From Bitcoin to earning Yield with tBTC and Keep Network.
When you centralize a system, the operations and functionalities of that system are dependent on the dictates of the central authority, and an irregularity with that central authority can jeopardize the function of the entire system. The traditional banking system is centralized, and the banked are left with no choice but to agree to policies set by the central authority even when it does not favor the customers. The advent of blockchain technology paved the way for decentralization to get into the financial industry, and thus produced decentralized finance (DeFi)- these are digital systems that include decentralized applications, smart contracts, digital assets, and protocols built on blockchain networks. It is a decentralized financial ecosystem to deliver financial tools and services to FinTech.
Yield Farming
Yield farming refers to a process that involves earning more funds with your crypto, and it could be through a lending/borrowing scheme or other methods. With the aid of smart contracts and other parameters, crypto investors can earn fees when they lend their held or hedged crypto to borrowers. It may interest you to know that this process is also known as liquidity mining. In liquidity mining, the liquidity providers invest their funds through liquidity pools and then get rewarded for it. Two major metrics are used to calculate the returns; Annual Percentage Yield (APY), and Annual Percentage Rate (APR).
The KEEP Network
https://twitter.com/keep_project
KEEP is a framework that was designed to facilitate effective and efficient interconnectivity between the blockchain network and off-chain private data. The world of cryptocurrency has been exposed to timely blockchain-based innovations that have contributed immensely to the drive for mass adoption of these blockchain and cryptocurrency systems, and KEEP was created to aid the functionality of decentralized finance platforms and applications. KEEP was used to create a revolutionary application called tBTC, which provides a functional and effective way for Bitcoin owners to participate in decentralized finance with their Bitcoins, without bothering about third parties. While some similar platforms’ security depends on validators that are expensive to run, KEEP uses a much cheaper method that is also easy to implement.
tBTC
https://twitter.com/tBTC_project
With the aid of the KEEP project, a way for users to trade with their Bitcoin on the Ethereum blockchain was created. With tBTC, Bitcoin users can perform Bitcoin deposits, as well as redeem their Bitcoin in decentralized finance applications without interference from intermediaries. Some of the unique features of tBTC include simplicity, security, permissionless operations, 1:1 backing with Bitcoin, decentralization, etc. Furthermore, while it is a bridge between Bitcoin users and DeFi products, tBTC also allows users to earn in yield farming. Since its inception, a lot of bitcoin users have availed themselves the opportunity to get on the tBTC investment train. The tBTC source code is open source, and that makes it easy and possible to integrate with your decentralized application to aid the use of Bitcoin on the Ethereum blockchain.
How to Mint tBTC?
Do you have Bitcoin saved up somewhere and have no idea what to do with it? You know you can actually earn on Bitcoin deposits with the tBTC project. In this section, we will talk about steps to help you set up the required tools for minting, as well as how to mint tBTC with Bitcoins. As mentioned earlier, one of the major reasons why tBTC was created was to make it possible for Bitcoin owners to transact in DeFi without third parties.
Setup
Setting up your tools to begin minting is quite easy; all you need is your internet, your browser, and a smartphone. Here are the steps:
- You need to get the Metamask Wallet extension. Visit Metamask.io via your chrome browser.
- Click on the “Get Chrome Extension” button to get the extension for the metamask wallet.
- After downloading the extension to your chrome browser, you should see the Metamask icon at the top of your browser, click on it and scroll down to accept the policy and continue.
- You will be required to create a new password (Create something strong and can be remembered easily)
- Store the 12 seed words that are shown to you, as you may need them if something happens to your Metamask account and you need to restore it.
- That’s all you need to create your wallet, and to get your public address, just click on the Metamask icon at your browser’s top right.
- Locate the three dots beside your account name and click on it. On the pop-up menu, select the option with “Copy Address to….”
- You can copy and paste the public address whenever you need it.
- After setting up your wallet, you need to pick a network from the same Metamask menu at the top right corner of your browser.
- You need to fund your Metamask wallet with Ether that you can get from crypto exchanges.
- Whip out your smartphone and get the Coinomi app.
- With the Coinomi app, you can get a wallet for your Bitcoin.
- You also need to fund your Bitcoin wallet with Bitcoin, as you will need it for minting tBTC.
When you are done with setting up your tools, the next phase is to begin the minting process. It is important to ensure that you have the aforementioned ready, with the wallets funded.
Steps to Mint tBTC
The first thing you need to do here is to visit https://dapp.tbtc.network/. It’s a simple page with a straightforward interface.
- You will see two options on the screen, click on “Deposit”.
- You will be required to link your Metamask wallet on the next page, as well as select lot size (this refers to the amount of tBTC you intend to mint), and create an address.
- When you create the address, you will be taken to a page displaying “Initiating deposit” and “Fetching BTC address”.
- You will get a prompt from your Metamask wallet, as it makes some computations about the amount you need to pay for the minting cost.
- Note that the minting fee is usually a fixed amount, while the gas fee varies.
- You should see a Bitcoin wallet address; copy the address.
- Open the Coinomi application on your smartphone, and transfer the amount of Bitcoin to the copied wallet address.
- After sending the Bitcoin, you may need to wait for about some minutes for the transaction to get confirmed.
- When the confirmation is done, the next step is to submit proof by making a gas fee payment.
- After the proof submission, you will need to pay two more fees and sign a smart contract before receiving tBTC.
- You should get a prompt for a successful minting session.
After minting some tBTC, you can look for different pools where yield rewards are offered, some liquidity pools include Uniswap, Curve, and Sushiswap among others. For the purpose of this post, we will talk about SushiSwap.
SushiSwap
Two developers with the pseudonyms Chef Nomi and 0xMaki came together to create the SushiSwap protocol, and they recorded a huge success within the first week of implementation. SushiSwap is one of the successful decentralized exchanges within the crypto community and intends to be a better version of Uniswap, and interestingly both decentralized exchanges share similarities in function and user interface.
If you intend to stake tokens and get SUSHI tokens in return, we would need several components. Some ETH to cover transaction costs, tBTC that we have already minted, and wBTC to complete the whole mission. We have ETH and tBTC, so let's head over to Uniswap to get some wBTC. Follow these steps:
- Go to Uniswap. Select the cryptocurrency you want to spend, in our case it is ETH, click on “Select Token” and search for wBTC.
- After that select an amount of wBTC you would like to purchase and click on “Swap”
- Wait until your transaction is confirmed and you are good to go!
Now it is time to use our tBTC to earn daily rewards. The first thing you need to do is to head over to Sushiswap.
- After that, you should go to “Menus of the Week” and scroll down to “ Sushiswap wBTC/tBTC”.
As you can see by providing liquidity, you will earn 0,09% daily, 2,76% monthly, or 33,62% yearly on your funds. In other words, you will get 1,464 Sushi per 1000$ in liquidity, per day.
The next step would be to select an amount of tBTC and wBTC you would like to add. By adding 1 wBTC and 0,99117 tBTC we will get 0,27% of the whole staked pool. The only thing that is left is to click on “Add liquidity” and you are good to go! You can always reduce your liquidity by clicking on “- Liquidity” and selecting the percentage of funds you would like to remove.
SushiSwap presents some interesting advantages to its community members; for instance, anyone can trade and contribute to the platform without bothering about KYC policies. There is also the interchangeability of SUSHI / ETH and ETH / SUSHI. Furthermore, SUSHI holders get rewarded with 0.05% of sushi swaps on the platform, while the liquidity providers who are actively involved, get 0.25% of sushi swaps.
Harvest Finance
https://twitter.com/harvest_finance
Yield farming is becoming a big deal in the crypto community, and yield farmers are enjoying the profitability that comes with the activity. Harvest Finance is a tool that was designed to help yield farmers get access to the most profitable yields that are available on select DeFi frameworks. With Harvest Finance, there are plethoras of farming methods that you can choose from that will yield rewards when you stake your liquidity pool tokens. Here are the steps to get you started:
- You need a wallet, so if you do not have one, you need to create one with Metamask, and you can do that by following the steps mentioned when setting up to get your tBTC.
- If you have a wallet already, visit www.harvest.finance on your browser
- Click on “Stake” at the top of the page, and then select the pool you intend to farm (fSUSHI-WBTC-TBTC) You will be taken to this page; https://harvest.finance/pool/fweth-sushi-wbtc-tbtc
- Before you can stake tokens, you need to get the SUSHI-WBTC-tBTC liquidity pool tokens from https://exchange.sushiswapclassic.org/#/add/0x2260FAC5E5542a773Aa44fBCfeDf7C193bc2C599/0x8dAEBADE922dF735c38C80C7eBD708Af50815fAa Connect your wallet and select the token list you want.
- After getting your LP tokens, you need to deposit them at https://harvest.finance/
- When you’re done depositing, you can begin by clicking on “Stake” at the top of the page, and selecting the fSUSHI-WBTC-TBTC pool.lick on the “Stake” button on the new page, input the amount, and confirm the transaction.
- You can also use this https://harvest.finance/pool/fweth-sushi-wbtc-tbtc page to claim rewards or unstake and claim your investments.
It may interest you to know that the APY for the WBTC-TBTC pair on Harvest Finance is 20.10% and that invariably means that investors will enjoy the protocol’s profitability. In September 2020, assets were added and rewards weighted. The first week of September saw a total of 57,500+ tokens issued, with about 70% of the tokens getting distributed to the providers of liquidity on the platform.
With the rapid expansion of the DeFi market, we have seen different innovative DeFi initiatives spring up, and that is an indication that as the crypto community pushes for mass adoption; crypto profitability has evolved to something much better than it was 10 years ago. Now, you do not need to hedge cryptocurrency for a long while without yielding returns, you can invest in yield farming, and while your funds are being hedged, they can be put to good use in liquidity pools where you can earn on yields, or the crypto funds can be used on lending-borrowing platforms where there are interests on investments. Perhaps, not many thought there would be a day when Bitcoin would be used on the Ethereum blockchain, but here we are with tBTC; now crypto investors cannot only use their Bitcoin on an Ethereum blockchain, but they can also earn returns and rewards on decentralized finance platforms and applications.
Every day, it becomes clearer that decentralized finance provides users with more earning power and opportunities, in contrast to what is made available to customers by centralized and traditional finance systems and models.
Used sources:
What is Yield Farming in DeFi?
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