Newsletter #2: Yield Farming is HOT – but Farmers Beware of scams

I’ll keep this week’s newsletter short and sweet. Primary markets (BTC, ETC) have been relatively stable, which an overall trend of recovery after last week’s flash crash on the 2nd of Aug. The crash was primarily targeted at leveraged traders, with over $1 Billion USD worth of contracts being liquidated across multiple exchanges. After this crash, prices quickly recovered nearing previous highs. This goes to show one of the dangers of over-leveraged positions, as there can be sudden volatility in either direction causing positions to be liquidated.

Yield farming is HOT, but farmers Beware!

Personally, I’ve been yield farming quite a lot this week with generally favorable results. Please note that Yield Farming is EXTREMELY dangerous as it involves the use of potentially unverified audited code on smart contracts. Do Your Own Research (honestly this is what’s taking up most of my time)

Starting off, Yearn’s developer Andre Cronje (check this interview summary) launched Yvaults 2. Simply funds saved there will automatically be invested into the best strategy possible to generate more profit. The new system allows for the addition of new strategies too – basically what the founder Andre sees fit. Annual returns can vary – we’ve seen numbers between 50% and 200% APY. However, there isn’t a good way to calculate for the time being.

One of the biggest trends this week is the emergence of $YFI clones. $YFI farming was extremely popular 2 weeks ago as it has extremely high yields. However – this has since paused as there is no new distribution of $YFI. Many opportunistic developers sought to create forks for $YFI that would distribute new coins such as $YFII, $YFFI, $YFT, and $WIFEY (just to name a few) in a similar fashion. One of the biggest risks with these $YFI clones is that the use un-audited code  – so they are extremely vulnerable to smart contract bugs (such as this one https://twitter.com/oli_vdb/status/1290370855709573122 ).

BEWARE: $ASUKA & YYFI exit scams

Two infamous projects pulled of exit scams in the past month, with developers minting a huge number of tokens and trading it into DAI. Both $ASUKA and $YYFI preyed on farmers who added liquidity to balancer pools that are required to farm the tokens. These pools are dangerous because the funds are directly used as a counter-party to trades, meaning that the pool’s DAI will directly be used to buy up the corresponding token. The $YFFI developer minted 1,000,000 $YFFI and sold it immediately, making off with $70,000 in the process (could have been more if he understood how balancer works).


For the time being, I’m staying away from any yield farming involves liquidity pools.

CREAM

This week I’m testing out CREAM mining. CREAM is a project inspired by Compound and they are offering airdrops of CREAM token to those supply / borrowing from the protocol. Currently, the project’s code is up on GitHub but is pending formal audits. This means there will be potential smart contract risks with farming here.

UPCOMING:

Serum IEO (Friday 7th): https://boxmining.com/serum-srm-first-look/
Interview with Binance CEO CZ (Wed 12th). Ask questions and win prizes: https://boxmining.com/ask-a-question-to-cz-binance/
CURVE.FI expected to launch a new token in the coming weeks.

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The information provided in this article is intended for general guidance and information purposes only. Contents of this article are under no circumstances intended to be considered as investment, business, legal or tax advice. We do not accept any responsibility for individual decisions made based on this article and we strongly encourage you to do your own research before taking any action. Although best efforts are made to ensure that all information provided herein is accurate and up to date, omissions, errors, or mistakes may occur. 
Disclosure: Authors are invested in cryptocurrency projects and have cryptocurrency holdings - including those covered on this website. 

Michael
Michael
I’m Michael Gu, Creator of Boxmining. I’ve been involved in the digital asset and Blockchain space since 2012. Something I immediately noticed was that accurate information is hard to come by in this space. More often than not, we find extremely biased information that exploits the complexity of blockchain to obscure facts. Having been around before bitcoin or blockchain was even “cool” meant that I had to do a lot of discovery myself, and along the way, I had many successes, but also made mistakes. I started Boxmining in 2017 mainly as a passion project, to educate people on digital assets and share my experiences. Being based in Asia, I also found a huge discrepancy between digital asset trends and knowledge gap in the West and China. So I leveraged my knowledge and positioning to bridge that information gap and let people know what is truly happening. This journey has been nothing short of exhilarating for me, starting from when I mined Bitcoin in grad school to appearing on China’s national television as an overseas expert on blockchain technology, and having the honour of interviewing leading crypto entrepreneurs, including Binance CEO Changpeng Zhao and FTX founder Sam Bankman-Fried.

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