HODL Farming has the same basic concept of HODL Staking but instead of the base token being the project’s native token, in HODL Farming the base token is the project LP token!
In the last few posts we introduced the new and revolutionary HODL Staking contract that helps protect projects and investors from token devaluation. We explained how it works and gave examples of how you can create a HODL Staking contract where the investors stake a token and get the same token as reward, or stake a token and get a different token as reward.
But what if a project wants to take the same concept and use it in way that would also encourage their investors to provide liquidity to their token?
Introducing… HODL Farming!
HODL Farming has the same basic concept of HODL Staking but instead of the base token being the project’s native token, in HODL Farming the base token is the project LP token!
Before we explain how the HODL Farming contract works and why it is more beneficial than regular Farming (also known as Yield Farming), let us explain briefly how traditional farming works.
By default, every Decentralized Exchange (DEX) relies on liquidity providers for a smooth trading experience. Liquidity providers (or LPs for short) send an equal amount of the two tokens that make a trading pair into the trading pair pool. In return, they get LP tokens that represent their proportion of ownership in that pool. Any time someone makes a trade for that pair, the DEX charges a commission and part of it goes to the LPs based on their ownership stake in the pool.
In essence, an LP token is a token that is combined from the 2 tokens in the pair.
As an example, in Optimus we have liquidity in PancakeSwap for the pair $BNB / $OPTCM.
Here is the LP token address: https://bscscan.com/token/0x083df79b361ab119bd173ef4ad6e21ebba5b8634
Farming is a way to further reward the LPs by giving them an additional token reward for locking their LP tokens.
However, traditional farming has some disadvantages. The main one is that the APR (Annual Percentage Return) is usually very dynamic and can increase but also decrease based on the farmers activity.
The HODL Farming Advnatage
In HODL Farming, similar to HODL Staking, the APR Can only grow, since once the contract is live members can only cash out, and every time someone cashes out the APR immediately grows!
Projects will have the ability to use their own token or any other token as rewards for HODL farmers.
Its important to note that the APR grows in the amount of tokens being rewarded to the HODL farmer, but not necessarily in $ value.
The reason for that is, a project can have the reward token in a different token than the ones making the LP tokens, and if the reward token decreases in value it can affect the $ value of the rewards, resulting in a lower USD value APR.
Any EVM Project Can Launch A HODL Farming Contract
As part of our strategy we will offer this tool to any EVM project looking to offer their investors a better way to farm their LP tokens.
Projects will have the ability to launch a HODL Farming contract using their own token or other tokens as rewards!
Stay tuned for more updates. In the coming days we are planning on revealing some more exciting details about the HODL contract, and to show how easy it is to both launch your own HODL Staking / farming contract or join existing ones.
The Optimus Team
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