If you ask me, Terra Luna continues to be the number #1 ecosystem offering high-yielding DeFi opportunities and at the same time, the price of token Luna has been exploding. In the last 30 days, LUNA pumped 30% to almost $100.
What is more important is that these native tokens that are being farmed in the Terra Luna ecosystem have been showing ultimate price-performance too. That means there is a high demand!! But which are the best Luna farms? What are the best farming strategies? You will find out in this article.
Farming Option 1: Anchor
OK so first off, Anchor is not a farming option. Not in the traditional sense. It’s bank-like savings and investment option and in that way, it’s a good option for us. You already know from our previous videos that mention what Anchor is capable of.
⚓️@anchor_protocol, the popular savings app on @terra_money, is now the third-largest dApp in DeFi.
With $14.5B in TVL, it represents over half of all assets locked on Terra.@samuel_haig reports👇https://t.co/sR0YkwDNnP
— The Defiant (@DefiantNews) March 25, 2022
You deposit UST, receive aUST like a receipt that you can use elsewhere, and you earn 19.4% while doing so. Awesome, right? But no mention of LUNA. Or at least not yet. Well, Anchor is a borrowing platform too. And they use 3 kinds of collateral before extending loans in UST:
- bETH (bonded ETH)
- bLUNA (bonded LUNA)
- sAVAX (Staked AVAX brand new just added)
So what is bonded LUNA? Bonded LUNA means the LUNA has gone through the bonding process and is now staking. Typical staking for LUNA if you go directly from your Terra Station or another wallet, you earn 8% minus fees to the validator for delegating your stake. And 8% is less than 19%, right? So what you do is the following:
-
Swap LUNA for bLUNA
- Put your bLUNA up for collateral
- Borrow UST on Anchor at 60% LTV
- Deposit that UST at Anchor to earn 19%
For example, on $1000, at 8% staking, you would earn $80. On that same $1000, if we borrow $600 and earn 19% on that we are earning $114 interest or 11.4% on our $1000. This includes the 40% we are using to secure our collateral and not earning anything on.
Still a great deal with low risk. Therefore, to get back to your LUNA position, you will have to rewind this and swap bLUNA for LUNA. Note that bLUNA always trades at a slight discount to LUNA.
In addition, a 2nd note that you give up your staking rewards on your bLUNA when you put it up for collateral as Anchor now earns that. That’s why we had to beat 8% to do this technique.
Farming Option 2: Osmosis
Next, we have Osmosis. Osmosis is both its blockchain and its decentralized AMM. Having their blockchain while being a market maker is unique. The other unique thing is that all IBC tokens can trade on it.
Billions a month. IBC far and away the most used interoperability protocol out there and expanding the lead with interchain accounts. 🚀⚛️🧑🚀🌖👨🚀🌚 pic.twitter.com/28Am9a6xmr
— Jack Zampolin (@jack_zampolin) March 26, 2022
To review, IBC is Inter-Blockchain Communication or a part of the Cosmos protocol. So all blockchains built on Cosmos can trade their tokens here. That includes Terra Luna, Cosmos, Crypto.com, Secret Network, and KAVA. So with that in mind, there are 2 excellent pools here on Osmosis that we could take advantage of here:
- LUNA-UST: It pays an excellent rate of 43.76%.
- LUNA-ATOM: It pays 32.51%. You must then decide if you want to keep the ATOM or sell it for more LUNA or some other coin.
One important thing to note is that when you bond these assets to the stake, your APR goes down if you decide to do a 1 or 7-day unbonding process instead of 14 days. During unbonding, you aren’t earning anything so you need to take that into account.
For example, on the LUNA-UST LP, your return goes down to 21.92%, still, an excellent return, if you choose 1-day unbonding. Only you can decide if that flexibility is worth sacrificing the returns.
Farming Option 3: Edge
We mentioned Edge in our 34% stablecoin video. Edge is a lending protocol so you can supply LUNA to earn interest in a single-sided staking environment. If you do, then you can earn 1.88% on Edge with no risk of impermanent loss. Not much.
Edge: Money market platform on Terra
Edge enables money markets as-a-service with a marketplace allowing users to choose their favorite lending market to lend and borrow.https://t.co/eJbm6dz0YO @EdgeProtocol— Qiao Wang (@QwQiao) March 22, 2022
Now we can take it one further. Go bond your LUNA into bLUNA so you can earn staking rewards on your LUNA. Then you can also deposit that bLUNA into Edge and earn an additional 6.88%. This is the better deal of compounded returns if you like the Edge protocol.
Farming Option 4: Spectrum
Spectrum Finance is a yield optimizer. One of the benefits here is that they can give us better yields than the place where the farm originates. And that’s true here.
LoTerra LOTA-UST vault is now available on Spectrum Protocol. Auto-compound your LPs and earn $SPEC rewards at https://t.co/hL6YfGSWoh pic.twitter.com/7HQ5YXKALa
— Spectrum Protocol (@SpecProtocol) March 27, 2022
Here are two farming options in Spectrum Finance that you should take a look at:
- LUNA-UST
LUNA-UST on Astroport pays 10.03%. That’s pretty good and on 2 coins we want to own anyway. But wait. On Spectrum, by agreeing to get paid in their native SPEC token, we can earn 28.67% instead. Do we take on a little more risk? Yes.
But, you can swap your SPEC right away for UST. Then you could add LUNA, other Terra assets, or maybe some of both LUNA and UST to add to this pool.
2. LUNA-bLUNA
This pool gives us the benefit of almost no risk of impermanent loss as these are 2 versions of the same asset. The only difference is Bonded LUNA (bLUNA) means you are earning staking rewards too.
Due to this locking into staking, bLUNA always trades at a slight discount to LUNA, which you can buy, sell, trade, or whatever anytime. Also, bLUNA has an unbonding period that LUNA does not. Moreover, bLUNA almost always trades at less than a 2% discount to LUNA.
This farm from Astroport gives us a nice bump from 12.47% to 15.36% again to get paid in SPEC. Again, you can swap your rewards right away for UST, which you can hold, invest or trade for more LUNA and/or bLUNA if you want to add to this pool. For almost zero risk of impermanent loss, this is a terrific deal.
Farming Option 5: Astroport
Another good place to farm, Astroport, has both of our farm candidates today. Astroport is a DEX in the Terra system. As we mentioned with Spectrum, the 2 farms we chose there originated here on Astroport. Spectrum gave us the chance to bump up our returns a little bit.
✦ Astroport Upgrades ✦
🪲 Bug fix enabling users to claim accrued rewards from the Rewards Centre after expiration of the airdrop
🪲 Bug fix related to custom slippage settings for swaps
🧪 Testnet deployment: WIW-UST pair added to Bombay pic.twitter.com/UkxxtzKoRX
— Astroport ✦ (@astroport_fi) March 24, 2022
But Astroport has an excellent LUNA farm that Spectrum is not covering. And that farm is stLUNA-LUNA. stLUNA is Lido staked LUNA. Lido is one of the leaders in liquid staking so you can earn rewards and help keep your favorite network secure while staying liquid for other investment opportunities.
On Lido, you will stake your LUNA and earn 7%. Then your liquid token (like with aUST for UST deposits on Anchor) is stLUNA which we bring here to Astroport. This pool pays 18.98% and that’s on top of the 7% staking you earn on the stLUNA portion. And again, virtually no risk of impermanent loss so this is a great deal.
This pool pays 18.98% and that’s on top of the 7% staking you earn on the stLUNA portion. And again, virtually no risk of impermanent loss so this is a great deal.
Conclusion
Here we have 5 great options to put your LUNA to work and make some money. Anchor is probably the best known of these methods as is the most bank-like app in DeFi.
Also, Osmosis brings together the Cosmos community with more options than only Terra native platforms. Moreover, Astroport brings in one of LUNA’s liquid staking options.
Then, Edge and Spectrum give us a combination of flexibility, reduced risk, and in some cases no risk of impermanent loss. They are all excellent farming options for LUNA.
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