Low Risk Yield Farming Using Fiat Stable Coins Early 2021

Fajar Purnama
10 min readApr 14, 2021

What Many People Ignore in Staking and Yield Farming

Back in the old days whenever someone said HODL my reply was why not just stake instead and earn some interest? That is true if the coin we stake will go up in value. However, many people did not think of what happen if the coin value go down? For example, you have 100 coins worth $1 each ($100 worth) with interest annual percentage rate (APR) 30% a year:

  • With APR 30% you will have 100 + 30 = 130 coins at the end of the year.
  • If the price drops more than APR 30%, you lose for example 130 coins costs $0.6 (price drops by 40%) is worth 130 * 0.6 = $78. Profit/loss $78 — $100 = -$22
  • If the price drops slightly below APR you still win for example 130 coins costs $0.8 (price drops by 20%) is worth 130 * 0.8 = $104. Profit/loss $104 — $100 = $4
  • If the price stays you win ofcourse. 30% APR is $130 where profit/loss $130 — $100 = $30.
  • If the price goes up is the best situation. Not only your investment when up but you also earned interest. Still the best investment is ofcourse the one with the highest profit. For example, which do you prefer? Buy Fairmoon on 30th March 2021 or buy and stake Ape Swap Banana?
  • I bought 200 Ape Swap Banana at $0.5 ($100 worth of investment) and the APR on its pool is 266%, and then the price goes up to $1. 200 Banana 266% is 532 Banana so the total is 200 + 532 = 732 then * $1 which all worth $732 and the profit/loss is $732 — $100 = $632.
  • Buy $100 Fairmoon at $0.00015 on March 30, 2021 where we will get 666666 Fairmoon. 3 days later, the price goes up to $0.02 which is $0.02 — $0.00015 = $0.01985, divided by $0.00015 = 132 then time 100% = 13200%. Anyway the 666666 Fairmoon * $0.02 is now worth $13333 where the profit/loss = $13333 — $100 = $13233.
  • Comparing both profit, buying Fairmoon early $13233 — $632 = $12601 more profitable than buying and staking Apeswap Banana. (Disclaimer: this is just historical example and not financial advice for example if Apeswap Banana will go up to $20, 732 * $20 = 14640, ofcourse it is better to buy and stake Apeswap Banana)

Issue With Many New Players

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Fajar Purnama

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