Hamburger Finance is a DeFi Yield Farming platform that helps users make as much profit as possible from their crypto assets, through the provision of liquidity to DeFi (Decentralized Finance) protocols.
Hamburger Finance is an experimental protocol mashing up some of the most exciting innovations in programmable money and governance. Built by a team of DeFi natives, it features:
An elastic supply to seek eventual price stability
A governable treasury to further support stability
Fully on-chain governance to enable decentralized control and evolution from Day 1
A fair distribution mechanism that incentivizes key community members to active take the reins o governance
At its core, Hamburger is an elastic supply cryptocurrency, which expands and contracts supply in response to market conditions.
It will be left entirely to those who choose to farm Hamburger to decide the future direction and evolution of the protocol and its crop(s). We have no collective entity or interest other than an excitement to see how this experiment plays out. At this time, we have no intent to play a further role in the Hamburger protocol, aside from some of us expecting to harvest hamburgers on a modest scale on equal footing with all other farmers.
Hamburger Finance Smart Contract
A smart contract is a protocol that digitally verifies contract negotiation. They define the rules and penalties related to an agreement and also automatically enforce those obligations. The smart contract code facilitates, verifies, and enforces the negotiation or performance of an agreement or transaction. From a tokenization perspective, smart contracts also facilitate automatic funds transfers between participating parties should certain criteria be met.
Hamburger Finance is built on TRON smart contracts. TRON smart contracts are written in the Solidity language. Once written and tested, they can be compiled into bytecode, then deployed onto the TRON network for the TRON Virtual Machine. Once deployed, smart contracts can be queried via their contract addresses. The contract Application Binary Interface (ABI) shows the contract's call functions and is used for interacting with the network.
The risks of yield farming
Yield farming isn’t simple. The most profitable yield farming strategies are highly complex and only recommended for advanced users. In addition, yield farming is generally more suited to those that have a lot of capital to deploy (i.e., whales).
Yield farming isn’t as easy as it seems, and if you don’t understand what you’re doing, you’ll likely lose money. We’ve just discussed how your collateral can be liquidated. But what other risks do you need to be aware of?
One obvious risk of yield farming is smart contracts. Due to the nature of DeFi, many protocols are built and developed by small teams with limited budgets. This can increase the risk of smart contract bugs.
Even in the case of bigger protocols that are audited by reputable auditing firms, vulnerabilities and bugs are discovered all the time. Due to the immutable nature of blockchain, this can lead to loss of user funds. You need to take this into account when locking your funds in a smart contract.
In addition, one of the biggest advantages of DeFi is also one of its greatest risks. It’s the idea of composability. Let’s see how it impacts yield farming.
As we’ve discussed before, DeFi protocols are permissionless and can seamlessly integrate with each other. This means that the entire DeFi ecosystem is heavily reliant on each of its building blocks. This is what we refer to when we say that these applications are composable – they can easily work together.
Why is this a risk? Well, if just one of the building blocks doesn’t work as intended, the whole ecosystem may suffer. This is what poses one of the greatest risks to yield farmers and liquidity pools. You not only have to trust the protocol you deposit your funds to but all the others it may be reliant upon.
Choosing an Appropriate Farm
For the slightly risk-averse who just want to earn a yield on their stablecoins, money markets or providing liquidity on Curve Finance is the best option for lower-risk interest. For those who have large cryptocurrency holdings and want to put them to productive use, liquidity pools like Uniswap or Balancer and Justswap are a good choice. Added incentives are just the icing on the cake.
That said, the perfect yield farm for each individual varies based on the amount of capital they have, their investment time horizon, and their desired level of risk. Profitable Yield Farming
The best time to provide liquidity for an asset is when it is trading within a defined price range for an extended period. ETH has been stuck in an 11% range for the last month, meaning liquidity providers have done well by earning passive income despite ETH’s muted price action.
However, it is near impossible to predict when the price will start to trend in either direction or range. No one can predict whether a token is going to go 2x or lose 50% of its value over the next few months. But for those who speculate, liquidity provision is a good investment in anticipation of low volatility.
If you still don’t understand how these elements work and when it is profitable or loss-making, it’s probably best to refrain from providing liquidity.
The bottom line for yield farming is to make sure you’re comfortable with bearing impermanent losses, or you find ways to offset those losses through strategic purchases of crypto derivatives.
What are the Risks of Yield Farming?
Locking your funds in vaults and using smart contracts is inherently risky. Smart contract exploits, which abuse the logic of the contract to generate high returns, and liquidations are a major threat to collateralized funds. The other big risk is the peg of the DAI stablecoin, which must retain its $1 value. Breaking the $1 peg will diminish the value of loans, and create panic selling and quick removal of liquidity.
The boom of DeFi also brought multiple untested protocols, using new smart contracts that led to malfunctions. The YAM DeFi protocol drew in close to $300 million in funds, but due to unforeseen smart contract behavior, led to the printing of thousands of billions of extra tokens. Other projects also release untested smart contracts, which may lead to losses of funds.
Another major concern is a more recent development: the Compound DeFi fund shows more than 1.3 billion DAI in its lending and borrowing markets, while there are around 421 million DAI coins created as of August 14, 2020. This situation resembles a debt bubble, in which cryptocurrency assets are created via the process of lending, thus circulating value that is artificially amplified by yield farmers.
This situation may put pressure on the DAI dollar peg, and create more serious fallout in case of liquidations. So far, as of August 2020, greed and a price boom allow for the rapid growth of Compound DeFi.
What are the Best Projects for Yield Farming
Maker DAO is one of the earliest successful attempts at cryptocurrency lending. Initially, lending DAI backed by ETH drew the initial bulk of capital into DeFi.
Compound, a similar lending platform, followed soon after. Compound also evolved beyond lending, launching its own incentive COMP token. This caused an explosion in DeFi funding between July 15 and early August, when the amount of funds locked in yield farming doubled, from roughly $2 billion to above $4 billion.
Both Compound and Maker DAO competed for the top spot in DeFi, based on locked value and on their well-known brands. In terms of algorithmic trading, projects like Augur, Bancor, and dy/dx remain prominent in the crypto space.
Alternatively, and not particularly “yield farming” per se, decentralized lending platforms and cryptocurrency interest accounts such as BlockFi and Celsius provide upwards of 8.6% APY on stablecoins without many of the complications of the yield farming outlined in this article, so they’re worth checking out if that’s up your alley.
Yield Farming is the best way for lending Crypto for earning interest
Like any financial service that guarantees high returns and immediate interest on deposits, Yield Farming also comes along with its own level of risk. Technical glitches in software smart contracts, chances of liquidation, regulatory restrictions on crypto trading etc are some of the threats associated with Yield Farming while lending Crypto. Hence, it is important to exercise caution and invest carefully in such money markets. That said, Yield Farming is still the best when it comes to earning reasonable profits or yields on crypto assets, when compared with other alternatives.