In this article I want to describe my strategy on getting some returns on my $FTM tokens on the Fantom Opera Blockchain (of blockchains). If you are new to Fantom, feel free to check out my article on the network here.
How To Get A Return On Your FTM?
Even though the Fantom price is recovering as I am writing this article, I got in before the market downturns at 0.80$ and 0.60$. That means I want to stay exposed to potential gains FTM might make in the future. As I am expecting an increase in price, I don’t want to expose my asset to potential impermanent loss that comes with providing liquidity.
One option is to stake your FTM. This comes with some returns but only really becomes profitable when you also lock your FTM for periods up to a year. And you probably know, that is far too long in the crypto space. Or for me at least.
So, the next best option for me is lending. A well established lending platform is C.R.E.A.M (Crypto Rules Everything Around Me). I am saying well established because it already works on Ethereum, BSC and It allows me to deposit assets and earn APY on my assets. Additionally, I can use my lent assets as collateral to borrow other assets.
Here you can see there is almost 10 Mio. $ TVL on CREAM. The biggest markets are WFTM (just a technical wrap for FTM, like BNB and WBNB on Binance Smart Chain), USDC and ETH.
Looking at the single assets you can see what you can get for lending (2.35% APY for WFTM for example) and what it costs to borrow (6.50% APY respectively). This APY is quite volatile at the moment, yesterday I was even earning up to 15% APY on my WFTM so take this with a grain of salt.
Earning APY on your assets is one thing. Now you can also add it as collateral that you can borrow other assets against. This is of course risky, especially when you lend assets, which can drop in price. So your safest bet would be lending stablecoins, but their supply APY is lower. Risk and reward as always.
One way to minimize your risk is to only borrow up to a certain percentage of your collateral, say 20%. That means if you supply $100 worth of FTM as collateral, you would only borrow $20 worth of a stablecoin.
The interesting part is that you could then put those stablecoins to work. In my case, I put them in a pool on frozenyoghurt.finance (a fork of curve.finance on Ethereum) and stake the tokens I receive with beefy.finance for auto-compounding. Learn more about the power of APY vs. APR in my latest article.
In Frozenyoghurt’s 3Pool you can deposit any of the three stablecoins: USDT, DAI and USDC. Frozenyoghurt then allows users to swap between these stablecoins with very low fees and slippage. You as a liquidity provider earn a share of the fees.
To boost your returns, you can go ahead and deposit your 3Pool-LP tokens with an auto-compounder like Beefy to increase your gains.
Even though the pool only pays 0.05% daily, through auto-compounding you can earn 20.55% APY on your stablecoins. Please let me know if you know any other pools/yield opportunities for stablecoins on Fantom Opera!
Risks of this strategy:
- Platform Risk of CREAM, Froyo, Beefy (Smart Contract Failures, Economic attacks)
- Risk of negative returns on CREAM if lending/borrowing prices are unstable
- Risk of getting liquidated on CREAM if price of FTM drops too low (CREAM will sell your assets to repay your debt)
This is not financial advice. Please always do your own research before using any (DeFi) Platform.
But let me know in the comments, what do you think of my strategy? What is your way of getting some return on your $FTM?
None of this is financial advice. Please always do your own research. Thanks for reading!
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