#39 How to improve your crypto yield farming skill 100x

Yield farming is trading, a thread on how I farm & the tools i use

2lambroz.eth

Feb 16, 2023

How to improve your crypto yield farming skill 100x

How I farm & the tools i use

📍In this thread

Types of yield & farms
⭐Thinking framework
Apply 🐑farmer framework to an example
Understanding yield farm is a form trading
Reply 🐑 for extend farming thread

📍Core types of yield

🔹Trading Liquidity Providing (uniswap v2v3, curve, balancer, GLP)

🔹Lending yield (aave, compound)

🔹Volatility yield (options & lots of upcoming protocols)

🔹Protocol fee (GMX, marketplace token, gamefi)

These yields are typically mix with elements of

🔹Protocol incentives

🔹PvP ponzi

🔹Speculation

📍Thinking framework with 🐑 example

Protocols like to mix & match with a lot of elements together to confuse you. This is my simple thinking framework

⭐ Yield > cost = profitable (yield farm) trade

🔹Yield

Where does the yield come from?
Can I boost my yield?
How long does it last?
Is there enough capacity to exit?
What are my risks?

🔹Cost

What does my farming position mean? (m i longing a token or Volatility? Betting it stay within a range?)
What is the cost of my farming position?

⭐and if Yield > cost = profitable (yield farm) trade

📍Apply 🐑farmer framework to an example

Scrolling tweets i found a new protocol shill by twitter kols

" Lambswap $lamb is the next generation swap with veTokenomics enabling DeFi 5.0 "

After reading the docs, i will start to apply my 🐑farmer framework

🔹Where does the yield come from?

Uniswap V2 style trading fee+ token incentives

🔹Can I boost my yield?

There is some “ve” element to boost my yield

🔹How long does it last?

Looking at the token “utility” & gut feel on “hype”. Not sure yet.

🔹Is there enough capacity to exit?

Checking the LP pair of $lamb/usd there is around 1m should be enough to exit

🔹What are my risks?

- rug

- potential implement loss on the pair.

🔹So assuming the farm is safe and I want to proceed, which pair should i farm?

- WETH/USDC 90-243% apy

- USDT/USDC 39-97% apy

*this is from a random dapp example

Since its uniswap v2, i will have a look at my potential IL in relation to eth movement with impermanent loss calculator by @dailydefiorg.

https://dailydefi.org/tools/impermanent-loss-calculator/

Remember to consider, are u holding eth anyways? Or buying eth to farm.

🔹Thinking framework conclusion

I have eth & i don’t think the price of eth will swing up or down aggressively within 2 weeks hence why 97% compared to 39% apy from usdt/usdc pair is worth the risk.

🔹After selecting the pair I look at how i can boost my apy?

-Lock stake x amount of time? (if is ETH/USDC m i will to bet on the price not moving? *essentially shorting volatility*

-Buy $lamb token for more boost apy? (will the emission cover potential cost of lamb dumping?)

Lastly u need to have a strategy on how and when do you want to exit ur farmed token,

Does the LP pool have enough liquidity for you to exit?

📍Understand yield farming is a form of trading

As example from lambswap u can see that the core part is “cost” and understanding what outcome u are expecting from ur “farming” position (LP) is very important.