Hello to current (and future) ReFi investors,
ReFi are big believers in education. The essence of DeFi is that you can be your own bank, and the passion that drives ReFi is to reimagine what finance could look like.
With that in mind, I thought I’d put together a special educational article for our followers.
Let’s say you’re a savvy investor and you’re currently hovering on Uniswap, about to buy 1 ETH of $ReFi tokens, to get you on that passive income flywheel.
But then you get the idea that screw this, I’m going to yield farm myself! How exactly would you do that?
Let’s take a look at one of the most popular trades in the FaaS space at the moment — being a liquidity provider (LP) on a popular pair like FTM/TOMB.
The first problem you’ll face is that you currently hold Ether ($ETH), on the Ethereum network. You’ll need to ‘bridge’ that Ethereum to another network, in this instance Fantom.
If you haven’t got it set up already, the first thing you’ll want to do is go to chainlist.org and add Fantom to your Metamask.
After that, you’ll head to somewhere like spookyswap.finance/bridge and end up here:
But there’s a small inconvenience, ETH is not in the drop down list of assets to bridge:
So first you have to “wrap” your ETH in a format that will be accepted on Fantom. But that’s fine, within Metamask itself you can simply “swap” your ETH for wrapped ETH:
Cool. So now you have some wETH, you can go back to the spookyswap.finance/bridge page and send over your wETH to Fantom:
Wait a hop , skip and a jump and alas — you’ll have some wETH — not on the Ethereum blockchain, but on the Fantom chain.
Now, much like how “gas” is paid to transact on Ethereum, you’ll need FTM in your wallet to transact and pay fees on this chain. This FTM can either be bought and sent to your Fantom Opera wallet directly from a CEX like Binance, but more recently it seems you can do the bridging in one step including receiving FTM using https://multichain.org/ (I haven’t tried it yet).
Either way, once you have assets in Fantom, you’ll want to buy equal amounts of Asset A (FTM) and Asset B (TOMB) in order to provide liquidity to the FTM/TOMB LP.
So head on over to the Swap tab on spookyswap.finance and swap HALF your wETH for FTM:
and the remaining half for TOMB.
Once you’ve done this, you’ll have 2 assets (“ingredients” if you will), in equal measure.
We then want to create the LP token for FTM-TOMB, which we will deposit in a FTM-TOMB vault somewhere to get those juicy APY’s. So we head on over to the “Liquidity” tab and mix up our potion of FTM and TOMB in equal measure to get those LP tokens:
Once done you’ll need to go to an auto-compounder like reaper.farm and deposit your LP tokens there like so (you may need to click Approve first, then deposit).
and that’s pretty much it. You’ll be able to see some rather intimidating looking data on the more info tab, but essentially you’ve put on your first yield farming strategy.
So why the heck do we need ReFi then?
A few points to note.
1. Calculating and monitoring Impermanent Loss
Impermanent loss happens when you provide liquidity to a liquidity pool, and the price of your deposited assets changes compared to when you deposited them. The bigger this change is, the more you are exposed to impermanent loss (IL).
Whilst the peg between FTM and TOMB is close to 1, it’s important to note that you are directionally long on each asset price. ReFi constantly monitor the IL of our positions and make a risk-adjusted call on whether to add, reduce or remove exposure:
As outlined in our last article, we also conduct all the due diligence on which protocols to use, the risk of vault exploit, the volatility of the position, smart contract risk, peg risk, current market valuation and market outlook. In the case of most protocols that we use, we also have a direct relationship with the founders (e.g. reaper.farm, SCREAM, LQDR, Beefy Finance etc).
2. Managing multiple trades across different chains
To be frankly honest, putting on one trade and setting and forgetting it is relatively easy. However, ReFi currently has 43 trades on across Ethereum, Arbitrum, Fantom, Avalanche, Solana and Cronos.
It’s a full time job to monitor each of these positions and update the PnL, assess the weightings to each pool, keep up to date with newer vaults and protocols and know where the best returns are at any given time. APYs change on an hourly basis and the rate that is advertised has likely changed by the time you’ve done your deposit. To maximise yield you must optimise the portfolio on a regular basis.
This is why we. are hiring into the farming team. As ReFi grows we want to provide best-in-class research and execution for our investors.
3. Accessing opportunities early
One benefit of running a $1,700,000 farm is that we are starting to get early access to new protocols due to our deep industry relationships.
For example, we recently acquired some tokens in the presale for a new DAO that has launched on the Cronos network. The presale was sold out within 30 seconds but our deal had been pre-arranged beforehand so we didn’t have to sit and refresh. After all, “hope is not a trading strategy”.
That position is currently paying an insane APY, which I won’t advertise here so as not to mislead investors about what may happen in the future. However, every 8 hours we are making 3.0674%, which compounds at each 8 hourly rebase. So currently we make 57.34% ROI every 5 days. As an extra bonus, the token price has 3x’d since our OTC deal.
I’m expecting ReFi to make about 15 ETH on the 1 ETH we invested. This is the kind of assymetric payoff that we will see more of as ReFi scales and asserts itself as the leading player in the FaaS space.
ReFi is more than just a token. We are here to educate our investors. Whether that be through podcasts, medium articles, AMA’s, Twitter Spaces, Discord channels or down the line, YouTube.
Anyone can put on a position, that’s the easy bit. The real value add is in knowing what to do with it.
Peace out, huf.