Harvest Finance (FARM) is a multi-chain yield aggregator. This advanced protocol helps to simplify DeFi (decentralized finance) investing by streamlining the core processes for yield farmers. The network consists of a cooperative of users that pool resources across a decentralized network that leverages multi-chain smart contracts to direct user funds to the pools with the highest APYs.
How Does Harvest Finance (FARM) Work?
The Harvest Finance ecosystem leverages a variety of different protocols to create an easy-to-use DeFi alternative. The combines auto-farming vaults, liquidity mining, P2P lending, and more. Together, these components create an immersive, low-risk, user-centric decentralized experience.
What Problems Does Harvest Finance Solve?
One of the main issues that Harvest Finance was created to reduce is the amount of labor required to DeFi farm effectively. Farming is similar to staking in many aspects. For one, you need to provide liquidity to a smart contract. In return, you receive rewards in the form of tokens. However, unlike staking, farming has no lockup periods.
Since your funds are not locked up, there is no predetermined reward. As such, farming requires you to monitor multiple pools to find the best-paying ones. Farmers switch between pools in search of the highest returns. If done correctly, it can be more profitable than staking. However, it is far more labor-intensive
The manual effort and overall inconvenience of the process limited its adoption to only those who have a firm understanding of the DeFi sector to this point. Harvest Finance changes the game by eliminating the workload. The protocol automatically farms the highest yield by moving funds between farming pools on your behalf.
Compartmentalization
Another major issue that Harvest Finance helps to solve is the lack of interoperability in the market. At this time, there are a variety of DeFi ecosystems that operate as islands. Harvest Finance’s multi-chain approach acts as a bridge to connect investors to Ethereum, Binance Smart Chain, and Polygon. This strategy improves the usability of the platform considerably as the protocol monitors over 100 different farms simultaneously.
High Gas Prices
Manual farming has another downside, there is a fee generated every time a person manually transfers funds across networks and pools. These gas fees can end up eating away at your profits. If not monitored, you can even take a loss. Harvest Finance provides a yield optimizing alternative that eliminates these costs. Notably, since its launch, the system has saved users +$50m in gas costs.
Benefits of Harvest Finance (FARM)
There are many benefits you gain when using Harvest Finance. For one, it simplifies DeFi investing. You don’t need to spend the next month learning various yield farming strategies. Instead, you simply deposit funds into Harvest Finance and they do the heavy lifting for you.
Improves ROIs
Harvest Finance’s strategy helps investors maximize returns. The protocol is able to accomplish this task because it pools users’ funds together to get the best rates and fees. As the network grows, it will be able to secure even more advantages.
Fee Sharing
The developers re-circulate DEX and farming fees throughout the community. These fees go towards buybacks and rewards for stakers participating in the profit-sharing pools. Additionally, the community can approve expenditures for the network via the governance mechanism.
Reinvestment Strategies
One of the biggest advantages Harvest Finance brings to the table is the fact that it creates a wealth generation loop. The network integrates an auto-compounding system that takes your rewards and automatically re-stakes them. Since your rewards are paid in FARM tokens, the process is simple.
Team Focused on Transparency
Another unique aspect of the platform is the level of transparency the development team has shown. Notably, there were no developer pre-mines for the project. Additionally, they didn’t seek out investors. Instead, the team chose to issue tokens weekly to provide a fair opportunity to all.
Harvest Finance Vaults
The main feature of the platform is the Harvest Finance Vaults. These auto-farming vaults enable users to stake their LP tokens to secure rewards. Notably, LP tokens can also be staked to further improve your rewards. LP tokens appreciate in value as the pool increases in liquidity.
Liquidity Mining
Another cool feature that users enjoy is access to liquidity mining rewards. Liquidity mining is a system that pays users rewards when they provide liquidity to LPs on other DEXs. In the Harvest Finance model, users are privy to a share of the DEX’s transaction fees. You can then take your rewards and stake the tokens in the Harvest Finance vaults.
fCASH
Peer-to-peer lending is one of the fastest-growing sectors in the DeFi market. These systems enable users to lend out their crypto in a secure and collateralized manner. In return, lenders receive interest on their loans. Harvest Finance introduces a system called fCASH that allows users to access funding using FARM tokens as collateral.
The system pays out borrowers in fCASH, the network’s stablecoin. These tokens can then be traded for other stablecoins such as USDC and USDT. These funds can be transferred to popular CEXs and withdrawn as fiat if so desired by the borrower. This approach eliminates the gatekeepers from the lending scenario.
FARM
The main utility and governance token of the network is FARM. FARM is a versatile asset that can be staked, farmed, or traded to generate rewards. Notably, FARM is an Ethereum token that is ERC-20 compatible.
Major hack
Harvest Finance saw considerable adoption at launch due to its combination of features and usability. The network experienced a major hack in 2020 that saw millions in USDT and USDC stolen from the Harvest Finance pool. These heists affected the market value of FARM as the token dropped 60% following the news. Since that time, FARM has recovered much of these losses.
Bottom Line
The Harvest Finance project is a great example of how DeFi technologies help regular users to join forces and improve their situations. The protocol provides a streamlined approach to earning profits DeFi farming. As such, there will continue to be a strong demand for Harvest Finance’s services moving forward.
