Yield farms have a problem. While they’re attractive for simple speculators looking to net a quick profit on their holdings, they frequently fail to generate a long-term community and a stable token economy, due to the massive supply side liquidity of the reward token.
As a result, many yield farms are able to generate substantial momentum early on while rewards are high, yet gradually taper off as users move on to other platforms, due to diminishing returns and a lack of token utility.
Pera Finance, an innovative yield farming protocol built on Binance Smart Chain (BSC), is looking to revitalize the token economy of projects that are struggling with this problem through an innovative new yield farming protocol.
What Is Yield Farming?
To understand what yield farming is, let's first split the term into its component terms: yield and farming. These are two separate processes that come together to enable users to maximize the returns they are able to net using their idle cryptocurrencies.
The yield is the return that users are able to get through using a particular platform or protocol to turn a profit on their crypto holdings. This might be achieved through liquidity mining, peer-to-peer lending, staking, or any other yield-bearing process. Farming designates to the process of either manually or automatically moving funds between different platforms in order to maximize this yield.
Today, the term yield farming is most commonly used in the crypto space to describe the activity of parking funds at platforms that reward users for staking their tokens. These returns can be paid in the same token that has been staked or denominated in various different assets.
Pera Finance: The Basics
Pera Finance is a protocol that is designed to establish a more sustainable approach to yield farming by incentivizing traders through a decentralized trading competition.
The platform aims to become the first platform to successfully balance yield farming incentives with long-term token support. Its strategy is to provide a solution whereby long-term holders and value-adding users are duly rewarded but without dramatically increasing the selling pressure on the asset used for their rewards.
In development since mid-2020, PERA Finance is built to incentivize all stakeholders in its ecosystem with rewards that promote adoption of the token and the protocol by third-party projects. The overarching goal of the project is to make the DeFi sector more sustainable by helping other platforms to better incentivize their users, all the while maintaining a balance between supply and demand of the native token.
How do you prefer to earn a yield on your cryptocurrencies?
The PERA token is the entry point to the Pera Finance ecosystem. It’s used to access the yields generated directly by the PERA network, as well as those generated by partner projects using its solution, thereby netting PERA holders multi-token yields. The token is set to launch on July 8, 2021, as a BEP-20 asset on Binance Smart Chain.
PERA was co-founded by Eren Yecan and Utku Çeli̇kok. Yecan is a former university lecturer and entrepreneur with a penchant for decentralized technologies, while Çeli̇kok is an engineer and veteran in the crypto space, with a keen interest in neuroscience and computer modeling.
The two co-founders are supported by a team that is largely composed of technical staff and blockchain enthusiasts.
How Does Pera Finance Work?
Pera Finance seeks to reward the three key stakeholders in the PERA ecosystem through a variety of yields, including a share of the total value transacted on the network and a cut of the PERA token emission. Overall, rewards are distributed to network participants as follows:
- PERA liquidity providers: 0.75% share of every transaction and 50,400 PERA/day
- Top 10 PERA traders: 0.5% share of every transaction and 19,600 PERA/day
- PERA holders: 0.75% share of every transaction.
Beyond this, PERA stakers can earn multi-asset rewards from other projects in the PERA Finance ecosystem. These rewards will come online and continue to grow as other projects integrate PERA’s sustainable yield distribution system.
Rewards are distributed to recipients without gas fees through the use of a specialized smart contract. The system is designed to provide a sufficient APY to all stakeholders, without catalyzing excess supply-side liquidity — a challenge faced by most (if not all) yield farms today.
The PERA token is the first token to benefit from the solution but Pera Finance's trader-oriented yield farming protocol can be easily integrated with other projects. PERA hopes this will help to usher in DeFi 2.0 by providing a sustainable solution that boosts demand-side liquidity.
The platform is currently in its early stages of development. Its token generation event is scheduled for July 2021 and the solution is expected to be integrated with various DeFi platforms by Q3 2021.
What Makes Pera Finance Unique?
In order to build a sustainable yield farming protocol that is attractive to a variety of third-party projects, PERA Finance has developed several unique features and innovations. These include:
Decentralized Trading Competitions
Trading competitions are a popular way to increase the liquidity of a particular token by incentivizing traders. Yet until now, these competitions have been restricted to centralized platforms that could efficiently track and reward participants.
PERA overcomes this through its PERA Sorting Algorithm, which is used to reward PERA traders for generating volume using a powerful filter and sort approach that helps to minimize memory requirements and gas costs.
Multiple Yield Sources
PERA uses a variety of yield sources to incentivize the different stakeholders within its ecosystem. These include sharing a fraction of the value transacted on the network, in addition to daily token emission rewards (from inflation) and multi-token rewards from PERA ecosystem partners.
PERA believes that by rewarding different stakeholders with a variety of revenue sources, the project will be able to successfully balance stakeholder incentives with token demand in order to establish a sustainable token economy.
According to PERA’s calculations, its solution will be able to offer returns ranging from 107% to 510% APY, depending on market conditions and ecosystem partners.
It’s Plug and Play
PERA’s solution is designed to be easily integrated with both existing and upcoming projects. The protocol is scalable and modular, giving projects some control over its operating parameters.