In addition to serving as a means of exchange, cryptocurrencies are becoming a hot investment asset. Since their first market launch in 2009 in the form of Bitcoin, their market caps have been surging. As of 18th December 2020, the total market cap is at $637 billion according to CoinMarketCap, with an 18% growth in 7 days from 12th December 2020. However, the good times don’t last forever, there are surges and slumps in the markets. There are hardly any incentives for investors to continue holding crypto assets during market slumps. This led to the creation of Defhold, which is used to implement yield making strategies to reward crypto holders.
Defhold is a DeFi financial application, featuring a non-inflationary ecosystem that offers yield making investments. The investments benefit long term crypto holders who persist during both market surges and slumps.
To enable income generation, the Defhold ecosystem enables the staking and farming of investors’ assets through their native token, Defo.
Yield Generation Through Defhold
The Defo tokens enable investors to stake or farm assets into pools with set periods of lock-up. All revenues are generated for investors through fees and rewards
Yields Through Fees
The pools are meant to retain the investments up to the end of the lock-up period, enabling investors to earn yields. Investors can choose to opt-out by withdrawing their assets at any point before the lock-up period. A premature withdrawal however would attract an early withdrawal fee (EWF).
The EWF forms the first stream of yields for farmers and stakers still in the pool. Investors who retain their assets in the pools can earn the EWFs of those that withdraw their investments. Through precise portfolio management and sound assessment of one’s liquidity needs, investors can stay put until the lock-up period matures.
The process involves good cash requirement forecasting and asset allocation skills. Investors that opt-out due to cold feet regarding market swings or cash flow requirements are referred to as weak hands.
Yields Through Rewards
The other source of revenue is through rewards on assets staked or farmed. These rewards are first determined by the type of investment, whether it is staking or farming.
Within each specific type of investment, the other determinant is the duration of the lock-up pool. Staking is done on Defo while farming is available through LP tokens using Uniswap. The rewards are set as follows;
There are 5 pools under staking. Yields increase with an increase in the lock-up period. The first pool has a 10-day lock-up period with a 1% yield on Defo. The second pool, with a 30-day lock-up, has a 3.5% return on staked Defo.
The third pool comes with a 60-day lock-up period and an 8.2% yield on Defo, while the 90-day long fourth pool has a 14.3% revenue on staked Defo. The fifth pool is the last, with a 180-day long lock-up period and the highest yield of 33.3%.
Similarly, farming LP tokens has five pools, with the yield increasing as per the increments in the lock-up period. For the first pool, the lock-up period is 10 days long with a 2% yield on farmed tokens, while the second pool is 30-days long with a 7% yield
As for the third pool, the yield is 16.3% on assets with a 60-day lock-up. The fourth pool’s 90-day lock-up generates a 28.6% yield on LP tokens invested. The fifth and final pool comes with a 180-day long lock-up period and a 66.6% yield on LP tokens.
Details Regarding the Investment
To effect and safeguard an investor’s assets, Defhold offers the following strategies;
The biggest risk with yield farming and staking is inflationary pressures. This is caused by the continual increase of tokens without there being an increase in demand.
An oversupply is created pushing down the token value with time. This is the norm in most Defi yield farming protocols. In the defhold platform, no additional Defi tokens are minted. This static token quantity ensures that inflationary pressures are avoided, and token values are upheld over time.
Pool Transferability Into a Faster Pool
The pools are meant to allow inter transferability of investors assets. When a pool reaches the lock-up period of a faster pool, the tokens of investors are moved automatically to the faster pool. The EWF and rewards also concurrently change to that of the faster pool.
For instance, if an investor farms LP tokens on the third pool on the 1st of April, their yield is set at 16.3%. On the 1st of May, 30 days later, the tokens get automatically moved to the second pool, attracting a 7% yield. These are the lock-up period and yield of the faster second poll. Eventually, the tokens get transferred to the 2% yielding first pool on the 21st of May, 20 days later, at its lock-up period end.
Pools have no set outset period. Their accessibility is anytime, as per the wishes of the investors. This implies that an investor may join any pool at any given time they deem fit.
The protocol’s smart contract will do the calculations pertaining to when an investor’s lock-up period has come to an end as well as the yields earned. Such a feature ensures that no interested party is locked out of an investment opportunity.
Despite Cryptocurrency values always being on the uptick, the vulnerability of market slumps normally prompts a sell response to investors. There has not been much incentive for investors to hold crypto assets during a slump. Defhold has created such an incentive through its yield farming and staking strategies. The platform’s non-inflationary nature guarantees value stability, while its EWF and reward yields ensure investors get a return on their investment. That is, as long as they don’t withdraw from their pools before the lock-up period ends. Defhold, therefore, provides a real market incentive to stake and farm cryptos, regardless of the prevailing market conditions.