#alpaca finance tutorial

[awaketake]

What is Alpaca Finance

Alpaca Finance is a lending protocol which allows you to yield farm using leverage on BNB and Fantom. And it was the first one who implemented leverage that way.

Lenders get safe and stable yields while borrowers get uncollateralized loans for leveraged yield farming positions to increase their earnings.

Even safer are the Automated Vaults apply a market neutral strategy, working both in bear and bull markets, with said leverage to multiply slightly stable profits.

However, that doesn’t mean it can suffer from smart contract attacks like other protocols or chains.

What is DeFi

If you have already used similar platforms, websites or daaps you already know that Alpaca falls under the DeFi category being a decentralized platform.

That means you will need to pay fees depending on the blockchain you are using and send some funds from your wallet, but generally BNB and Fatom fees are not that expensive.

Protocol Info

If you want to know a little bit more about what’s happening underneath you can check out Alpaca Finance on DeFi Llama for some stats such as Total Value Locked (TVL), Chains, Tokens, Token Inflows and USD Inflows.

For more details you can click on view on BSCScan to look at the contract, transactions and more.

Lend

Just like other lending products you deposit a certain amount of a coin and then earn interest on it.

There are different coins on BNB and Fantom, but they usually stack both Lending and Staking rewards so that you can get higher APYs.

Some assets you can lend are:

ALPACA

CAKE

BNB

BUSD

USDT

USDC

TUSD

BTC

ETH

Right now, ALPACA and CAKE have the highest APYs, but to earn that with ALPACA you would need to lock up your funds for 1 to 52 weeks.

Such high APYs can be achieved because Alpaca offers high capital efficiency to borrowers, allowing them to open undercollateralized loans for yield farming.

As a result, our utilization rates and lending interest rates are consistently 2x(or higher) than that of other protocols.

Farm

On the farming section you will see the leverage playout as you can increase it from 1 to 4.50% to increase the base APYs.

Leverage Yield Farm is the core product of Alpaca Finance which allows you to multiply your yields.

Although it’s a great feature it’s not free. You will need to pay borrowing interest to use those borrowed funds for leverage.

You will see all the active pools and be able to filter them according to the DEX and Paired Asset. And sort the pools by TVL or APY Percentage.

Of course, a Higher APY will give you higher returns but might also be riskier so you might want to check out what assets are in that pool.

Usually, long-standing projects with a higher or decent MarketCap are less risky especially if they are paired with a stable coin such as USDT.

They still can provide you better than average returns with leverage so that’s what I would recommend. Some examples would be:

ALPACA-BUSD (57%)

ETH-USDT (52%)

BNB-USDT (30%)

CAKE-USDT (162%)

Automated Vaults

On the farm section you also have the automated vaults with Neutral and Savings Vault strategies and some balanced options when it comes to APYs and risk levels.

The automated vaults run complex strategies like an edge fund to improve profitability over a period.

Neutral Strategies are leverage yield farming strategies that farm both long and short positions at the same time and are rebalanced to keep a neutral exposure. So that they can have high yields and low risk.

Savings Vault Strategies are long strategies like staking or lending one coin but earn higher APYs with higher leverage.

Vaults have a certain capacity and the higher APY ones are often filled very quickly due to their great risk/ reward ratio!

There are 3x and 8x leverage vaults. 3x are public which means everyone can use them while 8x are private and can only be used by xALPACA and AUSD3EPS holders.

APYs usually range from 10-40% depending on the asset and strategy. And will need to deposit both assets to get it going.

By clicking on invest you get some more info about the vault including an Annualized Returns Chart and a Backtest Analysis Chart with some Key Statistics and Expected Returns.

AUSD

AUSD is an auto-farming stablecoin that earns passive yields for you.

Here’s what you can do with it:

Stake AUSD

Sell AUSD into lending assets to leverage up lending positions

Sell AUSD into other assets to open high yield leveraged yield farming positions

Sell AUSD into other assets to deploy in external protocols

On the section itself you have a few pools where you can borrow or supply AUSD to earn yields.

Those yields are not that high as the resulting rewards are from Lending and Staking a stable coin which does not appreciate.

Stake

Here you can stake tokens, NFTs or AUSD for some lower yields. But I cannot confirm that for the NFTs as I do know own any Alpies myself.

There’s no use of leverage, it’s just regular staking where you deposit your funds, support a network, and earn rewards.

Alpies

Alpies are Alpaca Finance Protocol NFTs that are sold on multiple marketplaces.

I’m not going to cover much more than this regarding NFTs as the goal of the video is to talk more about investing and yields generated by using the Daap.

But there’s a video on the channel covering how to make money with NFTs using different strategies so click on the card to check it out!

Graze

Grazing is accessible through governance staking. Where essential you lock up some ALPACA and earn ALPACA rewards plus grazing ranges.