Jake Call | Crypto Flywheel™

A Beginners Guide To Yield Farming Lately, I’ve talked a lot about earning yield on idle stables in places like @DeFiCarrot, @SuperlendHQ, among others. But there’s another powerful way to earn - the world of Yield Farming. Why do I love it? Because it’s semi-passive and the returns can be incredible - if you know how to avoid the main trap: impermanent loss. Yield farming works especially well in choppy ranges (kind of like we are seeing right now) but also works in any market structure. For this example I'm going to walk you through the setup with one of my favorites, @DeFiTuna Head on over to: defituna.com/lp?pool=7VuKeev… You'll see the page loads a SOL/USDC pool. You’ll see a SOL/USDC pool. Here’s the basic idea: you’re acting like a market maker. Your assets provide liquidity so others can swap SOL ⇄ USDC - and that trading volume generates yield for you. If you’re a beginner, I suggest entering with only USDC and letting the protocol auto-balance into SOL/USDC. That way, your entry is clean at the current price. Impermanent loss simplified: When SOL’s price moves, the pool rebalances your position. If price runs up, you end up holding more USDC and less SOL (you “sold” some SOL along the way). If price drops, you end up with more SOL and less USDC. Compared to just holding, this can leave you worse off - that’s impermanent loss. But if SOL returns to your entry range, the loss disappears. It's even harder to keep track of and unlocks another pitfall if the SOL you enter the pool with has a much different cost basis than current cost. Which is why - to make it clean and simple - I tend to always just enter with the single-asset stable and leave my spot bags as my spot bags. This, after all, is a yield generation play. Now the fun part - the setup. Let’s say I have $500 USDC to farm with. I keep leverage off, swaps off (best for beginners). Next, I choose a price range. The tighter the range, the higher the yield, but also the higher the risk of falling out of range. For this example, I set a +/- 5% range. My estimated yield shows 0.53% per day - which annualizes to 193% APY. Yes, 193% APY. Let that sink in. That’s where yield farming shines. Here’s why: If SOL pumps above my range, I exit with 100% USDC. Along the way, I DCA’d out of SOL at a profit plus collected yield - a juicy double-dip. If SOL dumps below my range, I exit with 100% SOL. That’s basically DCA’ing into SOL at better prices than today, while still collecting yield on the way down. Either way, I’m winning. Right now, as we are still in a bull market, I view yield farming as a great way to earn amazing returns because I'm confident that my positions will exit my range at the top side, not the bottom. Which means I will get that juicy double profit I mentioned. And if I fall out of range on the low end? I can just sit and wait until price re-enters (earning nothing in the meantime, but no harm done), or I can withdraw my SOL and put it to work elsewhere, like staking with @MarinadeFinance. Yield farming isn’t for everyone, and I don’t call myself a subject matter expert. But I’ve learned a lot by doing it - and by studying one person who I think is the best educator on the topic: Jake Call. His YouTube content is one of the few that’s actually worth your time if you ever want to dive to deeper depths than I've just mapped out for you. As always, I am never paid to mention any protocol or person in my posts. I only post about people/things I truly believe in. 🫡 From the depths — The White Whale 🐋