How to Leverage Stablecoin Mining on Alpaca.Finance

An article that takes you through how to Alpaca.Finance for leveraged stablecoin mining.

Alpaca.Fiance is a DeFi project on BSC that combines deposit and loan, leveraged liquidity mining and asset issuance.

In this article, we will explain how to do leveraged mining of stablecoins with Alpaca.Fiance and minimize the slippage generated during the period thus increasing the returns.

How to Leverage Stablecoin Mining on Alpaca.Finance

How to Implement Stablecoin Leveraged Mining

First, let’s start with the official flow chart to understand how Alpaca achieves leveraged mining of stable coins.

Take the USDT-BUSD pair as an example, users invest USDT or BUSD as margin to open a position and automatically borrow a certain amount of BUSD. The Alpaca smart contract will automatically match the two assets in the position and form LP Token on Pancake, which will then be invested in the corresponding liquidity mining pool to generate revenue.

In addition, Alpaca’s smart contract will sell the liquidity mining reward CAKE tokens for BUSD every 30 minutes for reinvestment.

How to Leverage Stablecoin Mining on Alpaca.Finance

Next, let’s analyze the composition of the user’s revenue: actual revenue = liquidity mining reward + fee income + Alpaca token reward – interest on borrowing – opening and closing fees and slippage.

Among them, the liquidity mining reward comes from the CAKE token reward for offering USDT-BUSD LP on Pancake Swap; the fee income comes from the fees generated by other users exchanging on Pancake Swap.

In addition, Alpaca token rewards come from Alpaca.Finance; borrowing interest comes from BUSD borrowed when opening a position; opening and closing fees and slippage come from fees and slippage incurred when matching two assets.

How to Leverage Stablecoin Mining on Alpaca.Finance

Both liquidity mining rewards and Alpaca token rewards are fixed in the medium term and can only be increased by increasing the leverage multiplier, but the increase in leverage multiplier will also magnify the borrowing interest.

On balance, the highest leverage multiple should be used for stable coin mining under the premise that the sum of the first two is greater than the borrowing interest.

The fee income is variable and depends on the transaction size of Pancake Swap during the period. This income is earned as long as you are a liquidity provider, so the longer you provide liquidity, the higher the fee income you will earn.

The opening and closing fees and slippage can be reduced through operations. First of all, it is important to clarify that the assets borrowed for stablecoin mining on Alpaca.Finance are BUSD.

Therefore, in order to match the two assets, the smart contract converts the borrowed BUSD into another token on Pancake, incurring fees and slippage during the process.

How to Leverage Stablecoin Mining on Alpaca.Finance

Therefore, when opening a position, the user should put all of it into non-borrowed assets. In the case of USDT-BUSD, for example, the user should put in all USDT when opening a position.

On the contrary, if a position is opened with both USDT and BUSD, the invested BUSD and part of the borrowed BUSD will still be converted to USDT, thus increasing unnecessary fees and slippage losses.

There is also a video tutorial QR code at the end, so if you don’t like to read text, you can jump to the bottom of the article to view it.

Note: This article is only intended as a practical instruction and does not constitute any advice.

Stable coin leveraged mining practice

  1. Go to “app.alpacafinance.org”, click “Farm” on the left, then click “BUSD” on the right, and find the stablecoin trading Find the Stablecoin trading pair.
How to Leverage Stablecoin Mining on Alpaca.Finance

The red box shows the composition of the return at the maximum leverage, in short, if “Yield Farming” is greater than “Borrowing interest”, the return will be more stable.

How to Leverage Stablecoin Mining on Alpaca.Finance
  1. Click “Farm” on the right side of the pair to enter the open position screen.

For stablecoin pairs, you can use the maximum leverage and invest all non-BUSD assets, not any BUSD.

Finally, click on the green “Farm” at the bottom of the page to complete the position opening operation.

How to Leverage Stablecoin Mining on Alpaca.Finance
How to Leverage Stablecoin Mining on Alpaca.Finance
  1. After opening a position successfully, click “Farm” on the left side, it will show the positions you have held.

Among them, “Equity Value” represents the net value of the position, and “Kill Buffer” represents the fluctuation range before liquidation.

Generally speaking, USDT will not depreciate more than 10% against BUSD, but it does not mean that there is no risk of liquidation for leveraged mining of stable coins, users still need to pay attention to the relative price changes of both in real time and take countermeasures.

In extreme cases, you can click “Add Collateral” on the right to increase the value of collateral to avoid liquidation.

How to Leverage Stablecoin Mining on Alpaca.Finance
How to Leverage Stablecoin Mining on Alpaca.Finance

4、Click “Close Position” on the left to enter the Close Position screen.

How to Leverage Stablecoin Mining on Alpaca.Finance

The red box shows the approximate number of assets remaining to be closed and the minimum number you can receive at this time.

Click on the “Close Position” button in the red circle to close the position.

How to Leverage Stablecoin Mining on Alpaca.Finance

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/how-to-leverage-stablecoin-mining-on-alpaca-finance/
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