🤑Power Farms
One-click yield-farming strategies that leverage native liquidity from our lending platform to multiply the yields available on select Pendle zero-impermanent-loss LPs.
Last updated
One-click yield-farming strategies that leverage native liquidity from our lending platform to multiply the yields available on select Pendle zero-impermanent-loss LPs.
Last updated
Lenders can't borrow against their deposited funds
Yield is often padded with unsustainable token rewards
Impermanent Loss makes leveraged positions very risky
Best practices often require constant monitoring, extensive research, and the frequent rotation of funds between multiple protocols
From the chart below, one can see that Yearn Finance is one of the few yield aggregators that does simple lending, and leveraged borrowing, and liquidity provision. But even Yearn lacks the simple borrowing capabilities of Aave. With Wise Lending, we realized that lending platforms and yield aggregators need each other to perform at their best. Lending platforms need access to high-end yield strategies in order to increase the demand for borrowing, and yield aggregators need access to massive amounts of borrowable liquidity at a slightly less cost than their yield source, in order to create arbitrage.
In the past, yield aggregators have been regarded as risky compared to dApps like Aave, but with the rise of staked ETH as a yield source, protocols like Pendle have created new fully decentralized yield opportunities, without the degenerate tokenomics, unsustainable yield sources, and centralization we have seen in the past. It is only logical, that these decentralized yield sources should be used to fix the problem of low demand on traditional lending platforms.
Power Farms are zero impermanent loss, like-kind-asset, low risk strategies. Liquidations wouldn't happen from the price moving the wrong way like traditional leverage, because both collateral and borrowed assets are like-kind assets that move together. However, a black swan event that causes the derivative asset to become de-pegged from the underlying asset could cause liquidations. (e.g. the Silicon Valley Bank collapse temporarily affecting USDC).
In the unlikely event of a liquidation, only 21% of principle funds are lost, within a few percent, depending on how quickly the position is liquidated.
The only other liquidation scenario is if the Power Farm position becomes negative APY (from the user paying more to borrow than what is being earned). For that user, liquidation may occur, if they do not close that position for an extended period of time, such that all earned profits are depleted, and enough principle is attrited away to cause a liquidation.
For this scenario to occur, it means there is most likely a better Power Farm opportunity available that is pushing the borrow demand up even further, or else there would be no reason that borrowers would pay higher APY to borrow. It's important for Power Farm users to periodically monitor their positions to ensure they are still earning positive APY. Note: this required attentiveness does not apply to lenders.
Since deposited capital on Wise Lending is designed to be put to work on the various yield sources available through our Power Farms, ensuring the safety and decentralization of those sources is critical to the health of Wise Lending. We will not build Power Farms on any yield systems that are compromised by centralization or unsustainable economic models.
True DeFi is a term that means upholding the pure decentralized ethos of DeFi. It means decentralized from end-to-end, and having no reliance whatsoever on humans, including multi-sig wallets that control critical aspects. The term "DeFi" is used to describe many projects built on the blockchain, but only a handful, including Uniswap, Curve, Pendle, and a few others are actually true DeFi projects. Supporting true DeFi is necessary, if we want to stop seeing scams like FTX and many others.
Proxy Contracts are smart contracts that can be changed/upgraded/altered by an admin wallet. Time locks can be implemented as a safety measure that gives users a window to exit before the new code goes live, but this is certainly not true DeFi. Unfortunately, the majority of blockchain projects use proxy contracts for convenience, including giants like Aave. We believe this is dangerous, and sets a bad example.
Admin Keys is a term referring to functions in a smart contract that are controlled by the admin. If there is any possible way for an admin to withdraw funds (either directly or by introducing new code), then it is not true DeFi.
For more info on decentralization, see the Decentralization Rank.
ETH-based Power Farms earn APY in ETH. Stable coin Power Farms earn APY in stable coins...it's that simple! We do have a WISE token, but it's not used for rewards. Wise Lending actually drives value to WISE by using its protocol fees to buy-and-burn WISE. (This is the opposite of the trend, which is using a hyper-inflationary token to drive users to the platform). See WISE Token.
Power Farms are scalable, as long as their yield sources do not not become diluted. Since Power Farms are built on the most powerful yield sources in crypto such as staked ETH, Wise Lending can support billions in capital without becoming diluted.
