It’s all about the APR

My DeFi-nitive experience in Yield Farming & Staking

It all started in November 2020. Throughout my years in the crypto-space from 2013, all I knew was Bitcoin and all the other cryptocurrencies, and I was buying, selling & trading with them - with some successes and fails along the way.

So ironically, my colleague whom I introduced crypto some years back kept abreast of developments and told me to check out decentralised finance (DeFi). He said that I, being the compulsive researcher/thinker that I am, would be able to learn and share about DeFi to the rest of that small community that we’re part of.

The journey started with me parting with lots of Ethereum, paying fees on Uniswap, trying out yield farming, providing liquidity and just generally getting my feet wet. At that time, it was amazing just seeing my investments earning interest. I looked at my fiat account in a multi-year fixed deposit as well as my government bonds and shook my head, wondering what kind of scheme did I subject my money to?

Fast forward to February 2021, I was a little smarter now. Providing almost half of my crypto investments into low risk, low yield stablecoin LPs at Uniswap, I was planning an exodus of my money in fiat accounts into DeFi. Until that same colleague whispered to me at work one day, “Binance Smart Chain (BSC), bro.”

So that’s where I ended up. Taking whatever little knowledge I gained from DeFi over at the Ethereum network, I literally went balls deep into BSC DeFi. With lower fees, I could test and try different strategies, trying to maximise returns and grow a portfolio of BNB and other BSC tokens.

This article will kind of be an overview of what I am doing now at the time of writing - my strategies and my thoughts on adopting said strategies. One of the earliest projects that I invested in was https://apeswap.finance and this article focuses on their farms and pools as an example but theorhetically you could implement it anywhere depending on your risk vs gains appetite.

After spending a short tenure on DeFi platforms, my current investment mantra is “all about APR”. For the uninitiated, APR is Annual Percentage Rate - not to be associated with APY (Annual Percentage Yield). There is a huge difference between them both.

Good sites to reference to learn more about APR vs APY would be at https://www.aprtoapy.com/ and https://www.thecalculatorsite.com/finance/calculators/daily-compound-interest.php

Back to my mantra. My main focus on growing my crypto assets is simple - as far as possible, try to gain 1%/day. Using compound calculators, that will mean I would have doubled my initial outlay just after 70 days of compounding.

At that time, I would need to take a call whether to continue to compound further (and faster), or take profits in the form of my initial investment and ride to the sunset for the rest.

Aiming for that 1%/day is not a big problem these days with many DeFi platforms offering so much more than that.

But the problem is this, they’re inconsistent. You could do more than 1%/day for a few days, then something would happen - token price fluctuations, market slumps, exit scams, exploits - there is so much risk to mitigate and so much monitoring one has to do. One wrong move or bad event and it would wipe out all the gains you had until that point in time. This is an ongoing consideration for any yield farmer/staker even till this day. But I know, we endure.

It’s a tough balancing act of APR vs stability and security and that leaves me with my current method of trying to maintain a consistent 1%/day that I’m sharing here, together with my thought process.

In summary, easy math will dictate that in order to reach a 1% APR daily rate, my money needs to be in farms and pools that advertise a 365% APR or 3678% APY.

On ApeSwap, there aren’t any pools close to that 365% rate that I’m looking for. However, there are a multitude of farms that do.

These are farms that require LP (Liquidity Pool) tokens to stake and it’s perfect for my strategy.

Being higher than my daily yield requirement also means that part of the rewards will be used for gas/transaction fees as well as to make up for any fluctuations in price of BNB.

So what I do is to split my investment into equal parts and create the LP tokens to stake in these farms that meet my 1% daily target. These farms payout in Bananas, which are the native token of ApeSwap.

My daily routine is to ensure that I “Wuzz Out” or collect my daily banana rewards at around the same time everyday from all my farms.

Using the exchange functionality on ApeSwap, I would then convert half of the bananas to BNB and the other half to KEYFI for example, referencing the screenshots above. They will then be used to create LP tokens which will be redeposited (compounded) into the farm.

This is repeated on day 2 with the next token - BFT and on day 3 with NAUT.

From days 4 to 6, the same sequence is performed. This compounding is done regardless of BNB or token prices as I feel that tokens are more or less pegged to BNB anyway and they usually move up or down in value according to BNB fluctuations.

However, sometimes this isn’t true and a token may have a breakout scenario against BNB and this will contribute to IL (impermanent loss). But having to compound twice a week would average the price out somewhat and as long as funds are committed to the farm for a long(er) period of time, it should make IL easier to stomach.

On day 7, it’s my weekly payday. All bananas collected will be used in various ways as I deem fit. A part of it will be sold for BNB to cover gas/transaction fees. The rest of it will go to either a form of stablecoin, should there be a need to buy any future dips or reinvested into other platforms or to stake for useful tokens like the one below.

https://www.yieldwatch.net/ provides me with a holistic view of all my farms at one glance and they have a Pro feature that is activated by holding their native WATCH tokens in my wallet.

In crypto, many say that we all live 3 days at a time due to the volatility. I can’t agree more. By the time you read this article, I wouldn’t be surprised that in a weeks' time, it may be time to re-assess and re-strategize.

Personally, my plan is simple and not complex at all. However, it is not the “be all” of strategies. There are others who adopt different methods and honestly, there is no right or wrong way. The best way is to decide on a plan and stick to it. Your own way.

So what happens assuming that token prices and APR remain steady all the way to the 77th day, where at this juncture, I would have doubled my initial investment?

As I mentioned earlier, cashing out and redeeming the initial investment is definitely a good and safe strategy. Considering market sentiments, we could continue to boost the farms because on the 123rd day, you would have netted a 200% increase from the original investment.

In summary, DeFi has changed the money I put money to work and I believe that since you are reading my humble experience, you are also considering it or are thinking of ways to optimise your own experience.

I would definitely hope to receive any feedback or thoughts about this article. I’m very active in the ApeSwap Telegram group at https://t.me/ape_swap @jpmoregain. Feel free to join me there.

And if you feel I have given you some useful insights with this article and would like to send me some monetary encouragement, do join the ApeSwap community and buy a few bananas off the exchange and stake them, that’s the best monetary encouragement I could have.

Thank you for reading through everything.

Derek (JP)