As DeFi continues to make waves and maintain its parabolic growth since the summer of 2020, yield farming remains a popular tool for generating returns from long-term holdings. For the uninitiated, yield farming is simply the act of staking your assets into a platform to earn yield, usually in the form of governance tokens or the staked asset. As new platforms are constantly introduced into the ecosystem at a steady rate, yield farmers are always on the lookout for the highest returns. In traditional terms, this is similar to depositing funds into whichever bank that offers the highest interest rate, albeit with much more astronomical figures.
With the Ethereum network getting congested lately, gas fees have increased significantly, even for simple transactions. The increase in gas fees has squeezed out many users from using the Ethereum blockchain as it is no longer economically feasible. DeFi activity on Ethereum is now mainly left to larger whales, who have hundreds of thousands of dollars at their disposal and can easily cover their transaction costs, in little to no time.
Although one of the key points of yield farming, barring the extravagant incentives, has been to ensure a fair distribution of rewards, the barriers of entry have simply become financially unreasonable for those with lesser capital.
This conundrum has kick-started a wave of yield-farming movements on alternative networks such as Binance Smart Chain (BSC), where transactions can cost anywhere from a few cents to a couple of dollars. While whales can still migrate over to BSC and earn their yield, the lower transaction costs have made it economically feasible for newcomers and developers to participate.
How To Get Started
There are several alternatives for depositing your funds onto the Binance Smart Chain. Here, we will outline 2 of the most popular ways:
Withdrawing funds from Binance to Binance Smart Chain
Transferring funds using the Binance Bridge
1. Withdrawing funds from Binance to BSC
Binance users can withdraw their funds from Binance directly to their BSC Wallet. Do make sure that the funds are indeed compatible and available on BSC, and that you have selected the correct network to withdraw the funds to.
Note the difference in fees between the different networks. Withdrawals through BSC cost only around 20 cents, compared to the Bitcoin and Ethereum networks which cost approximately $25 and $15 respectively.
Much like Ethereum addresses, BSC addresses start with ‘0x’ and you can connect your Metamask wallet to BSC directly. If you are a first-time user of BSC, you may need to create a custom RPC. Below are the details to connect to BSC:
Network Name: Smart Chain
New RPC URL: https://bsc-dataseed.binance.org/
Chain ID: 56
Block Explorer: https://bscscan.com
2. Transferring funds using the Binance Bridge
Alternatively, you can use the Binance Bridge to transfer funds from the Ethereum, TRX, or Binance Smart Chain Network. Note that only certain assets are supported for each network and there is a daily limit to how much you can send over to BSC.
For both methods, it is important to note that the Binance Smart Chain is not gas-free. Much like Ether is used for paying transaction fees on Ethereum, BSC uses Binance Coin (BNB) as its native token for gas fees. As such, do also transfer some BNB to your BSC wallet before you embark on your yield-farming adventures.
Now that you have loaded up your wallet with some assets and BNB, you are ready to explore the world of DeFi on BSC. Drawing parallels to the DeFi summer of 2020, many unique and cloned yield-farming platforms have mushroomed in the ecosystem, creating a constant stream of opportunities for the avid yield farmer.
With so many projects to keep track of, we have divided them into a few categories – decentralized exchanges, yield aggregators, and NFTs. Do note that this is not an exhaustive list, but…
Read More:Yield Farming on Binance Smart Chain