Fee Transparency: Beefy Finance and Autofarm Release Fee Data

Understanding how fees operate in the crypto landscape is crucial to fully participate in Decentralized Finance (DeFi), and transparency allows for quick user comprehension.

By
Rebecca Asseh
on
May 13, 2021
Category:
BSC News

Behind the Fee Scene

In a move that will satisfy investor curiosity, Beefy Finance has given a transparent breakdown of its fees. The Binance Smart Chain(BSC))-based yield aggregator decided to take a transparent route breaking down its fees in its fifth Bulletin. According to the yield aggregator, they understand that fees take away from the proceeds users obtain in their yields and that is why they charge the least amount of fees possible. Beefy Finance is comparing the fee structure of yield optimizers to that of traditional finance. Aside from Beefy Finance, another BSC-based yield aggregator in Autofarm also made a compilation of its fees and returns. Let’s dive into how these fees are different from standard financial institutional fees, and potential benefits derived from these differences.



How Do Yield Optimizer Fees Differ From Traditional Finance?

For every transaction carried out, whether in the traditional finance system or the cryptoverse, a fee is incurred. In the traditional finance sphere, transaction costs are expenses incurred when buying or selling a good or service. They represent the labor required to bring the goods or service to the user and include brokers' commissions and spreads. These transaction costs result in the creation of industries that focus on nothing more but facilitating exchanges, thereby tripling costs for the added middlemen. However, with yield optimizers like Beefy Finance or Autofarm, transaction fees collected are utilized for various purposes, including community engagement, salary payment for the team, hiring for external audits, community engagement and marketing.

Yield optimizers are decentralized protocols or smart contracts programmed to automatically seek the highest available yields across multiple supported platforms, and then farm, harvest, reinvest the harvest and automatically compound the earnings. When a user provides liquidity into a pool, they earn a share of the trading fees and liquidity provider fees. But what differentiates how Beefy or Autofarm assign those fees and present them from other optimizers and traditional finance?




 

Beefy Finance Fee Data

The answer is transparency. For instance, Beefy charges a 0.1% withdrawal fee on all vaults with the charges placed on the total amount you withdraw, but all other fees are included in their APY calculation. There is also a 3.0% performance fee on all vaults which gets distributed among BIFI holders in the BIFI Maxi pool. Aside from these fees, there are also the blockchain fees that go to blockchain operators. 0.5% of the fees are allocated to the Beefy Finance Treasury, 0.5% is awarded to the Vault Strategist and another 0.5% to the one calling the harvest function. 0.1% is assigned on deposit or withdrawal fees to protect each vault from bad actors. By laying out how the fees are dispersed, the company makes investors feel more secure with paying the fees for the service.

In comparison with traditional finance vehicles, users can get yields at a 14.46% APY with fees factored in with Beefy finance. In other words, $1M invested with Beefy Finance at 14.46% APY yields $57, 492, 639 Million. Meanwhile $1M invested with traditional finance for 30 years at 8% with a 3% management fee fields $4.32 Million.


Autofarm Fee Data

Now let’s take a look at Autofarm. Their fee break down according to the team includes the following:

Controller Fee

This fee covers the gas cost for the optimized auto-compounding. On BSC, the controller fees cost 0.2% while it costs 0.008% on HECO. 

Platform Fee (Treasury)

This fee covers all the varied purposes of the aggregator including running costs. On BSC, platform fees cover just the treasury and cost 0.5% on the other hand, HECO platform fees cover treasury + revenue sharing which cost 0.3% + 1.5% = 1.8%

Vault Fee ($AUTO Buyback & burn)

A percentage of the profit that is taken to buy back $AUTO tokens to be burnt. The tokens burnt will reduce the max supply of $AUTO forever and all $AUTO holders & liquidity providers will benefit. According to Beefy Finance, “The buyback burn rate is as specified in the dropdown of each vault. Currently, all regular vaults have a vault fee of 1.5%, and non-$AUTO earning vaults have a vault fee of 3.0%.”

Vault Fee (Reward $AUTO Stakers)

This Vault fee is only applicable to HECO as the BSC-HECO bridge has not been built and will likely be up in a Month. Vaults from the HECO cross-chain will be used to reward $AUTO stakers who stake their $AUTO tokens on single token vaults on the BSC network and it costs 1.5%.

Deposit Fee

Deposit fees on HECO and BSC cost the same - a one-off fee less than <0.1% on initial capital. 

Withdrawal Fee

Withdrawal fees on both HECO and BSC cost 0%. 


About Beefy Finance

Source

Beefy Finance is a yield aggregator that allows its users to become yield farmers effortlessly. This definition fits the profile of all yield aggregators. Users do not need to compound their funds periodically as users can just set and leave their funds in yield farming. Utilizing a vault system, Beefy Finance optimizes yields by implementing strategies through smart contracts. The vaults serve as investment instruments automating the best yield farming opportunities. Instead of users regularly making decisions on investments, the vaults perform the following actions: providing assets as collateral for others, utilizing assets as liquidity, using assets to generate a yield and compound profits and reducing liquidation. 


With traditional investment vehicles, you can earn a 12.5% annual return on your investment. But with Beefy Finance, your compounding interest and regular interest are added together to give their users a significantly higher overall annual return. So, you get your 12.5% annual compounding interest and 14.2% interest of another site’s promotional coin ( interest on promotional coins from any of the platforms Beefy uses). In total, users get  28.02% APY on Beefy. While traditional finance vehicles come with excess charges some of which are covert, Beefy has made a transparent declaration of all its fees which are directly proportional to when activities occur in your account. 




About Autofarm

Source

Autofarm is a leading DeFi yield aggregator on BSC and HECO with 3 products Autofarm, Vaults (yield optimizer), AutoSwap (DEX Aggregator), and farmfolio that make up its ecosystem. The yield optimizer implements maximized yields at minimal costs, while AutoSwap allows users to swap or trade through routes that find the best price and swap rates. Farmfol.io users have access to an intelligent portfolio manager and tracker that manages their assets across different DeFi farming projects. All of these services are governed by AUTO token, the platform’s native token. 


In Conclusion

Unlike traditional finance vehicles, with yield optimizers, fees are transparent and included in the APY minus blockchain fees. Yield optimizers are making fees charged on financial services serve a beneficial purpose for users, giving traditional investment vehicles a run for their money. With an APY of 12% to 14% that users get from yield optimizers fees factored in, more people will begin contemplating their financial future in the hands of a system designed to take more from them than to give in return. 


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Rebecca Asseh

Rebecca Asseh is a crypto and blockchain Writer with an interest in emerging technologies and financial psychology. When she's not writing, she's watching medical and crime shows.

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