Introduction to Six Simple Strategies to Earn
An introduction to maximizing your farming yields with Alpaca Finance
PreviousHow to ParticipateNextStrategy 1: Hold a Token While Earning High Yields at Low Risk; aka Lend & Stake
Last updated
An introduction to maximizing your farming yields with Alpaca Finance
Last updated
Alpaca Finance offers a variety of investment methods that can optimize the capital efficiency of your crypto assets. As such, whether in a bull or bear market, you’ll always have opportunities to maximize profits.
Now, with this goal in mind, we’ll briefly describe six simple strategies unique to Alpaca, presented in order of simplest first, to accommodate new users to advance one step at a time as they learn about the powerful earning tools within our platform. (We’ll also be rolling out articles for each of these strategies which you can read by clicking on their titles)
Lend & Stake Lend and then stake your individual crypto assets (BUSD, USDT, BNB, BTCB, ETH, ALPACA) for the highest single-asset yields within DeFi at very low risk.
Farm Auto-compounded LPs: Farm and auto-compound your favorite PancakeSwap or WaultSwap LP token pairs(at 1x without leverage) for yields that are the highest in the BNB Chain & Fantom ecosystem. Comparison chart here.
Farm Stablecoins with Leverage: When wary of market volatility, hedge risk by yield farming stablecoin-stablecoin pairs with up to 6x leverage. These pairs have relatively low risk, are unlikely to suffer any impermanent loss, and provide high APYs. Alpaca’s yields are among the highest for stablecoins in all of crypto.
Farm Crypto Tokens with Leverage(Long Positions): In bull markets, gain significant upside by opening leveraged yield farming positions with your favorite crypto tokens, preferring to borrow stablecoins, or the token in the pair that you are less bullish about. (Example: if you expect BNB price to rise more than BTCB, you can open a BNB-BTCB position where you should borrow BTCB). By using this strategy, you can get more than 3x on your yields compared to Strategy 2, of course at higher risk.
Farm Crypto Tokens with Leverage(Short Positions): In bear markets, gain upside by opening leveraged yield farming positions, borrowing crypto assets such as BNB, ETH, or BTCB that you believe will drop in price. (Borrowing above 2x is similar to shorting the asset you borrow. So you can open a position on BUSD-BNB, borrowing BNB and thus be short on BNB). This is one of the only ways to remain profitable while yield farming in a bear market, and you can Alpaca's leveraged yield farming platform is one of the only places you can do it.
Farm Crypto Tokens with Leverage(Hedged Positions): In any market conditions, you can hedge risk by yield-farming a multi-position strategy using a combination of strategies 4 and 5 to be both long and short on the same crypto asset, counteracting their corresponding long & short exposures which would make you hedged neutral. This can achieve a similar hedged effect as strategy 3 using stablecoins but typically with higher APYs. (Example: borrow BNB to go short farming BUSD-BNB, and also borrow BUSD to go long farming a second position on BNB-BUSD. If you set your positions properly, the long&short exposures on BNB will cancel each other out, leaving you neutral. One caveat with this strategy though, is that you only start hedged when you open the positions. As BNB price moves, your neutral exposure can shift long or short due to AMM asset rebalancing, so you would want to monitor that and adjust your positions periodically)
Regarding Strategies 4, 5, and 6, they have some nuance but are easy to understand once you just spend a little time to learn about them!
In any case, if you didn’t understand any strategies on the first read, fear not young Alpacas. Within the coming days, we’ll be releasing short articles with more information on each of these strategies to help you gain a clear understanding of how to use them to grow your portfolios.
For the time being though, you can find more thorough explanations on how to best use leveraged yield farming to multiply your gains in any market conditions within Alpaca Academy.
