Autofarm is one of the most popular components of the DeFi (Decentralized Finance) suite on the Binance Smart Chain (BSC). The Autofarm protocol was launched in December 2020. It serves the purpose of combining and simplifying yield farming opportunities for the protocol’s users. For this purpose it offers two products.
Autofarm Products
Vaults: There are currently more than 60 autofarm vaults available on the Binance Smart Chain. A vault essentially is a deposit contract in which users can lock an asset and obtain a yield on that asset that later on can be withdrawn.
The vault fee is currently between 1.5% and 3% on Autofarm. The most popular platform on Ethereum that offers vaults is Yearn Finance. On the Binance Smart Chain investors have several alternatives for yield farming:
- bEarn.Fi: https://frontierprotocols.com/bearn-fi-yield-farming-on-binance/
- ACryptosS: https://frontierprotocols.com/acryptos-the-fastest-growing-yield-farming-protocol-on-bsc/
Swaps: is a product designed as a DEX (decentralized exchange) aggregator. A decentralized exchange is an exchange that runs natively on the blockchain in the form of a protocol. Swaps by autofarm is not yet launched but it is expected to come soon. It can be compared to 1inch on Ethereum.
1inch is providing the best rates for users by comparing all rates of existing DEXes. 1inch uses a pathfinder which searches for the most efficient route for a token swap. 1inch aggregates information from Uniswap, DeFi Swap, Sushiswap, Balancer, Kyber and many more DEXes on Ethereum. Likewise it can be expected that Autofarm will aggregate token swap opportunities from BSC’s most popular exchanges such as PancakeSwap, JulSwap and BakerySwap.
Token Economics
The autofarm token is called $AUTO and has a maximum supply of 80,000 tokens. It is minted gradually from December 15, 2020 until October 2021.
Furthermore, $AUTO includes a deflationary component. The fees that are accrued from Autofarm vaults are used to buy back the $AUTO token and the $AUTO tokens are subsequently burned.
How to use the Autofarm protocol?
In order to take advantage of the yield farming opportunities on Autofarm you need to connect your wallet to the protocol and deposit the corresponding token in one of the many Autofarm vaults. Currently you have the following wallets available to interact with the protocol:
- MetaMask
- Binance Chain Wallet
- Wallet Connect
Additional Information
- There is currently more than 1.6 billion USD locked in the Autofarm protocol. This makes it the third most popular protocol on the Binance Smart Chain measured by total value locked according to data from defistation.io
- On top of the Binance Smart Chain (BSC) Autofarm is also available on HECO, which is the Huobi ECO chain. The HECO chain is a public blockchain which is supported by the Huobi exchange in a similar way as Binance supports the BSC.
- The roadmap of Autofarm intends to increase cross-chain support to further platforms such as Polkadot.
- The Autofarm protocol is written in Solidity. The code is as always open source and available on Github. The protocol is currently used in its second version which was launched in January 2021.
Risks of using the protocol: As always investors who take advantage of the protocol have the volatility risk of the underlying tokens which they deposit in the vaults. Furthermore, there is a smart contract risk with regard to the security of the deposit contract. However, a security code review for Autofarm was conducted in order to mitigate that risk. For providing liquidity there is the risk of impermanent loss. To learn more about impermanent loss read the following post: https://frontierprotocols.com/what-is-impermanent-loss/
