I firmly believe a large percentage of your portfolio should be in stablecoin farms. This is a vital part of a well-balanced crypto portfolio. When the market turns, you will also have available capital to deploy.
Here’s how to find good stablecoin farms 🧵
Since all data on the blockchain is transparent, there are multiple apps we can use to find:
- Great APY’s
- High TVL’s
- Rewards
(more on these later)
First let’s check out the amazing apps giving us alpha.
DeFi Llama — @DefiLlama
DeFi Llama is the go-to. You can find any chain you want with all the metrics you will ever need.
This app even allows you to dive deeper into the protocols of each chain. You can see exactly where volume is going on the chain.
CoinDix — @0xCoindix
CoinDix focuses on the best and trending farms around all chains. You can choose between different chains, but also different types of farms.
Some examples of farm types:
- Stablecoin
- No Impermanent Loss
- LP Stakes
- Single Stakes
We know the best apps giving us alpha. The question is- what are the best metrics to go by? Let’s dive into the initial protocol research.
APY — Annual Percentage Yield
If the APY is extremely high, or too good to be true, it more than likely is. When the APY is high, and the project is not new, you are probably the funding. Tread carefully here.
A rule of thumb:
The lower the APY, the more passive the farm.
TVL — Total Value Locked
TVL is a metric used in DeFi to find the overall value of the protocol. This metric is one of the first things you should be looking at when finding a new protocol.
TVL tracks all protocol functions like:
- Staking
- Lending
- Liquidity Pools
Rewards
You should always know what coin you want to farm before you start farming. There should be a phase of research where you check token what each farm rewards.
For instance, $AAVE may pay you 2% in the same coin (Base), but also pay you 5% in a different coin (Rewards).
These three metrics should get you started in DeFi farming research. $AVAX, $SOL, $TERRA, and $ALGO are a few cheap (gas fees), well established chains that you can learn on.
Remember that every DeFi farm can be classified as “risky”. Some are just way riskier than others.
When you have a medium to large account, you should never have all your money in one farm. Spread it out over a few protocols or even ecosystems.
Read this post and more on my Typeshare Social Blog
