DeFi Yield Farming: Why It’s All the Rage But Risky – Ep.180

Dan Elitzer, investor at IDEO CoLab Ventures, and Will Price, data scientist at Flipside Crypto, discuss the yield farming craze. In this episode, we cover:

• the goals of protocols offering liquidity mining
• the goals of users yield farming right now
• whether users of Compound will have much awareness of COMP in the future
• how Compound is trying to dampen inorganic activity and properly align incentives 
• how incentives in one DeFi protocol can screw up another’s such as changes in Compound’s liquidity mining program causing Dai to lose its peg
• whether the activity created by liquidity mining is sustainable and how
• whether Compound is overvalued and how to determine valuations for DeFi tokens
• the security risks that come with trying yield farming
• how teams can keep their protocols safe given the composability of DeFi and the growing number of developments in the space
• whether the yield farming craze will cause the price of ETH to rise and why the prevalence of stablecoins might prevent that
• whether new DeFi tokens could push flagging layer 1s out of the top 10
• what will happen if even more Bitcoin comes to DeFi
• how the next big thing in DeFi might be trying to stack yield across protocols and eventually prime brokerage protocols

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Crypto.com: https://www.crypto.com

 

Episode links: 

Dan Elitzer: https://twitter.com/delitzer

IDEO CoLab Ventures: https://www.ideocolab.com/ventures/

Will Price: https://twitter.com/will__price

Flipside Crypto: https://flipsidecrypto.com

 

Total value locked in Compound: https://defipulse.com/compound

 

What liquidity bootstrapping pools are: https://medium.com/balancer-protocol/building-liquidity-into-token-distribution-a49d4286e0d4 

 

Dan on earning more from borrowing USDT than lending it on Compound: https://twitter.com/delitzer/status/1272642107128164354 

 

Tony Sheng on how yield farming works and how much you can earn from it: https://twitter.com/tonysheng/status/1274393189231689728

 

And his followup on the risks of yield farming: https://twitter.com/tonysheng/status/1274780457729617920

 

The purpose of COMP for governance: https://medium.com/compound-finance/compound-community-ownership-ee0ed1252cc3 

https://medium.com/compound-finance/expanding-compound-governance-ce13fcd4fe36

 

Risks of so much BAT being held in Compound: https://twitter.com/spencernoon/status/1276897377446776832?s=20

https://twitter.com/defiprime/status/1277026665952980992?s=20

https://twitter.com/devops199fan/status/1274732220192829441?s=20

 

Cyrus of MakerDAO concerned about the risks COMP poses to the Dai peg: https://forum.makerdao.com/t/upcoming-comp-farming-change-could-impact-the-dai-peg/2965

 

Dan Guido and Taylor Monahan on Unchained discussing DeFi security: https://unchainedpodcast.com/defi-security-with-so-many-hacks-will-it-ever-be-safe/

 

Twitter discussion on whether ETH price will rise due to yield farming: https://twitter.com/RyanSAdams/status/1274781676875452421

 

What will happen to other Layer 1s? https://twitter.com/Shaughnessy119/status/1274376237239189504?s=20 

Aquaponic yield farming: https://bankless.substack.com/p/aquaponic-yield-farming

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• Source: https://unchainedpodcast.com/defi-yield-farming-why-its-all-the-rage-but-risky/