We are thrilled to launch the world’s first yield farming derivative. Now anyone can earn chain agnostic yield with zero gas fees and a simple trading interface. Early access users of Solstice V2 will be able to take part in this starting later today.
A Brief Introduction to Yield Farming
Yield farming has witnessed rapid growth in 2020. DeFi Pulse currently estimates that more than $14 Billion is locked into DeFi protocols. These protocols vary in nature from Automated Market Making (AMM) DEXes such as Uniswap to lending optimizers such as Yearn Finance.
On a basic level yield farming involves locking digital assets into a protocol which then earns the owner yield. Normally by adding tokens into a liquidity pool, a user (or “yield farmer”) is effectively able to provide additional liquidity for trades or other functions. Liquidity mining allows yield farmers to earn more tokens in addition to the usual return in exchange for their aid in providing more liquidity.
However, a number of issues such as surging gas fees continue to plague the yield farming sector and have likely hampered growth to an extent. Such high fees and the inherent complexities associated with interacting with DeFi products often make yield farming inaccessible for novice investors.
The Solution: Injective’s Novel Yield Farming Derivative
In order to address these mounting problems within yield farming, we at Injective have devised an entirely new solution that would enable anyone to yield farm without having to face the same common problems highlighted above.
How Injective Yield Farming Derivatives Work
The first yield farming derivative on Solstice V2 will be based on a specific Yearn Finance Vault.
Yearn Finance was developed by technologist Andre Cronje. Put simply, Yearn is a decentralized ecosystem of aggregators that utilizes lending services such as Aave and Compound to optimize token lending. Yearn traditionally works by moving funds to different pools in order to earn users the maximum yield at all times. Yearn vaults are another application of this phenomenon whereby advanced strategies are implemented to drive even higher returns for farmers.
We have specifically selected to begin with yield derivatives focused on Yearn since the platform is entirely decentralized and any changes to the ecosystem are always carried out via on-chain proposals and voting. So in this manner, the Yearn and Injective ethos are closely aligned.
The particular derivative we have created will track the performance of $1,000 USDT on Yearn Finance’s USDT3pool. This means that any trader can now have access to the same yield as a farmer on the USDT3pool without actually deploying money or having to directly interface with the protocol itself.
This brings a number of distinct advantages such as not having to pay any gas fees as Injective’s network has zero gas fees. In addition, the UI for injective has been created to resemble typical orderbook models that are familiar to most crypto newcomers.
Lastly, traders on Injective can now take part in chain agnostic yield farming derivatives with leverage which further augments the potential APY. So whether the yield farming pool is on Ethereum, Cosmos, BSC, or Polkadot, a user can effortlessly interact with it on Injective via our yield farming derivatives.
We are excited to bring forth a new era in DeFi as a whole. Up until now, yield farming was largely restricted to more experienced crypto enthusiasts and normally included a number of issues that inhibited overall growth.
Injective aims to entirely democratize the financial sector. We believe that the introduction of yield farming derivatives puts us one step closer to this goal by providing a new avenue for anyone to be able to benefit from the innovations in the yield farming industry regardless of their experience level or financial status.
About Injective Protocol
Injective Protocol is the first layer-2 decentralized exchange protocol that unlocks the full potential of decentralized derivatives and borderless DeFi. Injective Protocol enables fully decentralized trading without any restrictions, allowing individuals to trade on any derivative market of their choosing. Injective Protocol is backed by a prominent group of stakeholders including Pantera Capital, one of the most renowned venture capital firms in the world, and the leading cryptocurrency exchange, Binance.