Dive Into Defi: Yield Farm Portfolio Strategy (Part 1)

Get ready to enter the mind of a madman, in this three-part series KCrypto will dive into his yield farming portfolio. This part explains the base liquidity pairs involved in the strategy.

By
KCrypto
on
December 27, 2020
Category:
Dive Into DeFi

For this week, I wanted to try to break down my BSC strategy as an example of how one could attempt to earn a high yield from bullish assets. This strategy allows users to compound those earnings into a growing portfolio. I have decided to make this a multi-part series. Of course, don’t blindly follow the example I layout here. Please, please, please, research the projects I discuss here and make sure you understand what you are investing in. 

Where it Started:

I started by attempting to map my capital flow on my whiteboard. 

A picture containing text, whiteboardDescription automatically generated

To be honest, it is confusing. The arrows have multiple meanings: the flow of profits and the flow of LP tokens into different farms and optimizers. Over the next few weeks, I’m going to attempt to make it make sense. Especially the one question I have received a couple of times: Why is Thorchain here? So here we go. 

My strategy has one primary rule to live by, and it is the following:

Preserve Capital

My goal is to preserve my capital base at the end of the day while leveraging new yield farming opportunities to build and grow positions. The APY’s on BSC are for lack of a better term, incredible, making this relatively easy to do. 

I’m going to break this down into what I’ll call “layers.” Each layer is a different type or category of asset and may have different goals within my farming ecosystem. 

Layer 1: The Base Liquidity Pairs

My portfolio’s base liquidity pairs are the farming pairs that I have little intention of selling or taking profit from any time soon. I am currently compounding or earning from all these positions in one way or another, and break down as follows:

BTC/BNB – This pair is the king BNB pair available on BSC. While the yields you can earn with it are lower than others listed here, it’s a good one to hold. 

ETH/BNB – This one sort of goes without saying. I’m bullish on both assets. I am earning trading pool fees to grow the position and have the LP tokens deposited on Jetfuel.Finance to earn Fuel—Current fuel APY 77%.

UNI/BNB – I think this will perform well in the upcoming bull market and have the LP Tokens in Jetfuel.Finance to earn fuel—Current Fuel APY 128%. 

GUNS/BNB – Thugs.Finance is cooking up some extraordinary use cases for Guns. I think there will be a lot of demand, so I’m happy to hold this for the foreseeable future. I have the LP tokens deposited on Beefy.Finance for a whopping 1.75k% APY, compounding. This position is on autopilot for me. 

INJ/BNB – I am looking forward to seeing INJ grow. I have these LP tokens deposited in Beefy.Finance compounding at a rate of 130% APY. 

CRED/BNB – I’m bullish on Thugs.Finance growth and am happy holding this LP position—current compounding APY in Beefy.Finance is 163%.

BLIQ/BNB – I like the premise of Bliquid and am looking forward to seeing what the team can deliver from here. LP tokens are compounding in Beefy.Finance at a rate of 363% APY. 

FUEL/BNB – This pair generates an exceptional rate of return through Fuel—Current APY is 1100%. I use the earned Fuel token to compound several positions further down the chain.

BIFI/BNB – Beefy.Finance has proven itself to be an effective yield optimizer. As BSC grows, I see this project growing with it. This position is currently compounding in Beefy.Finance at an APY of 130%. 

ETH/RUNE – I know Rune is not BEP-20, but rather BEP-2. It will eventually move to its chain (ThorChain), but I think including Rune in my overall strategy is relevant as the simplicity to transfer between BEP-2 and bep 20 tokens makes it easy for me to integrate this position. The current APY from this pair is about 60% in Bepswap. 

More on Thorchain later. 

BTC/RUNE – This position is in bepswap and has an APY of 30%. 

The AMM’s in use for my farming portfolio are Streetswap.Vip and Pancakeswap.Finance. My Rune positions utilize Thorchain’s bepswap.  

Concluding Thoughts

This short LP list will likely grow over time. While I have no intention of selling any positions soon, I can move the LP tokens to new farms or yield optimizers as earnings opportunities develop on BSC. You can look at them

as the “income earners” of the portfolio, earning fees and appreciating in value while I either compound them in optimizers or use them to acquire new project tokens. The earnings calculation is: Pool fees + capital gains/losses + farming bonuses. 

However, I will note that I don’t toss my LP tokens at new platforms that have not yet proven themselves trustworthy. I’ll stress it again: my goal is to preserve capital, and I don’t want my LP getting rugged. We’re in a bull market, don’t take unnecessary risk for some extra earnings. 

Part two of this series (to come out next weekend) will focus on the single asset positions that tie into my strategy. These include BTC, ETH, Drugs, BHC, Fuel, and Jets, for now. 


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KCrypto

KCrypto is BSC News' Financial manager and one of the four founding team members. KCrypto self-proclaims himself as a yield farming "guru" who finds himself researching the latest De-Fi projects.