As an early LP provider for Harvest, I have been really impressed with what the Harvest.Finance team and community (Harvest) has achieved to date in such a short period of time! 1bil+ in total value locked (TVL), fucking crazy shit. So, I thought I’d chime in with a couple ideas.
The aim of my proposals is to increase the protocol fees and the network effects of Harvest, by leveraging and building upon Harvests bespoke vault technology and audited infrastructure (remember harvest is not a fork!). Harvest can become the custodial backbone or “The Humble Farmers’ Fort Knox” for not just our humble farmers collective, but a significant chunk of the entire yield farming market. Establishing Harvest as the best place for farmers to seek superior and safer risk adjusted yield.
Farms as a Service (FaaS) and the Farmers Market (FM) - “Your hard work is about to become easier with Harvest”
Farm as a Service (FaaS) will allow promising projects to spin up a pre-audited yield farming template/contract, just like I can spin up a node on Ankr. Think of it as a basic interface that allows me to set up some basic variables (base deposit, gov token distribution rewards, farming schedule, number of epochs, TVL size limit etc).
The Farmers Market would be a tab on Harvest.Finance (Harvest) that would list all of the 3rd party partner yield farms that are leveraging Harvest platform to obtain superior yield for their farmers.
Under my proposal, FaaS would allow new projects to directly attach their yield farms to Harvests Base Vaults (all vaults listed on the front page except profit share pool) allowing farmers to generate a real return on their underlying stable coin and crypto deposits, whilst also enjoying the main APY incentive, or native governance token of the project listed on top of Harvest. This would boost the yield of any farm that joined the farmer market significantly (3.5%-16.5%).
Given that Harvest autonomously harvest yields and locks in gains, farmers that provide liquidity to projects listed on the FM would not have to sell the native governance token to generate a real return and protect themselves against inflation and/or gas costs. The funds would be deposited directly into the Harvest Finance base Vaults (USDC, USDT, DAI, TUSD, WBTC, WETH, UNI Pairs etc) locking in gains for farmers on a daily basis.
30% of all profit will be deposited in the profit share pool. Leaving 70% of the funds left to be distributed between the farmer & the project.
The Project could use these funds to add real value for the new project’s governance token, whether it be:
- Further protocol development
- Add an insurance fund
- Yielding treasury vault that tethers their governance token against a real-world asset (USD, BTC, ETH) creating a price floor for the token.
Additionally, Harvest Finance would handle depositor funds (custody), preventing rug pulls and allowing them to benefit from Harvests growing reputation as the most secure place on the internet to farm yield. Imagine another tab on Harvest.finance in between the Stake and FAQ tabs, showing farmers all of the projects currently listed on Harvest FM.
This will allow fellow humble farmers to mine additional governance tokens without exposing their base capital to any additional risk (as farmers base capital will be held in ftokens and be in the custody of the harvest team/vault).
Triple Farming Rewards
If a project was deemed to be very important and beneficial to have on the Farmers Market, Harvest could opt to add an additional incentive. Creating a triple farming reward, by providing 3 different revenue sources for depositors.
- Base Asset Yield Farming reward = Uni/Crv tokens which will be sold off for the base asset and divided between the LP, Protocol Farm profit share
- Native governance token will be distributed to farmers as the main incentive
- Harvest Finance could provide a small Farm incentive to bootstrap these pools as they would generate fees for farm holders
The idea is that any project can apply to launch a farm on top of Harvest, but it would need to receive approval from both the Harvest congress (Harvest Team) and the Harvest senate (Farm token holders) by vote. This step is necessary to try and avoid listing scams. Even if a scam was listed it would not put the base capital of LP at risk. However it would damage the awesome brand of Harvest. So we need a basic due diligence process in place to avoid this from occurring.
A real world example of a project that could benefit from partnering up with Harvest.
I considered mining BOND token yesterday, Barnbridge currently have $202million in an unaudited (they have had an internal audit, but not an external one)usd farming pool. That means $202million of idle cash is sitting in an unaudited honey pot, not creating any real value for depositors, just additional risks:
- Gas entry and Exit costs, Harvesting Costs
- Unaudited contract, potentially vulnerable to drainage of funds
- APY is linked to a highly inflationary governance token (all coins are inflationary during the mining period), exposing me farmers like me to a highly unstable and often falling APYs.
This is why I have decided against it, given the risk reward.
However, if Barnbridge were to launch their USD stable coin pool on top of a Harvest Vault via FaaS, I would of chosen to mine bond. As this would allow me to reduce my risk of rug pulls, while boosting my APY massively.
Another example of a pool that could of benefited from FaaS is the YFV Stablecoin Seed Pool 2 which has attracted and maintained $50-$100 million TVL since Yfv.finance launched it. These funds were not used and sat their idle for months getting debased by FED inflation. Forcing farmers to sell YFV/Value to generate a real return. Forgoing millions in yields for farm depositors and Value Defi protocol as a whole.
In conclusion FaaS would:
Allow new project to leverage the technology and security of the Harvest has built to date by launching audited farming templates. Launching a secure audited trusted yield farm is not cheap and takes quite a bit of time. In the fast-moving crypto space this can be huge.
Allow Farmers to acquire new tokens listed on the Farmers Market, without gaining custodial risk or exposure to new, unproven and unaudited yield farms, as the funds will remain on the Harvest.Finance generating a real return. The percentage yield profit going to projects listed on the farmers market could be subject to conditions. So if they use the first tranche badly or irresponsible, the Harvest team could refund the remaining raised funds to LP.
Attract LPs and boost APYs by at least 3.5% (returns on RenBtc) to 16.5% (Uni ETH-DAI) Farming yields by depositing idle assets in the Harvest Vaults, resulting in greater profits and dividends for Farm token holders.
Reduce dependence of Farm token rewards, as the native governance token of the protocol being farmed will provide the main APY incentive for farmers.
New audited farming opportunities for the famer collective, a gradual stream of good projects should be able to generate a lot of new LPs to join the collective. Whilst retaining funds on the Harvest platform Establishing sustainable TVL growth in the long run.
Debt based Vaults – more to come tomorrow
- Allow LPs to borrow/leverage against their interest bearing Ftoken deposits
Imagine being able to borrow stablecoins against the WETH-BTC UNI LP Pair on Harvest. These stablecoins would be used to by more WETH-BTC UNI LP tokens to deposit onto the Harvest platform. Increasing TVL and Profits. Given the performances of the Harvests vaults, your underlying collateral would grow at a faster rate than the underlying debt. In effect the returns of the vault could be used to pay off the debt over time without ever having to repay the debt yourself! Think of it as a Leveraged Vault that pays its debt of over time.