DeFi mining cost me $5000

Editor's Note: This article comes fromGyro Finance (ID: tuolocaijing)Editor's Note: This article comes from

Gyro Finance (ID: tuolocaijing)

, Author: Raymond Yeh, Compiler: Ono Savage, published by Odaily with authorization.

I've lost $5000 in DeFi Farmer Yield over the past two weeks.

DeFi has been very hot in the past few months. After repeated reminders from my friends, I finally decided to enter the market two weeks ago. The following is my experience after losing $5,000 in DeFi farming income, I hope it can give you some inspiration."secondary title

Sushiswap

Kimbap.finance

Ulu.finance

Pickle.finance

"Liquidity Mining

It is a must-do for playing DeFi at present. People mortgage some tokens in smart contracts to provide liquidity for the trading pool, and thus get some native token rewards. The Farming application has multiple forks, the following are some fork cases

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In an application like Kimbap, you can deposit Uniswap's LP tokens, and when you hold liquidity tokens in Kimbap's "chef contract", you can get rewards in $KIMBAP tokens (Annotation: LP tokens , liquidity provider tokens, that is, tokens that provide liquidity in the trading pool, such as the ETH-USDT pool, which can use ETH and USDT, and use smart contracts to generate corresponding liquidity tokens, which will be called LP tokens later)."farm"first contact

At that time, I was daunted, and many questions popped up in my mind:

1. Is it true that the annual rate of return exceeds 1000%?

2. How can I get the tokens needed to invest in this farm?

3. Have the tokens I pledged been taken away by possible smart contract owners, or disappeared due to bugs?

With interest rates over 1,000%, I certainly can't wait to get all the answers to my questions. And the most important question is - "How do I get involved?"

After research, I found that I first need to obtain two tokens. For example, I choose USDC and ETH as trading token pairs, and deposit them in the Uniswap trading pool to generate corresponding liquidity tokens for my use.

1. Redeem my USDC and ETH shares (why should I do this?)

2. Mortgage LP tokens in the farm for profit!

As a very cautious investor, I took a close look at the smart contract and made sure it was safe. First of all, I have seen the code, and there is no problem; I have also compared this contract with another secure smart contract, and there is no outstanding problem; many people have invested in this project, so it must be safe; Haven't been hacked before, and I plan on getting out before that happens.

Not much to say, I staked my first USDC-ETH UNI-V2 LP token on Kimbap Farm, and immediately saw the Kimbap balance increasing little by little.

You know how healing it is to be able to watch your money beget money in real time?

I know!

For a few minutes, I watched the tokens grow in seconds, and it felt like a door opened to some evil world.

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If I buy some Kimbaps tokens now, pair them with ETH to generate LP tokens and put them in the liquidity pool, I can accumulate Kimbaps tokens faster than others, and then sell them quickly to recover my initial investment

Not long after I came up with this "genius plan", I bought some Kimbaps tokens on Uniswap, matched them with the corresponding ETH to generate a Unisawp transaction pool, and put the corresponding LP tokens into the pool .

Seeing Kimbaps grow at a meteoric rate, I thought, let this money work for me for the rest of the day.

Waking up, smelling the delicious coffee, and seeing the rich returns from the growth of Kimbap tokens are the best things.

But neither of those things happened.

Overnight, the price of Kimbap tokens dropped more than 100 times. I never imagined this possibility. Seeing that the value of 6W+ Kimbap tokens is lower than the gas fee for exchange, I realized one thing...  

I am the source of high yields for other farmers.

"If you don't know where the revenue is coming from, you may be the revenue source."

The basic building blocks in decentralized finance come from various sources such as loans & fees from liquidity providers. We can look at two examples of yield sources, one is lending through Compound, and the other is providing liquidity through Uniswap.

Image source: compound

In the case of Compound, users can earn a 3% annualized rate of return by lending excess DAI tokens. In return, Compound will also use a cDAI, which will serve as the IOU (annotation: IOU, I owe you, similar to an IOU) for the user to lend DAI, as well as the accrued interest rate.

Source: uniswap

In the case of Uniswap, users can obtain an annualized rate of return of 29% by providing liquidity for trading pairs such as ETH-USDT. By providing liquidity, other people in the market can freely exchange any ETH and USDC trading pairs, and the exchange fee of 0.3% for each exchange will be paid to the entire pool. In return for providing liquidity, Uniswap will reward you with an accounting token—UNIV2 USDC/ETH LP token, to track your share in the entire pool and pay you corresponding transaction fees."normal"We can see that the above

The annualized rate of return is in the range of 0-30%. How did these farms report yields of over 1,000%?

"If you don't know where the revenue source is, you may be the source of the revenue."

The answer is simple, honest farmers just eat up the profits of other, more honest farmers.

Source: Network MEME

In the case of providing liquidity or lending, you are adding value to the ecosystem and you should be rewarded for the value you add. However, in Farming, betting on LP tokens does not actually add more value to the ecosystem, and in this case, the reward you will get is that the value will eventually return to zero.

The value of the native token of each farm should be 0, Kimbap coin, moon coin, sushi coin, Ulu, kimchi coin are all like this.

If the value of the native token should be 0, and the transaction fee should be 0, then why would the price be higher than this on the exchange?

The reason is greed.

When farmers refuse to believe that the native token has zero value, they think they can reap the benefits faster than everyone else by providing a stablecoin liquidity pool for the native token. These farmers provide access to other farmers to sell $0 worth of stuff at higher prices than they are now.

Some farmers have no idea how native tokens will eventually go to zero, while others understand the laws of physics, but decide to take the risk and provide liquidity to native tokens because they believe they won’t be a bigger fool.

As long as there are fools in the market, there will be extra yields, and as long as there are extra yields, there will be degenerate farmers. (Annotation: degenerate or degen)

Don't be a fool, refuse to be greedy

As the saying goes, strike while the iron is hot, and DeFi games may not disappear for a long time. As long as there is greed, there will always be bigger fools. Your purpose is not to be a fool.

Here are some tips for not being a "dumb".

1. Never buy the so-called farm currency. In the long run, the price will always return to zero."success"2. Never engage in new types of farms, new farms are often old

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