A new DeFi project wants to make the current flavor of cryptocurrencies – yield farming – cheaper to access, run, and operate for retail users, Decrypt reported August 5.
Making Farming Cheaper
Set Protocol, a DeFi project, plans to bring yield farming as one of its automated trading strategies offered as part of its proprietary TokenSets platform.
The project will deploy yield farming strategies, designed by the Set Labs team, and the broader community. These will presumably include straightforward ones like locking up funds on Compound, to more complex ones using a combination of Yield Finance, Curve, and Balancer.
For the uninitiated, yield farming is a new concept in the crypto market that sees traders utilize different protocols – such as Compound, Balancer, Curve, and others – to gain interest, or yield, on their investments.
And it’s turned out a grand success. Hundreds of millions of dollars worth of various cryptocurrencies are locked in such protocol, paying out anything between 10%-1,000% to investors. However, they still remain a highly risky form of acquiring assets, and caution is advised.
That said, the strategies are usually sophisticated and require several steps to execute. Another prohibition is skyrocketing Ethereum gas costs that make their execution even more expensive for those investing smaller amounts like $100 to $500 (fees alone can reach $150).
While TokenSets had previously supported Compound’s interest-earning cTokens in V1, noted The Defiant, users can now benefit from yield farming by earning and distributing governance tokens like COMP, BAL, CRV, and more from various strategies which use underlying DeFi protocols.
With Set Protocol, users only pay for Ethereum gas fees when entering or exiting a strategy, while enjoying traders will a reduced complexity. So far, the firm has grown to $24M in assets locked in its smart contracts from $500k in just over a year, said Decrypt.
Upgrade Coming for Lowering Costs
The move is part of a wider upgrade. Set Protocol’s V2 will also include support for a larger array of ERC20 tokens. Only ETH, WBTC, LINK, and a couple of stablecoins were supported in V1. Set is also pledging to “significantly” reduce gas costs. To provide some context, V1 averaged anywhere from $15-50 to buy and sell a Set in the current gas climate.
Meanwhile, V2 aims to increase flexibility for “Set managers” to allow them to create better portfolios while including more sophisticated investment features like margin trading, limit orders, and DEX trading.
Set Protocol will also be integrating popular primitives and assets offered by Aave, Balancer, Curve, and Synthetix on top of their underlying liquidity mining opportunities.
In all, yield farmers can interesting parties may enjoy the benefits of the new concept without engaging in the complex structure themselves.