Dive Into Defi: Yield Farm Portfolio Strategy (Part 2)

Part two of this three-part series is all about building spot positions that either: auto-compound, harvest more yield, or both. The key here is, they all keep earning. 

By
Ben Antes
on
January 2, 2020
Category:
Dive Into DeFi

Part 2

While Part 1 of this series focused on my base liquidity pairs, part 2 is all about building spot positions that either: auto-compound, harvest more yield, or both. The key here is, they all keep earning. For those of you who missed out on part 1 check it out here.

Spot Positions

To start, I want to focus on the spot positions that I am going to simply auto-compound. For me, the two easy picks are BTC and ETH. While I’m bullish on other tokens, especially BNB, my Binance Smart Chain (BSC) LP pairs provide plenty of BNB exposure. In my opinion, no portfolio can have enough of the two I’m accruing. 

With every yield harvest I generally allocate a portion to BTC and ETH, and then throw them in a yield optimizer to auto-compound. While the yields are not as strong as say, 750% Fuel/BNB, the market currently provides APY’s of over 10% on both large cap cryptos. My current strategy utilizes Beefy.Finance, compounding both via yield earned in Venus. 

I am also accruing a bit of BUSD, earning a yield of 40%. I want this exposure in case the market dips, providing liquidity for a round of buying. 

The Yield Harvesters

BSC provides a multitude of tokens geared towards earning. These include the apparent plays of CAKE, DRUGS, and the newer token, JETS. 

CAKE and DRUGS: Cake and drugs provide ever changing earnings opportunities, so my use of them may change over time. Both Thugs.Fi and Pancakeswap.Finance let users earn newly-launched project tokens in unique farming schemes. If I see a token that I want to accrue and hold, I simply allocate towards that pool position. If I do not find the current token opportunities particularly interesting, I throw them in a yield optimizer and simply grow my position. I will admit that it took me a while to see the value in holding these kinds of tokens, but as the BSC continues to expand more interesting projects are coming on the scene. 

There are other scenarios in which these tokens can be used to both compound and earn additional tokens. Autofarm, for example, auto compounds your CAKE position while also distributing AUTO as extra rewards. ETH yield farmers can find this comparable to Harvest, which runs a similar yield farming/yield optimizing strategy. I only recently started using this platform and am tiptoeing into a position as I am less familiar with it, but it provides the perfect scenario of how you can build entirely new positions using your existing cryptocurrency holdings. I am currently farming AUTO and providing the reward as liquidity to compound those earnings.

JETS: JETS provides a bit of a unique use case. It is important to note that you can’t purchase JETS, but instead have to build the position by locking up FUEL. JETS allows yield farmers to earn in a number of ways:

  1. Profit share from the upcoming vault strategies
  2. Stake JETS to earn more FUEL
  3. Stake JETS to earn partner tokens. 
  4. Receive Gforce from transaction tax
  5. Profit share from future AMM
  6. Profit share from future lending/borrowing

Staking

Staking is a classic crypto concept, and can easily take a position in a yield farming strategy. Tokens like BHC allow holders to compound their position simply by staking the token, taking advantage of increased earnings and yield. The best part, is that BHC could have been earned via jets staking, making this a compounding play that involved zero dollars. 

Summary

Parts 1 and 2 of the Yield Farm Portfolio Strategy focused on building the concept, and Part 3 will put it to use. I plan on constructing a defined strategy that focuses on 

  1. Capital preservation
  2. Compounding yield
  3. Position building
  4. Profit-taking

If this sounds up your alley, be sure to catch Part 3 next week. 


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Ben Antes

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.

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