Hello, —I’m Redmption, a Community Manager with Harvest Finance—
Today, I’d like to propose the addition of $FARM as collateral on Aave. FARM is a profit share and governance token for Harvest Finance, an automated yield farming platform, which has been delivering incredible value to DeFi farmers for 15 weeks, recently exceeding $590M in deposits and currently 2nd ranked in Assets on DeFi Pulse.
With an AUM now exceeding yEarn’s, we believe the addition of $FARM as collateral on Aave would sustain an attractive market. It would also enable additional strategies for FARM holders that could eventually be harnessed in a FARM vault that employs rehypothecation strategies like lending on Aave to generate yield.
Why FARM?
Profit Share - The $FARM token has actual value in receiving 30% of all profits generated by liquidity providers at Harvest Finance. By providing cash flow even in down markets at a P/E ratio of less than 3, users see Harvest Finance and $FARM as a haven against bear markets.
Harvest has the technical expertise to deploy a FARM vault that could harness Aave’s credit delegation to leverage staked FARM for additional yields.
Harvest is a community enhanced project, with multiple initiatives to fund the Ethereum ecosystem via grants, and through strategic partnerships with newly forming projects like Perp.fi and Benchmark. The FARM token is also utilized for voting on initiatives that impact the platform and community.
Aave users love Harvest Finance! Harvest Finance accepts single currency deposits such as DAI, USDC and wBTC. With such low rates offered by Aave, blockchain analytics show users leverage their assets at Aave for stable coins to deposit at Harvest Finance. Those users in turn gain $FARM rewards, which if approved as collateral could then be deposited back at Aave for leverage.
Harvest Finance is entering its 15th week of production, and each week has implemented changes that bring additional integrity and value to the platform such as a supply burn and emissions reduction, multiple security audits, implementation of the 12 hour strategy timelock, and being the first automated yield farm to deploy UNI and IDLE strategies. I believe a quality project such as Harvest Finance which combines quality development with deep community integration is an excellent candidate for the Aave platform.
Imagine being able to leverage your ETH (which you can only yield farm for about 5%) to borrow something with a ~100% sustainable APR. Demand to borrow FARM would be massive.
I imagine this would in turn cause a lot of FARM holders to lend on Aave instead of staking in profitshare. You may even see the case the LEND rates for FARM matching or exceeding the profit share APR.
Its a brilliant combination. This is what I can do if AAVE supports FARM
Borrow FARM - stake is profit share to get ~100+ APY
(or)
Lend FARM - to leverage as the FARM value will continue to grow by design as long the TVL doesn’t drop. With level of engagement from devs and community, FARM has demonstrated that it can attract more and TVL can only go up from here.
Very few projects in Defi can create such an opportunity.
Just as impressive would be listing the fAssets issued by Harvest Finance. fAssets represent the users deposit for their base asset. Deposit USDC, receive fUSDC back. The pool value of fUSDC continues to grow as the Harvest platform continues to collect rewards from the farmed strategy, sells the rewards and compounds it back to to the USDC pool for investment. When a user then exits fUSDC at Harvest to redeem their USDC, they will receive more USDC back because the value of the pool grew. fAssets are not speculative assets, they are linked to the value of the under lying pool which ONLY GROWS.
If a user deposited $1000 in fUSDC to Aave and leveraged the asset, over time the collateralization health of the borrow could actually improve as fUSDC outperforms the lending rate of the borrowed asset. This is really amazing stuff, and better than stable coins against market volitivity because the asset appreciates based on the profits of the Harvest system, and not market speculation.
A community member built the below tool which visually shows you the performance of fassets
I definitely support this. I think there are a lot of synergies between both Farm and AAVE and allowing FARM to be collateral would be the first step in unlocking these.
