With the launch of COMP liquidity mining earlier this week, yield farming has become a hot topic in DeFi. With yield farming, users can start earning passive income across an increasingly wider range of Defi protocols in the protocol’s native token by providing liquidity (or any value-added service) to the network. While yield farming is a newer concept to the DeFi community, we’re seeing more and more complex strategies beginning to emerge as Ren Protocol, Synthetix, and Curve have teamed up to launch a new incentivized liquidity pool on Curve for tokenized BTC.
— Ren (@renprotocol) June 19, 2020
Ren Protocol’s launch of the RenVM allows users to easily swap their native BTC over to an Ethereum-based renBTC. Now, there’s a massive incentive to leverage Ren’s new trustless, cross-chain custodian to lend your idle Bitcoin. Users who deposit either sBTC, renBTC, or WBTC into Curve’s new sBTC pool will be offered an attractive basket of token incentives in the form of SNX, REN, CRV and BAL when staked via Mintr.
How Does it Work?
The SNX and REN rewards are distributed via Balancer Pool Tokens (BPT) meaning LP’s receive BAL rewards on top of the rising DeFi tokens. The last piece to this multi-asset yield farming puzzle is that Curve also recently announced its native governance token, CRV, through a similar liquidity mining mechanism where users who provide liquidity to Curve’s AMM will earn CRV rewards.
All of this combines to create one of the most complex and attractive yield farming opportunities we’ve seen to date. Tokenized BTC liquidity providers will share 10,000 SNX and 25,000 REN in weekly rewards through the BPT distribution. That said, BAL and CRV are still not available on the market, however, there are plans to launch the full public distribution in the near future. The new incentive program will run for 10 weeks, totaling for 100,000 SNX (~$130K) and 250,000 REN ($31K) in rewards to LPs along with the governance incentives.
For those interested in capitalizing on this yield farming opportunity, you can follow these steps:
- Deposit sBTC, renBTC, and/or WBTC to the BTC Curve liquidity pool (found here).
- Stake your Curve LP tokens into Synthetix’s Mintr
- CRV and BAL incentives will be distributed directly to your wallet upon launch of each respective public distribution
- BPT tokens (which are SNX and REN) will accrue automatically and be available to claim in the LP rewards tab in Mintr.
The great addition to the last part is that upon claiming your BPT token rewards, the asset will automatically unwrap and deposit your REN, SNX, and Balancer trading fee rewards into your wallet. If you have any questions or need support, visit the Synthetix Community Discord.
This is composability at its finest.
Curve’s BTC liquidity pool and the underlying multi-asset yield farming play exemplifies the potential for this emerging DeFi primitive. More importantly, Compound‘s COMP token distribution sets a standard for future DeFi protocols on how to approach token distribution. It’s a massive step above the ICO model as it’s not a get rich quick scheme for participants. Liquidity miners have to play the long game in order to maximize their earnings and actually accumulate a significant amount of COMP (and other governance tokens).
it aint much, but it's honest work https://t.co/HpT95ktYu7
— 찌 G 跻 じ ⚡️ 🔑 (@DegenSpartan) June 19, 2020
While exact returns are tough to calculate, it’s simply the novelty of this multi-asset yield farming opportunity that makes this so interesting. With liquidity mining just getting off the ground, we can say with certainty that this trend is just getting started.
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Analyst at Bankless – one of the leading resources for open finance. Lucas is an active contributor to the DeFi ecosystem with appearances in other notable DeFi outlets including The Defiant and Our Network. He has years of experience working with dozens blockchain and token startups where he focused on token economics, marketing, and growth.