Stable Coin Farming on OpenSwap: rewards with less risk
Stable coin farming is the epitome of a win / win situation. It carries several benefits for the user and OpenSwap. As we take a closer look at stable coin farming, we will outline the benefits and provide insight into the purpose of these farms.
What is a stable coin? What is stable coin farming?
The term stable coin is used for a cryptocurrency designed to be pegged to a real currency. For example, BUSD and USDC are examples of stable coins pegged to the US Dollar. This means their value is designed to be close to equal value of the US Dollar. To farm stable coins, take two different stable coins and combine them into a liquidity pool; this produces a LP token representing your contributions. You can stake the LP tokens to earn rewards; this is called farming. It is important to note, at any time, you can unstake and break your LP tokens to return to the initial coins that were used to created it originally. Before farming, please learn about impermanent loss as it will be mentioned later in this article.
Stable coin farming provides rewards and less risk for the user
Why should a user farm stable coins? Simply put, it provides a profitable reward at a minimal risk. Stable coin pools don’t carry the same risk as other staking pools. Theoretically, the value of the two stable coins should remain equal; the risk of impermanent loss is significantly lower with stable coin liquidity pools. Additionally, you receive significantly higher APRs than would be offered for placing your money in a standard bank account. A savings account at a bank pays at best .05% APY to hold your money. At the time of this writing, the stable coin farms on OpenSwap range from 29% to 44% APR. That is a sizable advantage to staking with OpenSwap.
Benefits of stable coin farming for an exchange
In short, stable coin farming helps an exchange provide a better user experience. These farms create a pseudo bridge for the exchange; allowing users to transfer their stable coins across platforms and creating more liquidity for the routing of swaps. Essentially, this creates more flexibility and efficiency when swapping to different coins/tokens.
Stable coin farming pairs on OpenSwap
Currently, there are 3 stable coin pools available for farming on OpenSwap.
· eBUSD / bBUSD
· eUSDC / bUSDC
· bBUSD / eUSDC
APRs on Stable Coins
Above, we mentioned the APRs for stable coin farming pools. The APRs do fluctuate higher or lower based on the amount of LPs staked. To put is simply:
If the amount of staked farming LP increase, there will be a reduction in APR.
If the amount of staked farming LP decrease, there will be an increase in APR.
Moving stable coins to Harmony
OpenSwap created a simplified bridge allowing you to transfer tokens / coins across networks. Currently you can bridge assets to / from Harmony on the Ethereum and Binance Smart Chain networks. For a detailed account about the OpenSwap bridge, please review this article.
OpenSwap (app.openswap.one) is a fast and secure non-custodial decentralized exchange that serves as a one-stop-shop to buy, trade, and earn crypto whether you’re from the Harmony, Ethereum, or Binance Smart Chain networks. OpenSwap allows Harmony users to seamlessly trade peer to peer without the tokens ever leaving the original wallet and through liquidity supplied by other users of the platform. With OpenSwap, users can:
- Exchange Tokens/Coins
- Provide Liquidity to Pools
- Earn Rewards by Staking in Lucrative Incentivized Liquidity Pools
- View ‘Personal Farming Profile’ detailing your rewards including Total Stake Value, Average APR %, Total Current Rewards, and Total Current Rewards in USD
- Simplified Bridge for Tokens/Coins to and from the Harmony, Ethereum, and Binance Smart Chain Network
- Collect Fees on Provided Liquidity Without Staking
- Vote on Governance Decisions, Including Adding New Tokens