Yield farms have become nothing short of a blockchain phenomenon in recent months, thanks to the impressive utility and yield they frequently provide to cryptocurrency holders.
The massive interest in these platforms has not only shone a spotlight on the practice of yield farming and its potential, but has led to a Cambrian explosion of new yield farm offerings — many of which offer a slight variation of the same standard formula. Deposit and temporarily lock up funds to earn yields — it’s typically as simple as that.
But in the last year, they’ve also been undergoing what can only be described as an accelerated evolution of sorts, despite still being a relatively new innovation. Now, the first wave of so-called ‘second generation’ yield farms are beginning to appear and they’re already making older platforms look outdated.
This is perhaps most clearly demonstrated with the appearance of yield farms that completely nix the typical lockup mechanic employed by most (if not all) current options. While this might seem like a fair tradeoff, it might not be necessary for much longer thanks to the advent of platforms like Flurry.
https://twitter.com/FlurryFi/status/1425788368927956998
Flurry will soon allow users to maximize their yields on their idle assets, without having to sacrifice their liquidity. It accomplishes this by minting a novel stablecoin known as a rhoToken at a 1:1 rate to deposited funds. These rhoTokens (e.g. rhoUSDT, rhoUSDC, etc) are pegged to the value of the underlying asset, and are fully liquid — meaning users can earn a yield on their assets, while still retaining their full utility and liquidity thanks to rhoTokens.
In essence, users can have their cake and eat it too.
Beyond this, with a massive push for blockchain interoperability technologies, and the development of a huge variety of cross-chain bridges and communication protocols, a new wave of chain-agnostic yield farms is imminent. As you might expect, these will allow users across various blockchains to deposit collateral and begin earning yields — rather than being restricted to deposits from a single blockchain (like Ethereum or Binance Smart Chain).
With the arrival of the first wave of cross-chain yield farms, users will soon be able to put their funds to work on whichever platform is most efficient for them. Whether this be using an automatic yield maximizer like Flurry, or another platform.
But while user-side improvements are always a welcome development, we are also beginning to see the elaboration of yield farms with even broader ambitions — including Popcorn, a platform that looks to use yield farming to pour some social good into the world.
https://twitter.com/Popcorn_DAO/status/1422127468941611014
Like many yield bearing platforms, Popcorn uses a variety of automated strategies to maximize the return users receive. But more than this, it also includes a novel pipeline for creating real-world impact — by directing some of the platform's profits towards organizations contributing to social good, like educational, environmental, and open-source developments.
Exactly which organizations receive this funding is controlled by a decentralized autonomous organization comprised of $POP holders.
With yield farms becoming increasingly recognized as some of the key platforms pushing innovation in the blockchain space, it is likely that the yield farming landscape will continue to evolve rapidly in the months and years ahead.
With this, it might not be long before yield farms are becoming just as popular as hedge funds, REITS, and other near-passive investment options, as even casual investors recognize the advantages they offer over traditional options.
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2021-08-26 02:32:56
