks as with every cryptocurrency and none should be assumed 100% safe.
I’m not a financial advisor and This post is only meant for educational purposes. Remember to always do your due diligence.
To get started, visit app.0vix.com and let the yield farming begin.
Official Links:
Website: https://www.0vix.com/
Twitter: https://twitter.com/0vixProtocol
Discord: https://discord.gg/0vix
Telegram: https://t.me/OVIXProtocol
