What’s up Chads! In this special 2 part guide, we’re going to cover — in great detail — our favorite yield farming strategies to maximize your returns while minimizing downside.
These strategies are based on our team’s personal experience as full-time DeFi participants (aka degen farmers), as well as that of those in our network.
We farmed SUSHI when it launched in late August, and CAKE when it was still $0.50. We’ve had our fair share of money-printers, rugs and everything in between.
Our hope is to share these insights and strategies with you to help you make life-changing profits and avoid getting completely rekt.
Part one of this guide will go over how to decide whether a project is worth farming in the first place. Some of this may seem common sense, but knowing which projects to hard pass on is equally if not more important than knowing which ones to enter. It saves you from getting rekt and not being able to play the game anymore.
The days of aping into everything and getting an easy 5x are over. These days, you have to be a little more sophisticated and knowledgeable. This is a GOOD thing because it will help you gain an advantage over newbies who don’t know what they’re doing.
Then, in part two, we will cover the four core yield farming strategies we use, and their associated risks:
- Degen + Compound With New Capital (Riskiest)
- Degen + Compound With Rewards
- Stable + Compound into Degen
- Stable + Dump (Safest)
As with everything we post in our channel and Medium, this information is meant as entertainment and should never be treated as financial or investment advice.
Part One: Knowing When And When Not To Ape
It sounds obvious, but if you want to make lucrative farming gains, you need to make sure you’re not buying a rug. It doesn’t matter how good your APYs are if you end up giving all your money to some random guy halfway across the world.
But sometimes, it’s not always easy to spot a rug or low-quality project. That’s why we have a checklist we go through to get an idea of how “legit” a project is before we enter with capital. You don’t have to be in the absolutely best project to make money (because under the right market conditions, even the most dog shit projects can pump).
But at the very least, you want to make sure you’re not buying a rug or blatant scam. Here are a few questions to ask yourself before risking your precious capital:
1. Are there malicious contract functions?
Assuming you are farming some variation of the infamous Masterchef contract, you want to make sure there’s no way the team can rug pull via hidden functions:
- setMigrator Function has been removed — the original Sushi and Pancake contracts have a setMigrator function that allows the owner to basically transfer your staked tokens. You’ll want to use https://www.diffchecker.com/ and compare the Masterchef contracts of the new project versus that of a safe and audited one (like Goose or Polaris) to see what the differences are. You don’t need to understand Solidity, but if you see weird functions, you should question them before entering.
- No hidden mint functions — Also keep an eye out for hidden code that allows the contract owner to mint any amount of tokens. Again, these functions will stand out when you compare the new contract with a trusted one.
- Timelock has been deployed and set as owner of masterchef contract — A timelock contract delays the execution of a contract function for a set amount of hours. Personally we think Timelocks are overrated and sometimes hurt the project since they delay everything. But having a Timelock is often more secure.
- Team doesn’t control a large chunk of tokens — This requires some more digging through BSCScan, but you want to look at token holders and make sure no non-contract wallet has a large % of tokens. Look at staking transactions to the Masterchef contract and figure who the whales are, when they got in and what price they got in at. Making a spreadsheet is your friend in these cases.
2. Does the project offer anything new from what’s currently out there?
Next, read through the project’s Medium, Gitbooks or website. If it lacks a descriptive Medium, that’s another red flag. As you read through the Medium, you want to ask if the project offers anything unique, or it’s just another low-effort Goose or Pancake clone.
If it has a Gitbooks with original and well-written content, then it’s most likely legit. Scammers are lazy and will rarely bother writing original content and posting it to Gitbooks. Note the emphasis on original & well-written because some rug pulls will copy paste content from other projects. For example, we stayed out of Meerkat.finance (which was rugged for $30+ million) because their Gitbooks was a carbon-copy of Alpaca.finance.
To illustrate what we mean, here are some recent farms that have done really well for us. While these are all Pancake/Goose forks, they added unique features:
Unique Farm #1 — Jurassic.farm
Jurassic is a Goose fork but 3% of deposit fees gets added as liquidity instead of buy backs and burns.
Unique Farm #2 — Polarisdefi.io
Another Goose fork but 2% of deposit fees fund Supernova Geysers which are competitive farming pools that use POLAR for harvest multipliers. Also has a descriptive Gitbook.
Unique Farm #3 — Blizzard.Money
Goose fork but deposit fees are converted into BNB, BTCB and ETH and can be farmed (similar to Polaris).
Now compare them to these trash projects that we quickly found while browsing some Telegram channels:
Low-Effort Clone #1 — Safufinance.xyz
They don’t even have a Medium. They have a Gitbooks but it’s awful and written very unprofessionally.
Low-Effort Clone #2 — Yieldfarm.money
Their Medium article offers nothing new
Low-Effort Clone #3 — Ninetails.finance
Again, poorly written Medium offers nothing new. Plus, it’s named after a Pokemon. The days of meme proejcts are over.
Now, that’s not the say the last 3 are rug-pulls. They are just low quality projects and way less likely to make you money in the long run.
And that brings us to the next checklist item…
3. Does the project have a custom UI and branding?
Take a look at the website, UI and branding to get an idea of how much time and effort the devs put into the project.
Generally, the better it looks, the better we feel about putting money into the project. Now that may sound too simple but remember, most people are apes and will put their money into something that looks cool. So when assessing DeFi projects, you do want to judge a book by its cover.
And if the UI is completely custom (even if it’s simple), then it’s most likely legit. Why? Because custom UIs take time and effort to code. Again, scammers are lazy so they’ll rather fork an existing project and change some basic stuff.
For instance, when Alpaca.finance popped up a few weeks ago, we were hesitant because the contracts were behind proxies and were hard to analyze.
However, the fact they had a custom UI, and a clear Gitbooks gave us some assurance it wasn’t a rug. We went heavy in the stable pools, compounded profits in the degen pool, and made a nice chunk of BNB over the next few days.
Now let’s take a look at the UI of the examples mentioned earlier.
Good — Jurassicfarm.app
They have a cool dinosaur video animation as well as a T-REX that grows bigger as TVL grows. This is a fun and silly feature that implies the devs are going out of their way to create a unique experience for the users.
Bad — Safufinance.xyz
They just forked the Pancake UI and changed some colors. The icon is a photo of CZ (funny, but that’s a legal no-no), and the color scheme is ugly. May not be a rug, but most serious investors will not consider buying in.
Good — Blizzard.money
The branding looks good and they have some custom graphics of their Yeti. They also have a “Blizzard” tab (custom UI) where you can stake BLZD to earn BNB and BIFI (innovative feature).
Bad — Yieldfarm.money
Graphics and font are ugly. Lottery is “coming soon” so the platform offers nothing new.
Good — Polarisdefi.io
Hopefully, you’re starting to see the pattern now.
The Polaris homepage features a cool galaxy animation which, if you’re familiar with WebGL, takes a lot of time to develop. This shows their devs are skilled or the team has capital to throw at such an animation. The colors and branding on their staking pages look good as well.
4. What is the vibe of the project’s Telegram and/or Discord channels?
Next, you want to look at how the channel owner and admins handle their communication because it reveals at how serious they are about the project.
Some red flags are:
- Unmoderated chat with excessive spam — Constant gifs or porn spam is always a bad look and will turn off serious buyers.
- Unprofessional behavior from the admins — One of the most overlooked signs of a good or bad project is how the community manager handles negativity. If you go into the chat and talk shit, and the admins barely react or ask you to politely stop, that’s bullish. Why? Because the team knows what they’re building is valuable and aren’t worried about your opinion. On the other hand, if the admins are constantly being annoying, defensive or arguing with members, that’s a turn-off to newcomers.
- Admins and owners talking about price — Most professional teams know they should not blatantly shill or make price predictions in the main chat. It’s a big red flag if the devs or admins are shamelessly talking about how the coin will moon, and pushing people to buy.
- Poor English — If admins and community managers can barely string two coherent sentences together, that’s another red flag. Obviously Crypto is international and English is not everyone’s first language, but if the team talks like 14 year old kids or constantly makes spelling and grammar mistakes, that’s not good. Plus, not having a strong English speaker puts the project at a disadvantage because they turn off the Western audience.
If the project has a Discord, it’s more likely to be legit than not. Discord channels are more work to set up then Telegram, so it shows the team is taking the project more seriously. Now this isn’t always the case since there have been plenty of Discord rugs, but it’s something to consider.
In short, lurk the project chat for a bit to get an idea of how professional the team is. A great reference is the Vesper Telegram chat. Observe how the Vesper community managers interact with users, especially when answering questions or dealing with negativity.
5. What Is The TVL (Total Value Locked)?
Now this one is a double edged sword because the generally, the higher the TVL, the later you are.
Personally, we love jumping into projects at under $2 million TVL because that’s considered “early” and the yield are still high.
However, higher TVL implies others have done their due diligence and the project is safe.
Coming Up — Part Two
So that’s the basics of assessing whether or not a project is worth farming in the first place.
A lot of this stuff may be common sense especially if you’ve been in this for a while, but sometimes, it can be easy to get caught up in emotions (fomo) and jump into bad projects and scams.
(Lately, with the flood of new farming projects coming onto BSC, our team has been sitting on the sidelines for most while making bigger bets into ones we really like.)
Thanks for reading and be sure to follow our @bscchads channel on Telegram for the release of Part 2, where we’ll go over our four core yield-farming strategies in depth.
P.S. What are we farming right now? Vesper on ETH and POLAR on BSC ;)