Welcome to this post, where we are going to see how Beefy Finance works, and what you need to know to use this DEFI platform.
Beefy Finance is one of the main platforms to optimize your investment in LP Tokens or cryptocurrency staking, with many different networks where it is available. Although its beginnings were on the Binance Smart Chain, they have expanded to other networks to give their users a wider range of offerings.
What is Beefy Finance
Beefy Finance is a decentralized multi-chain yield optimization platform that allows its users to earn compound interest on your cryptocurrencies.
Through a set of investment strategies secured and enforced by smart contracts, Beefy Finance automatically maximizes user rewards from various liquidity pools (LPs), automated market making (AMM) projects and other yield farming opportunities in the DeFi ecosystem.
Basically, it optimizes investment in other platforms, doing auto compounding optimally and adding more LP Tokens or cryptocurrencies if staking to your position. In this way, it manages to offer a better performance than using another platform.
It is important to know that beefy finance has farms and staking of different platforms, but always uses other platforms, so if any problem happens with the platform, that farm can be affected. Beefy finance only optimizes your positions to obtain a higher profitability.
Currently, it is on many different networks and every now and then new networks appear where you can use beefy finance, which are the following:
- Binance Smart Chain
As you can see, there are many networks which you can already use beefy finance. Also, it is a way to see new platforms in these networks and especially in new networks added, to see which platforms are in beefy and which are the most popular.
How to use it
Before we go into more detail, if you are new to DEFI and don’t know concepts like what is an LP Token or impermanent loss, I leave you a guide here so you can understand what we are going to see next.
As we have already mentioned, beefy finance uses other platforms to carry out its strategies and optimize the farms of these platforms. Therefore, the first thing to do is to go to the platform we are interested in farming.
You will be able to see in beefy that in each vault or trunk it indicates in use the platform. If you have found a vault that you are interested in using, you must click on it. If it is only a token, you can buy it and stake it in a simple way.
If on the other hand it is an LP Token, you will have to go to the platform to create it. Fortunately, beefy makes it necessary. Click on the vault you are interested in, and you will see under uses an add liquidity button, click there.
This will take you to the platform to create the LP Token, and then go back to beefy finance to deposit it. If you don’t have the tokens it asks for, you can buy them on the platform itself and go back to add liquidity to create the LP Token.
With the LP Token created or the cryptocurrency you want to deposit, you must first click on the vaul and approve and confirm in your wallet. Now, you can indicate the amount you want to deposit, you can use the bar below to indicate the % you want, and click on deposit. Confirm in your metamask wallet and you are done.
It is very important to read under deposit, where it tells you that you will receive a token in your platform, as a receipt that you have deposited, and if you sell it or send it to another wallet, you will not be able to withdraw your funds. So do not use the token you have received.
With this, in deposited you will be able to see the amount you have and how it is growing every day. Other relevant aspects are the apy you will receive for placing your cryptocurrencies in that vault, and the daily %. In addition to the TVL or total value locked in that vault.
When you want to withdraw it, simply click on withdraw, indicating the amount and confirm in your wallet to get your tokens back.
Advantages of using Beefy Finance
Now that you know how it works, let’s see the advantages and why you should use Beefy finance if you want to do LP Tokens farming or even staking of any cryptocurrency.
It is hard to find an annual % equal or higher than this platform. By applying auto compounding and farming optimization strategies, it is one of the platforms that offers more annual % and more return on your investment, with minimal risk. You can find other similar platforms that are optimizers, but not with as much security as beefy finance has.
You receive directly more LP Tokens or more tokens if it is staking. In many platforms for staking or farming, you receive the native token of the platform, which ends up falling in price, and if you do not sell it, actually the interest you are getting is less, because the rewards you receive are worth less. Beefy finance by selling the rewards you receive and adding more amount to your lp token or staking position, you mitigate this risk, and the % you see, is the % you are going to receive at all times. This is one of the main advantages, and why I recommend using beefy in farms that have very high % of profitability.
It is a secure platform, with a multitude of users, different vaults and options, and different networks. It is a very complete platform, where you can even find many good farming opportunities directly on beefy by looking at the different vaults in each network, and seeing the annual % they offer. It was one of the first auto compounding and farming optimization platforms in the Binance Smart Chain and has never had any problems. In addition to having over $500 billion in its platform.
It offers farming options on new networks, which you can find on few other platforms. Especially in new network launches, where at the beginning there are few platforms, beefy is one of the first to find options to optimize your farm.
The main risk of beefy finance is that when you deposit in a vault, it depends on the platform you have deposited. It has happened on occasions that platforms that were in beefy have been attacked, and this has affected the people who had the vault.
It is logical, since the vault always depends on the platform where it is located and you can see in uses, so, in this case, always check the platform where you place your funds, and if it is reliable. Although this is not really a beefy risk, many users may think that the funds are safe, and it really depends on the platform that has each vault. For example, if there is a vault that uses apeswap, if apeswap is hacked or any problem happens, beefy can’t do anything. Since the only thing beefy does, is to place what you deposit in the platform, but in an optimal way, to maximize your profit.
I hope that it has served you to know more in detail how beefy finance works, and you can get a better annual percentage. Remember that if you do not have an account with binance, you can create one just below.