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There is no crypto enthusiast who hasn’t heard about DeFi yields - a sphere actually propelled the emergence of DeFi and eventually complemented the blockchain ecosystem. After tens of thousands of whitepapers, the DeFi market brought another immediate need – Yield optimization. A segment of the market that brings actuality to not just high yield but also sustainable ones.
While you can still hop on to your device, look for the best protocols offering the APYs that day, and then jump from one protocol to another to get the assets you want to deploy (which is a long, long process in itself), do the swaps, add liquidity, and then repeat into - x3, each day, every day. You do get the yields, but you are losing all the efficiency and, of course, sustainability. Moreover, this method of deriving deals gets exponentially harder if you are new to DeFi.
So, what if there was a way of automating this process, and even better, optimizing your returns, keeping the efficiency and sustainability intact? There is indeed a way – DeFi yield optimizers.
What Exactly is DeFi Yield Optimization?
DeFi yield optimizers can be simply defined as protocols using data analytics and optimization strategies to maximize the performance of users' revenue. A pragmatic DeFi user will soon realize that dealing with even a single protocol at a time and with a limited number of assets means that there are a significant number of possible strategies. You will also quickly realize that determining the most optimal asset allocation is not easy, especially because the strategies within these protocols might change so frequently over time.
Once you realize that manually obtaining the most optimal asset allocation or strategy is simply impractical and, in many ways, unreasonable - it becomes easy to acknowledge that the space is hungry for automated yield optimization, which can easily offer significantly higher and sustainable returns.
Top 3 DeFi Yield Optimizers for the best yields on the Market!
To be fair, more than tooling, or lender, or decentralized exchanges, the true potential of DeFi lies in assets and invariably optimal, long-term, automated yields.
1. APY. Finance
APY.Finance automates the yield farming experience for its users and offers risk-adjusted returns. The protocol's smart contracts route your funds to find the best yield farming strategies in time. Users can choose to deposit their funds and add to the liquidity pool platform. As the value locked in the pool grows, APY. Finance achieves scalability by routing the funds all at once. Their smart routing system is based not just on yield optimization but also on risk mitigation. Hence if the system identifies a high yield strategy but one with high risks, it allocates a certain sum to gather the upside potential of the strategy. At the same time, since the sum allocated is limited, it can reduce the downside.
2. YOP. Finance
YOP.Finance is a yield optimization platform that synthesizes the statistics from several liquidity protocols into one single app. Their app aims to offer relief to a large user base as it merges multiple lenders into one opportunity. Powered by the YOP token, that allows users access to the complete suite of DeFi services present on the protocol.
Users are able to stake their tokens from within the YOP app, while their IndexPool manages the top yield farming tokens for you. The protocol uses customized parameters based on data from its ecosystem. Although YOP lacks a rebalancing mechanism, it makes up for it through the Market Data feature that provides live feeds derived from exchanges, block explorers, and other networks.
3. ETHA Lend
ETHA Lend is an agnostic yield optimizer that abstracts complexities in DeFi to provide algorithmically optimal yields. ETHA Lend, in many ways, complements the existing yield optimization market and takes it to a whole new level. The key maker of the protocol is its discovery algorithm that can factor in the volatility of the assets, the present and past yields, amount of asset supplied, latest gas cost, and the budget to determine the most optimal asset allocation.
The ETHA Smart (contract) Wallet is a feature that will roll out with their upcoming Mainnet. The smart wallet can chain multiple transactions in one, without employing any routers aiding in Gas optimization. Furthermore, it eliminates any approval transactions before initiating your interaction with protocol or dApp you haven’t used before, resulting in even more gas savings down the line. Their Mainnet rolls out on 15th July 2021, and it will be interesting to watch ETHA Lend as the newest big player of the DeFi yield optimization market.
The Future of DeFi Yield Optimization
The emergence of the lending protocols tackled the liquidity problem in the DeFi market, bringing paramount value to its stability by providing an anchor for interest rate earning in investing. This has significant meaning for investors and users who do not want to leave their assets static and unprofitable. However, as the market booms and protocol iteration accelerates, factors such as complexity in different platforms, high transaction costs, and overwhelming interoperability are also jeopardizing users' earning rate and patience.
Yield optimization is bound to supercharge the DeFi market with protocols like YOP. Finance already into action; the returns for users finally seem to level up. But what we need now is a yield optimizer that holds a vast ecosystem that can integrate the DeFi market and all its bounties. ETHA Lend seems to hold the promise to make that vision a reality.
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.