The DeFi Hero - Defibox EOSIO EOS
Congratulations! While the normies hang out with girls, you are learning “the obscure art of DeFi hacking”, which is not really “obscure” not even a “hack” but is simply the art of using DeFi well, minimizing risks, covering any costs and maximizing your returns.
However calling it “obscure hacking” will make you look like over level 9000 to girls… Guaranteed!*
* We don’t actually guarantee
First, use the best tools
With the decentralized personal finance revolution, people began to have full power over their money. This has led the smartest to seek out quick and easy earning strategies that no bank would ever provide. However, once you accept the risks of managing your money by yourself, you must also try to minimize those risks as much as possible.
For example, one of the biggest problems cryptocurrencies are facing right now is that some networks process transactions very slowly and with very high fees. If your strategies have strict limits this may lead to losing your money or in best case zeroing your gains.
Ethereum is now only usable by whales, some copycat networks have the same problems, aren’t ready yet, or suffer from extreme centralization. Believe it or not, the most suitable network for defi has already existed for 3 years and is called EOS.
Just because the biggest players get all the attention, doesn’t mean they are the best choice… best things are often hidden in plain sight, like YOU at every party, right?
The EOS network aims to run millions of transactions per second, with transaction fees so small that with the new power-up model, they are often offered for free to the users by wallets, dapps or block producers.
No fees, real-time transactions with no delays and the possibility to move even micro-sums makes EOS the best suited platform for DeFi.
This is the tool that a real DeFi Hero needs.
Second, look at the environment
With features such as those mentioned above it was impossible that something that could take advantage of it did not already exist, in fact on EOS you will find Defibox.
Defibox is a swap exchange, an algorithmic stable token, a lending/borrowing platform, all core DeFi protocols that run in harmony together, just 1000x faster …and cheaper …and just as secure or more secure than Uniswap.
Protocol interactions and cross-chain interoperability are other winning features of Defibox which already has satellite protocols, directly or indirectly financed and reciprocally integrated. Also, thanks to the bridges that EOS and EOSIO are getting via pNetwork, Liquidapps, and Telos, many potential open up for the future, faster and more reliably than any other chain.
Defibox ecosystem is a DeFi paradise.
Learn
Early DeFi users made earnings with three or four digit percentages by simply understanding the concepts before the masses. A huge part of the world population is still not participating in Yield farming and DeFi in general because they don’t have access or don’t understand it. Being into DeFi right now is already an advantage for you.
Beside self custody, DeFi has some killing advantages over traditional finance, like extreme transparency, programmability with smart contracts, and interoperability between DeFi dapps that are perfect fields to experiment with some financial “tricks” that will blow girls’ minds when you tell them.
Let’s start with the basics
Let’s use Defibox and its ecosystem of protocols to learn the basic elements of DeFi to plan our future Yield Farming “tricks”.
The basic components are easy and are almost identical among every DeFi dapp
- Swap tokens, pay fees, get rewarded with an utility token
- Provide liquidity (taking some risks), get fees, get a special proof of ownership token, get rewarded with an utility token
- Lock tokens, get interests, get rewarded with an utility token
Yield Farming
Yield Farming consists mostly of using the DeFi components listed above, to periodically obtain a “yield” when the invested funds are mature.
Liquidity Mining
Liquidity mining derives its name from the act of making a profit from liquidity, both providing and using it. On centralized exchanges buyers and sellers are matched on both sides. On decentralised exchanges people provide liquidity to other traders to quickly swap tokens. On decentralized exchanges like Defibox, users tap into liquidity pools provided by many other users. When someone swaps, say, EOS to USDT, the protocol deposits EOS and withdraws USDT from the vast liquidity it has acquired from liquidity providers. These Liquidity providers, which previously provided both tokens of the pair, earn the trading fees paid by the traders swapping tokens plus some BOX tokens offered by Defibox as an added value. Even those who use the swap function receive some BOX.
The BOX token, like the utility token of other dapps, tends to acquire a certain value over time, so obtaining them by swapping or providing liquidity for swaps can be cheaper than buying them on the market. This is all liquidity mining is about.
Take a look at Defibox mining weight list: https://defibox.io/mining
Locking mining
On Defibox there are two locking options:
- BOX Saving system
- USN Generation
In both cases you are required to lock your token to get some value. With the saving system you can increase your total BOX by ~5%/~11%/~23% locking them for 90/120/360 days.
With the USN generation system a certain amount of EOS is locked to receive some USN token (multi-collateral for USN generation is on the roadmap). When USN are paid back, you get the EOS back, just remember to set the staking ratio high enough to avoid liquidation.
Beyond the basics
Things get interesting: COMPOUNDING
Every tool you’ll find on Defibox and other DeFi dapps, has a “return rate” clearly shown. Those returns are generally annualized and the most commonly used metrics are: Annual Percentage Rate (APR) and Annual Percentage Yield (APY). The difference between them is that APR doesn’t take into account the effect of compounding, while APY does.
Compounding is the process whereby interest is credited to an existing initial amount as well as to interest already paid. Compounding creates a loop that generates an even larger interest time after time.
This same principle applies between tools of the same dapp or even between different dapps, like nesting liquidity pools one into another in search of the one with the best APY in that given moment.
How do you “nest” a liquidity pool into another?
When someone provides liquidity by depositing two tokens of a given pair creating a pool, he receives a special proof of ownership token called LP, in proportion to how much liquidity he supplied to the pool. Those tokens which are used to distribute fees proportionally amongst all other LP token holders, can also be used in combination with other tools on the same dapp, transferred to other users or dapps and become part of other liquidity pools elsewhere. Infinite loops can be generated in search of the best APY given in that moment.
Just add Lending/Borrowing
The classic use of a loan systems usually follows these practices:
- Get a leverage on any of the available crypto tokens by depositing, say, $300 worth of a token, borrow 100 USN and use them to buy more tokens or just monetize and repay the loan in future while still holding your deposit.
- Short-sell any of the available crypto tokens to profit of down markets by depositing, say, 300 USN, borrow $100 worth of a token to sell short on defibox.io. Then buy back after the market goes lower and return the token to close position. Keep the difference as a gain.
Why don’t take it a step further? Thanks to the newly implemented Defibox “Loan system” and the free tx on EOS, you can add loans as a “step” into your yield farming earning strategies. Imagine being able to provide liquidity to a pool even if you own only a single token instead of both:
- Deposit half of the first token into the pool, deposit the other half as collateral and borrow the second token to add to the pool. This way you will get LP tokens, earn from fees and mine utility tokens.
A double mining possibility opens:
- Deposit your tokens, get LP tokens, earn from fees and mine utility tokens. Deposit your LP tokens into lending and mine more utility tokens.
Even a triple mining:
- Deposit your Swap LP into lending, mine utility tokens. Use your deposit LP as collateral and borrow tokens. Use your borrowed tokens for a liquid pool, get LP tokens, earn from fees and mine utility tokens.
“HACKING” IN ACTION, no girl will resist you!
Time to combine all the aforementioned tools into a real-world example that will make you look like a hero:
Assume 1 BTC = 10,000 EOS. Imagine you own 1 pBTC and 10,000 EOS. Put them into a Defibox LP and earn yearly 80% interest (60% coming from swap fees and 20% from BOX tokens). Get also some BOXFU tokens representative of your % of pool ownership. Take those BOXFU tokens and use them as collateral on Defibox Lending protocol. Let’s say that it’s $120,000 in value, which allows you to safely borrow $35,000 of USDT and $35,000 of USN for 20% interest while you earn more BOX rewards. Take those USDT and USN and add them to a USDT+USN liquidity pool, since both are stablecoins the risk of impermanent loss is negligible, now you earn from fees and get Box rewards at 50% APR. You also get some BOXAI tokens representative of your % of pool ownership. Take those LP tokens and use them as collateral on Defibox lending protocol. The worth of around $70,000 allows you to safely borrow $30,000 of BOX tokens. Take those BOX and stake them using the BOX Savings System (BSS) for 90, 180, or 360 days. BSS has an APY as high as 20–23% and allows you to claim the matured BOX whenever you want, so, along the way you can sell some BOX enough to cover your Defibox loan interest.
What if the best APY is offered by another dapp?
If say, pizza.finance offers a better APY for stablecoin locking, just use the USDT and USN that you have borrowed from the lending of BOXFU and stake them into Pizza’s lending vault. This will give you the best APY for your tokens plus you will farm PIZZA tokens that can be staked on PIZZA for up to 23% APY or used in another liquidity pool wherever is more convenient.
All these tricks allowed you to minimize risks, cover any costs and maximize your returns.
These concatenations can go on indefinitely, like when you try to approach one girl and another and then another, and her friend and… you got it… right?
When ready, unstake, unroll the path and get your LP tokens back, close the open loans and get back the ownership of your original BTC and EOS plus all the gains from pool fees, the staking interest and the sale of utility tokens. All this without wasting anything in transaction fees.
Now you are the real DeFi HERO!
Trust the Team-Rekt! You’ll still have no girlfriend but at least you’ll be rich! We guarantee!*
*we guarantee only the “no girlfriend” part of the sentence
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Cheers :)
