The swift expansion and rising popularity of the DeFi sector are currently driven by investors aiming to more effectively utilize their assets and maximize returns from their dormant assets. In this guide, we delve into the top-yield farms on Polygon and examine their yield potentials.
DeFi platforms are unique as they are permissionless, meaning that anyone with internet access and a supported wallet or browser client can interact with them. They are also trustless, meaning no third parties or middlemen are required.
Polygon emerged as a suitable alternative for Ethereum-based DeFi platforms due to high gas fees and network congestion on the Ethereum blockchain. Polygon also brings many benefits to DeFi users, including:
- Negligible fees
- Instant finality and completion of transactions
- Higher yields due to the relative infancy of the network.
Now, due to its growing popularity and price increase, we’re going to cover the top 5 yield farms on Polygon, answer some important questions and cover some important terminology that will help you understand the DeFi space better.
“Yield Farming is a groundbreaking concept within DeFi that has breathed new life into the polygon space.”DappRadar: Youtube
What is yield farming?
Yield farming is a way to generate rewards and earn yields on your cryptocurrency assets by securing them on a DeFi platform.
On most platforms, users deposit their assets in a liquidity pool or stake their assets via a smart contract. In return for providing liquidity to the platform via their assets, rewards, and yield are generated in the form of the denominated token or a DeFi platform’s native token.
Most popular yield farms on Polygon utilise an Automated market makers (AMM) model, in which assets can be traded automatically on a permissionless basis by using liquidity pools instead of a traditional market of buyers and sellers.
How much can I earn with yield farming?
As there are so many platforms, the rewards you can earn vary. The most popular platforms offer anywhere between 10-50% yield on major assets such as:
Other platforms offer higher yield rewards when using the platform’s native token or more speculative assets. On DeFi platforms, rewards can fluctuate based on price action and liquidity, so it’s worth ensuring the yield percentages offered are stable.
Yield farming rewards are calculated annually, meaning they’re displayed as the returns that you could expect over a year. The most commonly used metrics are Annual Percentage Rate (APR) and Annual Percentage Yield (APY). APY takes into account the compounding of your assets whilst APR doesn’t.
Top 5 yield farms on Polygon
Having addressed some common questions about yield farming, let’s now proceed to our overview of the top 5 yield farms.
QuickSwap is top on our list of the top yield farms on Polygon network. QuickSwap is a leading DEX and AMM on the Polygon network. It’s a fork of Uniswap, the leading Ethereum-based DEX.
It currently has close to $500m in TVL and assets locked into its liquidity pools, and due to the increasing popularity of Polygon, that number is sure to rise following further adaptation. Since launching in February 2021, QuickSwap has attracted large amounts of liquidity and volume to its platform.
By becoming a liquidity provider on QuickSwap, users will receive LP tokens and earn rewards in the native token, QUICK. The available liquidity pools provide highly competitive yield returns on many leading assets and Polygon-based assets, along with a simple interface that makes DeFi easier.
Aave is a non-custodial liquidity protocol that specializes in the lending and borrowing of assets. On Aave, users can deposit their assets as collateral and “borrow” against them or simply “lend” them via deposits to Aave and generate yields.
Aave allows users to borrow and lend close to 20 leading crypto, attracting a large portion of investors looking to maximize returns on their assets. Another benefit to users is how borrowers on Aave can alternate between fixed and variable interest rates.
Aave is heavily used by yield farmers on Polygon and is the most popular DeFi platform on Polygon, securing close to $8bn of collective assets on Aave. Their deposit and borrow yields for leading stablecoins and assets such as BTC and ETH remain extremely competitive and are attracting many DeFi investors that wish to use the Aave platform but without high gas fees from interaction with smart contracts.
SushiSwap is known primarily for its DEX but has recently expanded its range of dapps to lending, staking and yield farming solutions. Originally a fork of Uniswap, SushiSwap has grown considerably since the DeFi space exploded and remains one of the more popular yield farms on Polygon for novice and experienced DeFi users alike.
Their network integration with Polygon was launched in early May, and since then, the TVL and volume of Polygon on SushiSwap has exploded. The TVL of Polygon assets on SushiSwap is approaching $1bn, with leading assets like BTC, ETH and Stablecoins providing generous yield rewards through their liquidity pools. They also recently released BentoBox, a lending and borrowing platform that provides highly competitive yields on popular assets and Stablecoin pairings.
Polycat Finance is another top-yield farm on Polygon. It’s a value-oriented, economically sustainable yield aggregator on Polygon. Their yield farming options incorporate various liquidity pools from external platforms like Aave, SushiSwap, and QuickSwap and provide regard to their native token, FISH.
Their vaults and farms have around $240m in TVL across their platform and due to a large number of pools available, DeFi users on Polygon have many choices when it comes to depositing their assets and earning the best yields.
DFYN is a top-yield farm on Polygon. It’s a community-governed DeFi project that offers a low-fee AMM exchange along with yield farming opportunities. DFYN is looking to build an inter-connected AMM with nodes spread on different blockchains. This will enable DFYN to be a multi-chain AMM and share liquidity across multiple chains.
DFYN is also a gasless exchange, which means users just have to “sign” the transactions. No fees are passed to users. Their yield farming options include Vaults, which allows users to lock up their DFYN tokens for a set period and Farms, which offer extremely competitive yield returns on leading assets. Yields are paid out in their native token, DFYN. They currently have around $200m in liquidity locked into their platform.
From novice to DeFi pro
With the continuous expansion of the DeFi space, an increasing number of yield farming opportunities are emerging. These opportunities attract a diverse range of investors eager to utilize their assets and optimize returns effectively.
Whether you’re just starting in DeFi or you’re a seasoned DeFi enthusiast, our carefully curated list of the top 5 yield farms on Polygon is designed to meet your needs. So, dive in and enjoy the journey of yield farming!
Frequently asked questions
Is yield farming safe?
Is yield farming profitable?
Is yield farming the same as staking?
How do you maximize yield farming?
What is the best project in Polygon?
What is the difference between DeFi and crypto?
What is DeFi yielding with polygon?
How do DeFi farms work?
Top crypto platforms in the US | December 2023
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