Yield Yak now offers one-click farming strategies for Cycle Finance. These strategies are built on top of the community-run autocompounder with token incentives.
- Earn Yield. Explore Cycle farms on Yield Yak
Cycle Finance operates a series of autocompounders on top of Pangolin, Trader Joe and other farms. Cycle automatically compounds deposits, plus awards CYCLE tokens. Yield Yak automatically compounds the extra CYCLE rewards so users benefit from the underlying farms plus Cycle’s incentives.
For example, Cycle may offer a Trader Joe LP position that earns 250% APY, and award another 50% CYCLE in rewards. YY users earn the combined APY of 300%.
“It’s a very pro community option that strikes at the core goal of both products, offering optimized yield for farmers.”
— Alex, founder of Cycle Finance
Reward and Fee Structure
Cycle charges fees on each community-initiated reinvestment, similar to Yield Yak. The fee structure is set globally for all of Cycle’s farms, meaning that it is less optimized than YY farms which are optimized by the Yak Quants group. However, the fees are compensated with CYCLE tokens. CYCLE tokens are used to distribute rewards and platform revenue.
YY farms compound CYCLE rewards as part of a layered yield product. Because the underlying farms are compounded by Cycle, YY fees only apply to the additional CYCLE rewards.
This fee structure makes YY very performant. Fee structures of other autocompounders charge based on the entire earnings of layered positions meaning that users are effectively charged fees twice on the underlying farms. This fee structure also makes YY cheaper to use because there is no need to record historical balances on each deposit and withdraw.
Layering Yield for the Yak Platform
Layered yield positions are great for YY users who get more and more advanced options for earning yield. But, does it make sense for the YY platform? For example, consider a farm with a high native APY and relatively low Cycle APY:
250% APY, native rewards
+50% APY, CYCLE rewards
300% APY, total rewards
YY users receive 300% APY, Cycle receives fees on 250% APY and YY receives fees based on 50% APY. Consider that if YY did not offer the farm, and instead pushed users to its own version of the same farm, it would earn fees on the ~275% APY (not 250%, because YY farms are more optimized). However, YY users would be worse off.
In order to compensate for worse fees accruing to YY, the treasury has taken a long-term position in Cycle using the earned fees from YY farms. This allows YY to benefit from the fees it generates to the Cycle platform, while offering users the best yield and more choice.
About Yield Yak
Yield Yak is an easy-to-use tool to earn more yield from defi farming on the Avalanche network.