Beefy.Finance Project Review: The Leading BSC Yield Optimizer

The team at Beefy.Finance has taken the BSC by storm: Simultaneously dominating the yield optimizer market share and strengthening the BSC community.

By
Goon Trades
on
November 23, 2020
Category:
Project Insight

Robo-Yield Farmers

When people hear “Yield Aggregator,” the first thing that comes to mind is yearn.finance (YFI). This yield aggregator is based on the Ethereum network, where it dominates the market share. The incorporation of Andre Cronje’s (YFI Founder) project allows users to yield farm tokens efficiently, with vault strategies created to maximize returns while minimizing the cost of fees.

Enough about the Ethereum Network, Yield optimizers (aggregators) on the Binance Smart Chain (BSC) are faced with slightly different circumstances. A large part of yield optimization on the Ethereum network is avoiding ridiculous fees, which, as we know, is not an issue on the BSC. This opens up doors for much more involved strategies that can rebalance frequently and use an increased number of transactions to maximize APY’s.

The appeal of yield aggregators is that it allows all users alike to become yield farmers effortlessly. Frequent vault updates remove the decisions independent yield farmers must make regarding APY maximization. On top of this, users don’t need to worry about manually compounding their funds daily or weekly. The point of these projects is to allow users to take a set and forget it approach to yield farming.


BSCs’ Leading Yield Optimizer

The team at Beefy Finance has a heavy focus on improving the BSC ecosystem as a whole. Through their governance platform, users and the team will be able to “help projects in BSC grow together, providing help with auditing, creating hackathons for interesting strategies to add to the platform, etc.” Overall, the Beefy Finance team continuously improves their project, the BSC, and yield farmers’ experience on the BSC.

Beefy.Finance optimizes yields through a vault system; vaults serve as investment instruments, implementing strategies through smart contracts. These vaults automate the best yield farming opportunities. Vaults can perform the following actions: Use assets as liquidity, provide assets as collateral for others, manage collateral to reduce odds of liquidation, use assets to generate a yield and compound profits. With the following actions, vaults allows users to automate their De-Fi farming experience completely. Strategies are created by the community and the BIFI team, allowing the process to be effectively optimized.

Compound Wizardry

Now for those of you who don’t know, compounding investing is your best friend. Beefy vaults compound daily, and some vaults compound multiple times a day. These compound functions are integrated into the vault strategies using heuristics to judge the optimal time of compounding. The systems take into account variables such as TVL, price, liquidity, and platform restrictions. Overall the Beefy vaults take care of the nitty-gritty compounding.

APY vs. APR

Annual Percentage Rate (APR) reflects a simple interest rate based on a year’s worth of interest. On the other hand, the Annual Percentage Yield (APY) reflects the rate with compounding factored in. This is a crucial difference to understand, as 1% compounded daily will result in a yield of 3678.34% per year, which is exponentially larger than the >1% APY found in traditional finance. This brings us into a bit of financial math; for those of you who don’t enjoy math ill make it quick.

I will do a quick breakdown of the math behind compounding but will leave the rest up to the eager users who wish to learn more. You can check out a more in-depth explanation on the Beefy.Finance whitepaper.

A=P(1+rn)^(nt)

The formula above represents the formula for compound interest, where:

  • P = principal amount (initial investment)
  • R = annual nominal interest rate (Decimal)
  • N = # of compounds per year
  • T = number of years

The compound equation is exponential, which results in graphs such as the one pictured below: 


This is where Beefy separates itself from the pack. De-Fi projects already boast insanely high yields, but Beefy vaults take it to the next level. Just in the sense of compounding, Beefy vaults can earn users upwards of 8x their initial investment after three years of compounding.


Da BIFI Bois

Graphical user interfaceDescription automatically generated

Similar to almost all De-Fi projects, the Beefy.Finance project has its own governance token, $BIFI, which allows users to receive a portion of the vaults performance fees. This token represents users stake in the governance and revenue of the project. $BIFI holders can stake their tokens into the Governance pool; this pool disburses WBNB daily to users based on their percentage of the pool.

Unlike many other BSC projects, users do not have to un-stake their tokens to participate in the voting process. This incentivizes much more voter participation as it means users don’t need to default their rewards to vote.


Key Metrics

The $BIFI token as previously explained allows users to reap rewards from the vaults. These metrics show the appeal behind $BIFI, due to the low capped supply, and an even lower circulating supply due to a majority of the tokens being staked. This displays that many holders are holding onto their tokens in order to receive WBNB payouts. While a majority of the tokens are staked there is no lock-in period which means that circulating supply can increase in a moments notice. This is still a very unlikely scenario as BIFI has seen rapid growth and is a tiny market when compared to the scale of YFI ($740m). Overall these metrics display the growth of BIFI and give us an insight about how much market share is left to be captured, and there is still plenty.

The Beefy team has experienced accelerated growth in the past week. At the time of writing the TVL was at 1.4m and a day later, at the time of editing, it has almost doubled.

Active Vaults:

Currently Beefy.Finance has over 20 vaults, with the top vaults earning over one percent a day. I’m not sure who’s been paying attention, but compounded consistently over a year, some of these vaults could see APY’s over 200,000%. Beefy’s vaults currently sprawl across three platforms, PancakeSwap, Thugs.Finance and Fortube. At the time of writing the vaults from Thugs.Finance boast the highest APY’s with the PanckeSwap vaults trailing behind. A key vault to look out for is the Drugs v2 vault, which dual farms $GUNs and $DRUGs. The $GUNs are sold and compounded for more DRUGs creating an insanely efficient vault which can be expected to see daily gains ~ two percent upon release— currently, the team at Thugs.Finance have just launched Drugs v2 staking. I imagine Beefy vaults will follow.

Editors Note: DRUGs v2 Vaults are live GO GO GO! Currently at ~400k% APY

A picture containing drawingDescription automatically generated


To keep this article condensed, I won’t be covering the remaining vault strategies as these can all be found on the whitepaper where they are explained in full detail.

Allowance Checker

The Beefy team isn’t just looking to maximize its community members farming, but also focus’ on keeping the BSC secure. They have released an Allowance Checker that allows users to identify projects/addresses that have an allowance to spend your tokens. This tool not only allows you to identify the addresses with allowance but also lets users revoke spending permissions for a small transaction fee. Beefy’s release of this tool enables users to stay proactive and ensure that no unwanted projects can drain their wallets. In the wave of recent BSC scams, security should be all investors utmost priority, and the team at Beefy.Finance seems to agree. 


For those who wish to learn more about maintaining safety on the BSC check out these two articles – Here & Here, by The Ape.

Roadmap

The Beefy.Finance team plans to be a stronghold of the BSC ecosystem. They plan to achieve long-term stability through creating a developing, designing, and finance-based community. The creation of a healthy community will ensure the innovation of Beefy continues to spur.

Knowing that Beefy is prepared to succeed in the future, what is coming next?

A Beefy OG community member, Power, provided some insight stating that “[He] will try to push the following initiative: Finalize the BSC ecosystem strategies to secure BIFI’s earnings and their number one spot on the BSC.”

Beefy’s focus at the moment is to solidify itself as the leading yield optimizer on the BSC. This consists of finalizing Cake, Thugs and Narwhal vaults to continue propelling BIFI earnings higher.

After discussion with multiple Beefy team members, this seems to be the consensus of the short-term focus. Through a broader lens, many BIFI community members expressed a mid-term stress of moving to a cross-chain system.

Sirbeefalot and Superbeefyboy were also kind enough to comment on their outlooks. Sirbeefalot mentioned that one of their visions for BIFI is to improve YFI’s bottlenecks by diversifying strategies and making them more available to users. The Beefy team believes that innovation happens best with open markets, which is why they created a system to allow strategies to surface through calls and signals versus the “traditional” model of committees and voting of YFI. Superbeefyboy then added to the discussion his vision of building a bazaar- referencing The Cathedral and the Bazaar- or a De-Fi app store. The general idea behind these points is that it allows all users alike to improve upon an existing foundation of technology.


Final Thoughts

Beefy vaults have taken the “traditional” implementation of YFI vaults and brought a unique spin to the BSC. Currently, Beefy vaults offer users the best yield farming experience on the BSC and only plan to innovate further. Their inclusive community governance system aims to attract many like-minded individuals in the crypto space, driving future developments. After speaking to the team, it is apparent that the Beefy team is oriented around building a strong foundation for both their project and the BSC ecosystem.

With all this being said, it is imperative to do your due diligence when making financial decisions.

Keep an eye on these cows because they are cooking up some heat.


Tags:
No items found.
Goon Trades

Greg (GoonTrades) is BSC News' Chief Editor and is also a writer for the team. Currently enrolled as an economics major, he finds himself as a cryptocurrency researcher, writer, and technical trader.