Yield farming with $NFTART
The enter ecosystem reached a new milestone this week, with the launch of our very first native farm! Here, we take a look at all the essentials regarding yield farming with $NFTART to give you the full scope of what you need to know.
September has been full of surprises and great news for the $NFTART community. Just last week, we announced that NFTART had been successfully launched on Avalanche, opening the doors for new holders and adding additional utility for $NFTART. This week, we’re excited to share another great milestone for the enterverse, as we launched our very first native farm on BNB Chain!
This means that artists, collectors, and DeFi degens alike can use their tokens to gain additional profit while providing liquidity to $NFTART. There are many reasons for getting into farming and staking, but there are also risks to be considered. We’ve gathered the fundamentals of staking and yield farming, and how to get started farming with $NFTART on https://farm.nft-art.finance/, so that you can get the full scope from the get-go. Keep reading to get all the details and remember to DYOR. Happy farming!
What do the new farms mean for $NFTART?
The farm on https://farm.nft-art.finance/ is built on top of the PancakeSwap v2 liquidity pool, so all the liquidity in their farms will help expand the liquidity of the v2 pool on PancakeSwap, which has the highest volume. This means more liquidity where it is needed, which will result in smaller price impacts from trades. Those who took the chance of joining the $NFTART genesis pool for DIBS at the launch of dibs.money took home some sweet rewards, and we’re excited to yet again offer a chance to harvest some nice APYs with an added utility for $NFTART for old and new holders alike, within our own ecosystem.
What is Yield Farming?
Yield Farming refers to the practice of providing liquidity to a protocol in return for transactional fees and additional token rewards. In essence, liquidity providers provide liquidity for a pairing (like $NFTART-$BNB) and share a percentage of its transactional fees, proportionate to their share of the pool. As a representation of the staked funds, liquidity providers receive an LP token that can be staked to earn additional rewards.
Yield Farming rewards you with transactional fees and staking rewards, and you gain the benefit of holding two tokens instead of one, thus diversifying your portfolio.
Compared to staking, yield farming does present additional risks. The risk of Impermanent Loss is ever-present for yield farmers and one should keep this in mind before getting started with farming.
What is Impermanent Loss?
When providing liquidity to a pool, you are exposed to impermanent loss. It occurs when there is a price change between the deposited assets compared to the time of deposit. The bigger the divergence in price, the bigger the loss in token value compared to simply holding both assets separately. The loss is deemed impermanent, because the lost value can be redeemed, given that the price ratio of the two assets return to what it was at the time of deposit. In that sense, the loss is only realized when the assets are withdrawn from the pool. To a degree, impermanent loss is offset by both transactional fees and staking rewards, but one should always be wary of this when yield farming.
$NFTART as a mitigation toward Impermanent Loss
Due to the deflationary and reflectionary properties of $NFTART, impermanent loss gives a bit of a different result, when $BNB is the falling or stagnant asset. In this case, $NFTART is converted to $BNB without being subject to the transactional tax, because the conversion happens off-chain, and users effectively get a 10% discount on the converted funds when splitting the pair, as well as another 10% discount if they were to sell it. This gives a sort of discount on impermanent loss, if $BNB is the falling asset in a $BNB/$NFTART pair.
What are APRs, APYs and Multipliers?
APR stands for Annual Percentage Rate and designates the interest rate on a particular pool or farm for the year. If a pool or farm has an APR of 100%, you will gain 100% of your staked funds in rewards after a year.
APY stands for Annual Percentage Yield and designates the yield from a particular pool or farm for the year. The main difference between APR and APY in this context is that APY takes compounding into account, while APR does not.
Multipliers designate the amount of rewards paid out to a particular farm.
An additional note on APY: The APY is based on a current estimate and is subject to fluctuations over time, dependent on multiple factors such as (i) TVL, (ii) transaction volume on PancakeSwap, (iii) and elsewhere. enter is not responsible for any tokens lost in PancakeSwap liquidity providing, staking or farming.
How to farm $NFTART-$BNB on nft-art.finance
Before you can start farming, you need a 50/50 split of $NFTART-$BNB. When you have that, you can navigate to PancakeSwap and add the liquidity here. Find the $NFTART contract address here. If you have $NFTART-$BNB LP tokens from previous farming, you can simply withdraw them from the current farm and add them to the new farm.
After adding liquidity and receiving your LP tokens, you will start receiving rewards in the form of transactional fees. By staking the LP tokens on nft-art.finance, you will start receiving additional rewards in the form of $NFTART. You can harvest your rewards whenever you want, but you should be aware of the gas fees before you press harvest.
When you want to unstake your LP tokens and split them, withdraw them from the farm, and go to PancakeSwap to split them to receive your tokens.
NOTE: $NFTART is deflationary, and the 10% transactional fee is still intact when transferring to or from LP tokens. The LP tokens do not have any tax when moved or staked. The total tax for creating and breaking LP tokens is 20%.
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PUBLISHED 16TH JUNE 2023
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