Yearn Finance — a leading decentralized yield aggregator and optimizer — paved the way for DeFi users to earn crypto through farming protocols. And a number of other projects have attempted to match Yearn’s achievements. But as yield farming has become more prevalent, the need for increasingly complex operations has grown, and investors are looking for higher APRs. The result was, in part, higher gas fees for users. This is where Harvest Finance comes in, the DeFi protocol positioned as a solution to this problem.
This guide will assess the features that Harvest Finance brings to the DeFi space and cover the role of the protocol’s native FARM token. Here’s what you need to know:
What is Harvest Finance?
Harvest Finance is a decentralized yield farming protocol and asset management platform. It aims to provide users with the best returns through strategic vaults. This type of yield aggregator is ideal for those who want to earn returns on their cryptocurrencies without managing their own holdings.
A well-developed farming protocol requires special strategies and checks, as well as the constant movement of funds. This results in high gas charges being passed on to users. Harvest Finance relieves the user of these responsibilities and vulnerabilities and does the work for you via its strategic vault system. All users have to do is deposit tokens and wait to receive a return.
Did you know? In October 2020, Harvest Finance suffered a devastating flash loan exploit in its vaults, resulting in a $24 million loss. The Harvest team then placed a $1 million bounty on anyone with information on the attacker.
In addition to the BTC addresses where the funds are located, there is now a significant amount of personally identifiable information about the attacker that is well known in the crypto community.
We’re putting a $100,000 bounty on the first person or team to approach the attacker
— Harvest (@harvest_finance) October 26, 2020
Story
An anonymous team developed and launched Harvets Finance in 2020. After the platform and token launch, the project quickly grew into a leading yield aggregator protocol with over $1 trillion to TVL. In December 2020, the team launched a cross-chain version of Harvest Finance on Polkadot.
How does Harvest Finance work?
The basic premise of the protocol is that users first deposit their ERC-20 tokens into one of Harvest’s smart contract vaults. Once the tokens are received, investors will receive an fToken compatible with the escrowed token.
So if you deposit into a USDC vault, you will receive fUSDC from the protocol. This represents your share of the associated vault. Users can withdraw deposits at any time. A corresponding amount of fToken tokens are burned for each payout.
Each farming opportunity has its own page with interactive charts and detailed statistics.
Easily keep track of APY and TVL history while monitoring the performance of your deposit over time. pic.twitter.com/ixUkevar4T
— Harvest (@harvest_finance) May 16, 2023
The three main features that govern the system are as follows:
- vault: The vaults are smart contracts that hold the deposited funds. These smart contracts execute various income-generating strategies that best serve the investor. Safes automatically buy low and sell high on behalf of users.
- strategies: The Harvest Finance team uses the latest and most profitable techniques and strategies in their vaults to maximize user returns. New projects are thoroughly evaluated and tested to qualify as one of the platform’s revenue-generating strategies.
- pools: The protocol provides for two different loan pools: an interest-bearing pool and a savings pool. Users earn interest on their deposited crypto funds in the interest-bearing pool. For the savings pool, they receive rewards for providing liquidity to the platform. In addition, quick loans are also available, allowing investors to borrow against their deposits.
In the graphic below we can see the vaults for some of the protocol’s tokens live in action.
Harvest Finance stablecoin vaults: Dune
Pros and Cons of Harvest Finance
Although the project successfully achieves its goals for DeFi users, it still poses risks. Before investing your money, you should always weigh the pros and cons of the platform.
Advantages
- Low fees: The protocol charges low fees for its services; Transaction fees are only 0.03%.
- Earn interest: You can start earning interest immediately after depositing crypto funds. Interest rates are based on supply and demand.
- High liquidity: Users can access liquidity through the decentralized exchange of the protocol.
- Driven by the community: Harvest Finance is open source and very community oriented, so everyone can contribute to its development and share on social media.
Disadvantages
- Risks of hacks: Like any other DeFi platform, the project can be vulnerable to system hacks since it runs on the Ethereum blockchain.
- Lack of customer support: The project does not have a customer support team. So if you have problems, you have to rely on the community.
- Unstable interest rates: Interest rates can fluctuate wildly, so you can make a big return one day and lose it the next.
Farms: crop financing
FARM token
FARM comes from Harvest Finance ERC-20 token and is for governance, staking, voting on proposals, and incentivization of users of the platform. Key incentives include profit-sharing pool participation rewards and FARM earnings for vault depositors. As per its governance usage, FARM owners can vote on important issues related to the project and platform. The more FARM an investor invests, the more influence he has on decisions.
The FARM tokens can be bought on some major exchanges including Binance, Coinbase, Kraken and DEXs including PancakeSwap v2 (BSC) and Uniswap v2. The cross-platform Atomic Wallet and Trust Wallet are great wallets for storing your tokens.
tokenomics
The FARM token has a live price of $28.12 with a total market capitalization of $19,153,881 (As of early June 2023). It has a circulating supply of 681,174.81 with a total offer 700,442.5 and a maximum supply or similarf 690.420 FARM.
Currently FARM has no VCs or investors. The token was bootstrapped with no pre-sale, no pre-mining and no circulating stock at launch. A total of 5 million FARM are to be distributed over four years. Newly minted tokens are released and distributed weekly:
- Incentive pool liquidity providers (70%)
- Bonuses to the company fund (10%)
- Harvest Building Team Rewards (20%)
- FARM owners receive the 5% fee from harvest farms
Since holders voted to reduce token issuance by 4.45% each week through week 208, token issuance will currently follow the curve below.
Token Emissions: Harvest
The future of Harvest Finance
The Harvest Finance project offers a seamless system that allows yield farming investors to receive maximum rewards for their deposits. By essentially doing all the heavy lifting, the protocol’s vaults act as intermediaries between its users and the pooled funds.
However, we have only seen the beginning. The team plans to roll out more features in the future, including staking pools, non-custodial wallets, and insurance products. We are currently in the very early stages of the DeFi revolution, with yield aggregators in particular taking center stage.
frequently asked Questions
Harvest Finance is a digital asset yield farming protocol that aims to enable users to earn interest on their crypto holdings. Assets are deposited into one of Harvest’s various strategic vaults to maximize their return. Harvest Finance is built on the Ethereum network and serves as a yield aggregator, generating the highest yields available from the latest DeFi protocols.
To start using the Harvest Finance protocol, users must first select a loan pool on the platform and deposit their ERC-20 crypto assets. Based on the terms of each pool, users will accumulate interest over time. These mechanisms are driven by the protocol’s vaults, which are smart contracts that execute specific yield-generating strategies for the investor. In other words, the vaults do all the work for you; All you have to do is deposit your money.
As with any other DeFi platform, Harvest Finance still carries some risks, including bugs in the smart contracts, correlation risk, a block failure or unpegging of stablecoins. In addition, large movements of whales in the market have a strong impact on markets like Harvest. And we’ve already seen what happened with the Flash Loan incident in 2020, where an attacker exploited the platform.
Harvest Finance works by pooling cryptocurrencies from different users and storing them in revenue-generating vaults. These vaults are powered by smart contracts that execute strategies on behalf of their users. Investors can deposit ERC-20 tokens and start earning income immediately.
The Harvest Finance protocol was created in September 2020 by an anonymous team, so nobody knows who is really behind the project. It was developed with the sole aim of reducing gas costs for yield farming users. Whoever the developers are, they control the vault strategies and create the vaults themselves.
Disclaimer
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