Beefy Finance is a multichain yield optimizer that lets users earn compound interest on their crypto holdings. Beefy earns you the highest APYs with top-tier safety and efficiency measures.
We discussed what Beefy Finance is in the previous article of this two-article series. Now, let’s look at how Beefy Finance works.
How Does Beefy Finance Work?
In essence, Beefy is a yield optimization platform. So, what is yield optimization? Yield optimization uses data analysis and optimization techniques to maximize performance and revenue.
A platform aggregator in DeFi can tackle these using algorithmic strategies to achieve high APYs. It is what Yearn Finance (YFI) does on Ethereum, and Beefy Finance is actively developing in the BSC and other chains.
In a nutshell, it is like an account that benefits its users with the best opportunities in the market.
Beefy’s solution involves algorithmically automating yield chances in different chains so users and farmers won’t always need to make choices and perform manual tasks.
Users can start earning interest on their assets by depositing them through any of the supported wallets on the platform. Earned yield will be automatically deposited to the vault once or twice a day (depending on the vault) to generate more yield, reducing user effort, transaction time, and gas costs.
Chief Elements of Beefy Finance
The team developed the protocol using a few principal elements to entice users to invest their time and money in Beefy Finance. These elements include:
1. Vaults: The core products Beefy Finance offers are vaults for staking tokens. The following are the purposes of a vault:
- Employ cryptos as a source of liquidity.
- Make assets available as collateral for others.
- Monitoring collateral to reduce the likelihood of liquidation.
- Use resources to boost yield and compound revenue.
By using vaults, users can retain control of their assets and keep them secure. In other words, they will enable the automatic investment and reinvestment of deposited funds to obtain a high compounded interest. On the Beefy platform, three different kinds of vaults are accessible. And these are:
- Single-asset Vaults
- Liquidity pools
- Stables
2. Strategies: A vault strategy is a modular smart contract that tells you which assets to farm and where to sell them. Rewards are commonly harvested, exchanged for the original vault item, and redeposited for compound farming.
3. Barn of Trust: It is built in partnership with Trust Wallet. Barn of Trust allows users to get rewards across many DeFi protocols by staking their $TWT or $BIFI in the vault.
Another standout aspect of Beefy Finance is multi-chain integration. The project garnered numerous alliances with 17 distinct chains, including Binance Smart Chain, Ethereum, Avalanche, Polygon, Harmony, Arbitrum, etc.
Does Beefy Finance Auto Compound?
Beefy vaults compound every day, and some vaults compound more than once. The vault strategies incorporate these compound functionalities, completely automating the farming process. It mimics a “Set and Forget” strategy.
When it comes to building wealth, compounding is one of the most effective methods available. The terms APR and APY stand for annual percentage rate and annual percentage yield, respectively. While APY refers to the rate with the effect of compounding, APR represents the simple interest rate over a year. Understanding this difference is essential since 1% compounded every day yields 3678.34% annually.
Where Do You Buy the Beefy Finance Coin?
At the heart of Beefy Finance are its native governance tokens, $BIFI, used for all the vaults deployed on every blockchain. The $BIFI tokens are “dividend-eligible” revenue shares in Beefy Finance that allow holders to vote on crucial platform decisions and to receive Beefy Finance’s profits. Platform revenue is fostered from a small portion of all vault earnings and given back to $BIFI stakers.
The supply of $BIFI is capped at 80,000 tokens. Since BIFI is completely pre-mined and has a limited supply, users cannot farm it but may acquire it through other platforms like Binance or Uniswap. The process of buying this token is the same as that of any top crypto.
Beefy Finance Versus PancakeSwap
PancakeSwap is an automated market maker (AMM), a decentralized finance (DeFi) platform that enables users to trade tokens, leasing out liquidity in exchange for fees. PancakeSwap employs an automated market maker model in which users trade against a liquidity pool. Users fill these pools by depositing funds and are given liquidity provider (LP) tokens in exchange.
These tokens, referred to as FLIP, can then be used to reclaim their portion of the pool and some of the trading commissions. Users of PancakeSwap can also farm other tokens like CAKE and SYRUP. Users who put LP tokens on the farm can get CAKE as a reward.
PancakeSwap enables users to trade BEP20 tokens, give liquidity to the exchange, and earn fees. Users can stake LP tokens to earn CAKE, and then stake CAKE to earn more CAKE or tokens of other projects on PancakeSwap.
Beefy picks up where PancakeSwap leaves off. If you choose to invest in a Pancake pool through Beefy, you’ll profit from an automatic harvest of CAKE and compounding them in your investment.
Beefy Finance Versus Yearn Finance
Yearn Finance is a suite of decentralized finance (DeFi) products that offer benefits like lending aggregation and yield generating to the blockchain. In other words, it is a top-tier DeFi solution that opens a gateway to several protocols, empowering users to take advantage of the best strategies for gaining access to crypto assets through lending and other forms of trading.
This set of protocols, which operate on the Ethereum blockchain, promises to increase user revenues while doing away with the need for a middleman like banks or escrow.
Beefy Finance also offers DeFi users a diverse range of yield-farming alternatives. It has taken the “conventional” Yearn Finance (YFI) application and made it significantly more innovative. The cross-chain compatibility of Beefy Finance sets it apart from many other protocols in the ecosystem.
Beefy Finance stands out from the rest of the DeFi ecosystem in several crucial ways:
- Beefy has over 250 million dollars in TVL, making it one of the largest.
- It has cross-chain support with 17 chains, making it the most adaptable platform in the DeFi landscape.
- It utilizes the vault system to enhance yields. The team of developers tests and approves vaults and investment strategies before they are available to the public.
- Beefy Finance has minimal fees and employs several cutting-edge investment techniques that yield results quickly at sensible rates.
- Besides, it provides several strategies not offered by other yield optimizers, such as the exclusive liquidity pool pair to the Beefy platform.
- The fact that Trust Wallet, Binance’s official decentralized wallet, backs Beefy adds credibility to the platform.
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