How to Earn Up to 8.6% on ETH and 9.8% on WBTC with Alpha Homora V2
Disclaimer: This is not financial advice. This is an educational resource that should never be interpreted as an endorsement to buy any digital assets mentioned. Please do your own research and be sure to check the updated APRs being earned because rates can go up or down with borrowing demand and the price of ALPHA rewards on Alpha Homora V2.
Today's guest post was written by the CoFounder of Alpha Homora --Tascha Pan.
How Leveraged Yield Farming Works on Alpha Homora
In DeFi, many different protocols will incentivize liquidity providers to help bootstrap their protocol through monetary incentives. When you can earn multiple forms of yield such as interest, trading fees, and pooled rewards in exchange for lending liquidity, we refer to this as yield farming. For a more thorough explanation on yield farming, check out this DeFi Basic on What is Yield Farming.
What happens when you streamline the tools to both borrow tokens and build a larger liquidity pool position? You can suddenly earn more yield farming rewards with a yield rate that's greater than the rate at which you borrow to hold this position. Alpha Homora V2 is a protocol that specializes in leveraged yield farming and leveraged liquidity providing. Today, Alpha Homora V2 boasts over $731M in total value locked (TVL), including $429M of collateral and $301M of debt.
On Alpha Homora V2, yield farmers are only required to deposit one or more assets while borrowing the other necessary tokens from pooled lenders on our platform, and at a borrowing rate lower than what they net out in yield while holding a larger liquidity position in one of 16 yield farming opportunities we source from Uniswap, SushiSwap, and Curve pools.
Homora Lenders Earn Borrowing Fees + Subsidized ALPHA Rewards
The net result of what we provide in leveraged yield farming on Alpha Homora is a continuous stream of high demand to borrow common assets like stablecoins, ETH, WBTC, YFI, DPI, and more. This presents an opportunity for lenders who wish to earn yield on their idle assets that can otherwise be used to farm on Alpha Homora. As of today, those options to earn while lending assets include the following at these APRs:
- ETH at 8.6% (updated May 25, 2021)
- WBTC at 9.8% (updated May 25, 2021)
- DAI at 12.65%
- USDT at 9.06%
- USDC at 9.71%
- YFI at 8.86%
- sUSD at 7.77%
- DPI at 13.64%
- SUSHI at 0.93%
Length of the Rewards Program
There is no time constraint on these existing lending opportunities under the Earn tab.
There are no fees to deposit and withdraw, except the Ethereum network fees you pay to transact, which are required to Approve depositing ERC20 tokens and then Confirm depositing whatever token you lend.
As a lender, you are exposed to smart contract risk in Alpha Homora and any associated liquidity pools using your borrowed assets such as Uniswap, SushiSwap, or Curve. Eventually, Nexus Mutual or pay-as-you-go DeFi insurance such as Armor will add cover to insure assets in Alpha Homora V2, as they have already for Homora V1. A liquidity crisis could result from a lending pool being 100% utilized, but it's probabilistically unlikely. There is risk of yield farmers defaulting on their loans if liquidators do not liquidate leveraged yield farmers fast enough while in default. There is also a systemic risk to consider if any of the money legos in Alpha Homora V2 were to fail.
How to Earn with ETH, WBTC, and Stablecoins on Alpha Homora V2
Here's how to get started earning lending interest and subsidized ALPHA rewards with the Earn tab on Alpha Homora V2.
- Go to the Earn tab here on Alpha Homora V2.
- Search or choose an asset you hold such as ETH, WBTC, USDC, and compare the rates one would like to earn with. Keep in mind these rates can change based on the utilization of the lending pool and the market price of ALPHA, which subsidizes the estimated APRs for lenders.
- Let's assume I choose to lend ETH so I click on SUPPLY under ETH.
- Specify how much ETH to Lend and click CONFIRM.
- Lastly, confirm the transaction on MetaMask. If you were depositing an ERC20 token like WBTC, you'll be prompted to first APPROVE spending tokens and then be asked to CONFIRM depositing.
You're done! You'll now accrue a combination of lending interest accrued to your ibTokens (interest-bearing tokens) in your wallet and ALPHA rewards which are claimable if you click on the top right wallet icon.
Don't forget you can track the balance of your lent assets as ibTokens in your Wallet on your Zapper Dashboard!