What DeFi Yield Farming is in Kenya
What is DeFi Yield Farming in Kenya revealed. We tested and verified the best DeFi Yield Farming guide for Kenyan Traders.
This is a complete guide to DeFi Yield Farming in Kenya.
In this in-depth guide you’ll learn:
- What is a DeFi Yield Farming?
- What are DeFi yield farming rates?
- What is DeFi yield?
- What is the best yield farming for crypto?
- How and can I trade Bitcoin with $5 (602 KES)?
- Which brokers offer a signup bonus on a $5 (602 KES) deposit?
And lots more…
So if you’re ready to go “all in” with the best-tested guide to DeFi Yield Farming in Kenya…
Let’s dive right in…
CySEC, FCA, FSA, FSCA, Labuan FSA
FSA, Cysec, FSCA, FSC
What DeFi Yield Farming is in Kenya (Updated 2023)
- What is DeFi Yield Farming?
- How does DeFi Yield Farming Work?
- Yield Farming Types Explained
- An Introduction to Total Value Locked (TVL)
- What Kenyans must understand about collateralization
- The Potential Rewards of DeFi Yield Farming
- The Pros and Cons of DeFi Yield Farming in Kenya
- 5 Best DeFi Yield Farming Protocols in Kenya
- The Best Crypto CFD Brokers in Kenya
What is DeFi Yield Farming?
👉 Yield farming, also known as liquidity mining, is a method for earning incentives using bitcoin assets. Simply said, it involves locking up cryptocurrency and receiving compensation.
👉 In some ways, yield farming and staking are comparable. Nonetheless, there is a great deal of intricacy occurring in the background. For example, it often collaborates with customers that contribute funds to liquidity pools and are referred to as “liquidity providers” (LPs).
👉 A liquidity pool is a smart contract containing money. LPs are compensated for supplying liquidity to the pool. This incentive may be derived from fees produced by the underlying DeFi platform or another source.
👉 Some liquidity pools provide numerous tokens as prizes. These tokens may subsequently be placed into other liquidity pools to gain incentives, etc.
👉 The rapid emergence of highly sophisticated tactics is already evident. For example, a liquidity provider puts cash into a liquidity pool and gets incentives in exchange.
👉 On Ethereum, yield farming is normally performed with ERC-20 tokens, and the rewards are typically likewise ERC-20 tokens. This may change in the future, though. Currently, most of this activity is taking place inside the Ethereum ecosystem.
👉 In the future, cross-chain bridges and other related developments may enable DeFi apps to be blockchain-agnostic. This implies they can operate on other blockchains that enable smart contract functionality.
👉 In their pursuit of high yields, yield farmers often shuffle their finances between several methods. DeFi platforms may thus provide additional economic incentives to attract more money to their platform. Like controlled exchanges, liquidity attracts further liquidity.
How does DeFi Yield Farming Work?
👉 DeFi yield farming takes after auto-market makers (AMM). This is one of several DEX protocols, which include liquidity pools and suppliers. Here are some frequently used words you may see when working in this industry:
➡️ Liquidity is how quickly and painlessly you can turn your digital assets into fiat currency without affecting the market value.
➡️ A liquidity pool is a sum of money secured by a smart contract for yield farming. They are intended to promote decentralized commerce and lending.
➡️ A liquidity provider (or a market maker) is a company or individual who quotes a tradable item’s purchase and sell price to benefit from the bid-ask spread or turn.
➡️ Automated market maker involves strategies that enable the trading of assets without authorization by using liquidity pools as opposed to conventional market procedures. Therefore, it is strongly related to yield automation farming.
👉 Now that you understand the fundamentals, the larger picture can be viewed as follows:
➡️ During State 1, intelligent contracts are liquidity pools. There, providers deposit their funds. In addition, these contracts lock in Stablecoins, a new kind of cryptocurrency that intends to provide price stability and is backed by a reserve asset, making them accessible under specified constraints and yielding agricultural platforms.
➡️ Stage 2 – Kenyans can sell, lend, or borrow yield farming coins on this page. Participants pay certain fees, and market makers earn an investment return according to the quantity of capital supplied.
➡️ Stage 3 – Market makers get compensation for their readiness to lock up capital in the pool. Protocols and deposits determine the incentives users get.
➡️ Stage 4 – During this stage, providers reinvest and reallocate their awards to boost their earnings further. That is, they continue to store coins in liquidity pools. This is how liquidity providers diversify and raise funds through their investment portfolios. Again, it is feasible to maximize profits by selecting effective techniques.
Yield Farming and Staking
👉 Suppose you believe in the long-term viability of a blockchain project using proof-of-stake. In that case, you may be interested in purchasing the native token and staking it to gain further incentives.
👉 Pledges of tokens are made to a blockchain protocol like Solana to stake cryptocurrencies.
👉 The protocol will then pick a staker to confirm the subsequent block on the blockchain – the more your wager, the greater your chances of being chosen. The chosen individual gets a reward for validating the block.
Yield Farming and Lending
👉 If you choose to invest your crypto assets in a lending scheme, you may receive much larger returns. Several lending protocols have evolved to allow cryptocurrency holders to access the value of their holdings without selling their assets and incurring taxes.
👉 They do it by providing loans with excessive collateral. For example, to get a loan for $100 worth of cryptocurrency, a borrower may be required to put up $200 in security.
👉 Others who participate as lenders on such protocols will benefit from the interest paid by those who borrow their assets. Interest rates are set minute-to-minute based on market forces of supply and demand.
👉 Lenders wanting regular returns might benefit from the interest rate stability brought about by certain practices.
👉 To engage in yield farming, you must use a DeFi protocol, such as Compound or Aave, as a lender. Lending is accomplished by exchanging the tokens you want to lend for tokens with the same value.
👉 As loans accrue interest from borrowers, the exchange rate for these tokens continually increases. Therefore, when you return your tokens to their original coin, you will get more than you initially swapped.
Yield Farming and Liquidity Pools
👉 If you have crypto assets, you may get even more value from them by providing liquidity to a decentralized exchange. For example, when a user wants to trade Ether for DAI, Uniswap will subtract some DAI from the liquidity pool and then add the Ether the user is trading.
👉 This enables Uniswap to provide trades for every cryptocurrency combination imaginable without holding any coin itself.
👉 Uniswap distributes the exchange charge it obtains to liquidity providers. Each provider gets an amount according to their part of the protocol’s overall liquidity pool. Over time, the percentage of your trading pair may change, particularly with volatile cryptocurrencies.
👉 This could result in temporary loss, which is the fall in the value of your assets relative to if you had just kept your crypto out of the liquidity pool.
Yield Farming Types Explained
👉 Users supply liquidity for trading on a DEX by depositing two coins simultaneously. When exchanging one token for another, exchanges collect a nominal fee distributed among the network’s liquidity providers.
👉 In certain circumstances, this charge could often be paid in new liquidity pool (LP) tokens.
👉 Holders of coins or tokens have the ability, via the use of a smart contract, to lend cryptocurrency to borrowers and receive yield from the interest paid on loans.
👉 Farmers could get a loan of another token by using the first token as security or collateralization. Following this, users may use the borrowed coins to cultivate produce.
👉 In this manner, the farmer can maintain their starting holding, which has the potential to rise in value over time, while at the same time collecting yield on the coins that they have borrowed.
👉 In the realm of DeFi, staking may be broken down into two distinct categories. The most common implementation is on blockchains that employ proof-of-stake, in which users receive interest in exchange for pledging their tokens to the network to ensure security.
👉 The second step is to stake the LP tokens acquired as a reward for providing liquidity to a DEX.
👉 This enables users to earn yield twice since they are rewarded for providing liquidity in LP tokens, which they may then bet to earn extra yield. Additionally, users are compensated for supplying liquidity in LP tokens.
An Introduction to Total Value Locked (TVL)
👉 The most effective method for gauging the general health of the DeFi yield farming community is the Total Value Locked (TVL). It monitors the amount of cryptocurrency that is trapped in DeFi loans and other sorts of money markets.
👉 TVL represents, in some sense, the aggregate liquidity of liquidity pools. Therefore, it is a valuable metric for gauging the overall health of the DeFi and yield farming business. In addition, you could use it to see how popular each DeFi standard is among users.
👉 The website Defi Pulse is an excellent location for Kenyans to monitor TVL. For example, you can determine which platforms have the most ETH or other cryptocurrencies locked in DeFi. This may provide an overview of the present condition of yield farming.
👉 The more value secured; the more likely yield farming will occur. Notable is the fact that TVL may be measured in ETH, USD, or even BTC. Each will provide a special assessment of the condition of the DeFi money markets.
What Kenyans must understand about collateralization
👉 Typically, you must provide collateral to secure the loan if you borrow assets. This effectively serves as debt insurance. Depending on the protocol to which you contribute money, you might need to check your collateralization ratio carefully.
👉 If the value of your collateral falls below the protocol-mandated minimum, it could be terminated on the open market. In addition, to prevent liquidation, you could add additional collateral.
👉 In this regard, each platform will have its own set of regulations, i.e., its own needed collateralization ratio. In addition, they often use a concept known as over-collateralization. This implies that borrowers must deposit a greater amount than they want to borrow.
👉 To lessen the likelihood of major market collapses, the system must liquidate substantial collateral. For example, you use demand for a collateralization ratio of 200% during the loan process. Therefore, your collateralization ratio must be 200%.
👉 This implies that you may borrow 50 USD for every 100 USD you deposit. To decrease liquidation risk even further, it is often prudent to provide more collateral than what is necessary.
👉 Despite this, several systems use extremely high collateralization ratios (such as 750%) to protect the whole platform against liquidation risk.
The Potential Rewards of DeFi Yield Farming
👉 Yield Farming was introduced in 2020, and several yield farmers have boasted of triple-digit APY rates, unheard of outside the cryptocurrency industry.
👉 However, these interest rates are volatile. Frequently, the tokens obtained from such farms are very volatile and susceptible to rug pulls.
👉 Numerous yield farms with negligible risk of permanent loss continue to provide double-digit annual APYs, with specialty coin combinations and riskier farms achieving triple and even quadruple-digit APYs, which are unsustainable but lucrative in the short term.
👉 Although most crypto trading is speculative, advanced tactics are often necessary to earn continuously from yield farming, and a sizeable amount of capital is frequently advised, even for beginners.
How can Kenyans calculate Yield Farming Returns?
👉 In most cases, annualized calculations determine the expected yield of agricultural returns. This calculates the returns on investment that you could anticipate receiving over a year.
👉 The Annual Percentage Rate (APR) and the Annual Percentage Yield are two often used indicators (APY). This is because the Annual Percentage Rate (APR) does not consider the impact that compounding has, but the Annual Percentage Yield (APY) does.
👉 In this context, “compounding” refers to immediately reinvesting earnings to produce more returns. Be aware, however, that the terms APR and APY are often used interchangeably.
👉 It is important to remember that these are only estimates and forecasts, so keep that in mind as well. Furthermore, even short-term benefits are notoriously difficult to predict with precision.
👉 In an extremely competitive and fast-paced market, yield farming also has prizes that might change sporadically. If a certain yield farming approach is successful for a period, many farmers will adopt it, which may cause it to cease producing high returns.
👉 Since APR and APY are derived from the legacy markets, DeFi might need to devise its own metrics to compute returns. Because of the rapid nature of DeFi, it might make it more logical to estimate returns on a weekly or even daily basis.
How can Kenyans earn an ROI in Yield Farming?
👉 ROI may be separated into three distinct categories in a yield farming environment. They include:
➡️ Token awards are like inducements to suggest liquidity. The coins are delivered over a time ranging from weeks to years. Users may trade these cryptocurrencies on DEX in addition to exchange providers such as Binance or Coinbase. These tokens are used to administer a system.
➡️ Transactional fee income – Imagine that the commission offered by the participant during pool formation varies between 0.003% and 15%. This is the rate of a certain pool. Others charge around 0.02 percent. Market makers earn all commissions. Governance coin holders will get a portion of the revenues.
➡️ Raising capital – An increase in finances facilitates the estimation of earnings from agricultural opportunities with difficult yields. Once REN, BTC, CRV, and SNX assets are included in the appropriate yield farming approach, they become extremely volatile and no longer need correlation. To reduce volatility, it is crucial to adopt appropriate measures that correspond well with stablecoins.
The Pros and Cons of DeFi Yield Farming in Kenya
👉 Earning potential on DeFi YF is unlocked for both LPs and platform owners. This has led to an uptick in interest in increasing agricultural output with DeFi technology. For a good reason, too, since there are several advantages to using this method, including:
➡️ Simple navigation. There are a lot of financial record-keeping solutions for farmers and farmers’ markets out there. Their learning curve is short. Their user-friendly interface makes it easy to see what projects are available and how much cryptocurrency you want to invest.
➡️ Starting is easy, even for beginners. This is another success story for user-friendly software. You do not need any prior experience with technology to get started; specialized devices will manage everything for you. The great compatibility of DeFi services also permits an expedited launch. A cryptocurrency wallet and Ethereum are the two most fundamental necessities, and they are sufficient.
➡️ Earnings potential – Those who put their money into protocols initially might reap the same rewards as early cryptocurrency investors. This means that high return rates are the main draw for financiers.
➡️ The decentralized financial sector is adaptable and open-ended. For example, certain systems may automatically shift cryptocurrency from service to service to improve investment results.
👉 As one of the most profitable and liquid forms of crypto investing, Yield Farming (YF) has garnered a lot of attention. This high-yield farming may expand thanks to simplified laws and rising popularity among participants.
👉 Yield farming, like any other investment, has its advantages and disadvantages. Some examples are included below for your perusal.
➡️ Inadequate funds or liquidity. This risk arises if the value of your collateral has decreased to the point where the cost of your loan is more than what you owe on the collateral. Whether your loan value increases or your collateral value drops, you will be forced to liquidate at some point.
➡️ The potential for a high cost. Assume a user has successfully used YF techniques to amass a sizable amount (210%, for example) while using the service. This individual will incur a loss due to the decline in the coin’s value. If the value of the collateral diminishes, the borrower will be kicked from the platform before they can be forced to pay.
➡️ Threat to the plan. If liquidity drops, for example, lending pools might become oversubscribed. Arbitrage trading is comparing several exchange services to take advantage of price discrepancies. If volatility declines, arbitrage trading will no longer provide a profit.
➡️ There is a risk of developers fleeing with your currency’s liquidity since they control it. The hazards are much bigger if you do not know the developers. Traders need to ensure that the pool they are using has been inspected by a trustworthy group, although this will not prevent every security risk.
➡️ The danger of rising petrol prices. When decentralized finance was at its height, gas prices increased by around 100. Constant price increases might make YF unattainable for regular investors. Ethereal (ETH) has published Ethereum 2.0, which includes layer II scaling to address the soaring cost of gas. Gas price reductions are also available with BNB, NEO, and TRON.
5 Best DeFi Yield Farming Protocols in Kenya
👉 One of the most prominent automated market makers (AMM) in the cryptocurrency industry, Balancer is a decentralized exchange (DEX) platform.
👉 Launched in March of 2020 after being in development since 2018, Balancer has quickly moved to the top of the cryptocurrency field. Among other data, trade volume and locked value show that Balancer is among the best DEX platforms.
👉 Based on the Ethereum blockchain, the decentralized protocol provides a democratic and easily accessible replacement for centralized trading platforms. Balancer creates a trustless, permissionless space for trading Ether and ERC-20 assets.
👉 Balancer also has its own native utility token (BAL), called the Balancer token, like many other existing DeFi programs. More than 17,500 liquidity providers (LPs) have contributed more than $3.4 billion in liquidity to Balancer, and these LPs have earned more than $70 million in fees.
👉 Balancer’s decentralized structure makes it ideal for investors and traders who want to make direct asset swaps or provide liquidity to one another.
👉 Yearn finance is a free, open-source Ethereum-based DeFi (decentralized financial institution) lending system. As such, it was developed to facilitate communication across various DeFi systems.
👉 When users deposit cryptocurrency into DeFi, the yearn.finance protocol acts as a yield aggregator, redistributing that money around other decentralized finance protocols to increase their yearly percentage returns.
👉 Users of yearn.finance may engage in activities like liquidate.finance, trade.finance, iborrow.finance, and yswap.exchange without interference from outside parties.
👉 Compared to other DeFi protocols, this one gives its consumers the largest yearly percentage returns. In addition, users may earn interest on their deposits of digital assets by placing them in liquidity pools.
👉 There is a lot of competition for a piece of the Yearn Finance pie since Yearn.finance is one of the most prominent, flexible, and lucrative DeFi protocols in the bitcoin finance industry.
👉 As a decentralized credit platform, MakerDAO facilitates the production of DAI, a stablecoin that is algorithmically fixed to the value of the US dollar. Furthermore, collateral assets like ETH, BAT, USDC, or WBTC may be stored in a Maker Vault, and anybody can create one.
👉 DAI may be created as a debt against the secured collateral. Holders of MKR tokens choose the rate of interest that will be charged on this loan, known as the stability fee.
👉 For example, the maker might be used by those concerned with crop yields to mint DAI for use in crop-boosting agricultural techniques.
👉 Uniswap is a trustless token swapping technology built on a decentralized exchange (DEX). Liquidity providers deposit tokens with a value of two dollars to launch a trading platform. Traders may then use the liquidity pool to execute trades.
👉 Liquidity providers get compensation through a share of the profits from transactions conducted inside their pool.
👉 Due to its low-friction nature, Uniswap has become one of the most often used exchanges for trustless token swaps. This could help increase crop yields in farming.
👉 The Aave protocol facilitates lending and borrowing without a central authority. Instead, it is an algorithm’s job to change interest rates in response to changes in the market. Loans are repaid with “aTokens” that the lender may then use.
👉 When deposited, these tokens instantly begin accruing interest, which increases over time. In addition to its basic features, Aave supports more complex features like “flash loans.”
👉 In addition, high-yield farmers rely significantly on Aave, which has established itself as a decentralized mechanism for lending and borrowing.
The Best Crypto CFD Brokers in Kenya
👉 In this article, we have listed the best brokers that offer crypto CFDs to traders in Kenya. In addition, we have further identified the brokers that offer additional services and solutions to Kenyan traders.
Best MetaTrader 4 / MT4 Crypto CFD Broker in Kenya
USD 1 / 116 KES
IFSC, FSCA (South africa), ASIC, CySEC
MetaTrader 4, MetaTrader 5, FBS Trader – all in one mobile trading platform.
$140 (16 373 KESFind out More)
Account Activation Time
👉 Overall, FBS is the best MT4 Crypto CFD Broker in Kenya. Kenyans can open a cryptocurrency trading account with FBS to participate in cryptocurrency, fiat currency, precious metal, and cryptocurrency-cryptocurrency cross-exchanges.
👉 Regarding trading, FBS has some of the greatest conditions available. Additionally, Kenyans may utilize the virtual account to become comfortable with trading before risking any real money.
Best MetaTrader 5 / MT5 Crypto CFD Broker in Kenya
USD 10 / 1156 KES
CBCS, CySEC, FCA, FSA, FSC, FSCA, CMA
MetaTrader 4 and MetaTrader 5
Account Activation Time
👉 Overall, Exness is the best MetaTrader 5 Crypto CFD Broker in Kenya. Exness offers Kenyans commission-free trading options and unlimited leverage options via MT5.
👉 Exness also offers the use of its proprietary trading app through which Kenyans can monitor fast-paced markets.
Best Crypto CFD Broker for beginners in Kenya
USD 200 / 23120 KES
Account Activation Time
👉 It is possible to employ leverage of up to 1:5 while trading cryptocurrencies and traders may even utilize copy trading using platforms like Zulutrade and Myfxbook.
Best Low Minimum Deposit Crypto CFD Broker in Kenya
👉 Overall, XM is the best Low Minimum Deposit Crypto CFD Broker in Kenya. XM’s minimum deposit starts from 5 USD / 600 KES. XM caters to millions of traders worldwide and provides the best trading experience.
👉 XM provides Kenyan traders access to several webinars, research materials, and a plethora of advanced trading tools.
Best ECN Crypto CFD Broker in Kenya
USD 100 / 11660 KES
CySec, FSC, FSA, BaFin, NFA
MetaTrader 4 , MetaTrader 5
50 Forex Pairs and 20 Crypto Pairs
Account Activation Time
👉 Overall, BDSwiss is the best ECN Crypto CFD Broker in Kenya. BDSwiss is a reputable broker that does not charge any trading fees.
👉 In addition, Kenyans that want to trade cryptocurrencies have access to a 1:5 leverage range, MetaTrader 4, MetaTrader 5, and the BDSwiss trading platform.
Best Islamic / Swap-Free Crypto CFD Broker in Kenya
USD 100 / 11560 KES
CySEC, FCA, MAS, FSA, ASIC, FMA, FSCA
Yes (Availability subject to regulations)
Account Activation Time
👉 Overall, Plus500 is the best Islamic / Swap-Free Crypto CFD Broker in Kenya. Plus500 is a trusted Crypto CFD broker with over 22 million customers and a listing on popular stock exchanges.
👉 There may only be one CFD account available on Plus500, but Muslim traders may open an Islamic Account inside that.
Best Crypto CFD Trading App in Kenya
USD 0 / 0 KES
Account Activation Time
👉 Overall, IG is the best Crypto CFD trading app in Kenya. In addition to MT4, IG offers an impressive range of proprietary trading apps led by its flagship app, IG Trading. Moreover, the lay-out on the app is filled with features that both beginners and professional traders could enjoy.
Best Kenyan Shilling Trading Account Crypto CFD Broker in Kenya
USD 1 / 116 KES
Account Activation Time
👉 Overall, SuperForex is the best Kenyan Shilling trading account Crypto CFD Broker in Kenya. More advanced Kenyan traders can benefit from the ECN accounts denominated in KES.
👉 SuperForex offers a choice between cryptocurrencies and ensures the best STP and ECN pricing.
Best Lowest Spread Crypto CFD Broker in Kenya
👉 Overall, CMC Markets is Kenya’s best, lowest spread Crypto CFD Broker. Kenyans can easily take advantage of commission-free trading on various cryptocurrency CFDs.
👉 CMC Markets offers low spreads, which change depending on the underlying trading instrument.
Best NDD Crypto CFD Broker in Kenya
👉 Overall, HFM is the best NDD Crypto CFD Broker in Kenya. HFM is one of the best brokers in Kenya with CMA regulations, providing customized and tailor-made solutions to Kenyan traders.
👉 Kenyans can expect STP and ECN trade execution across 1,000 financial instruments across asset classes.
Best STP Crypto CFD Broker in Kenya
USD 100 / 11560 KES
MetaTrader 4, MetaTrader 5, Ava Social, Ava Protect, Trading Central
Account Activation Time
👉 Overall, AvaTrade is the best STP Crypto CFD Broker in Kenya. Kenyans can use the robust AvaTradeGO app to trade with one of the world’s leading Straight-Through-Processing (STP) and Market Maker brokers, AvaTrade.
👉 AvaTrade provides round-the-clock cryptocurrency trading, and Kenyan traders may take advantage of favourable CFD trading circumstances for cryptocurrencies.
Best Sign-up Bonus Broker in Kenya
USD 5 / 578 KES
MT5, MT4, OctaTrader
Account Activation Time
👉 Furthermore, once Kenyans have verified a trading account, they can become eligible for additional promotions and bonuses.
👉 If you are a crypto investor with a long-term buy-and-hold strategy, you may want to investigate yield farming. You may minimize your exposure to risk by simple staking, or you can join the realm of DeFi through participation in lending or liquidity pools.
👉 There are several avenues to pursue, and it is feasible to increase the profits on your crypto investment significantly.
What does DeFi farming entail?
Yield farming refers to staking or lending cryptocurrencies for interest or other benefits. Kenyan traders who focus on yield use yearly percentage yields as a metric for their success (APY).
However, farming for yields has the potential for great reward but is fraught with peril.
Which DeFi has the highest yield for Kenyans?
Users may contribute ETH, USDC, DAI, USDT, or MATIC to HOP via various liquidity pools.
There are now two pools with higher returns than the others: the ETH pool on Optimism (8.5% APR) and the USDC pool on Arbitrum (6.8% APR).
How can Kenyans earn yield through DeFi?
Kenyans can participate in yield farming programs by locking their cryptocurrency tokens for a certain time in exchange for incentives.
Using smart contracts, yield farms may secure tokens and pay interest at rates ranging from the low single digits to the high hundreds.
Is DeFi yield farming profitable for Kenyans?
Even while yield farming does not always provide an instant return on investment (ROI), unlike staking, you do not have to commit all your funds at once.
Subsequently, yield farming might not pay off right now, but it might make a lot of money in the future.
Can Kenyans Yield Farm on Coinbase?
Coinbase does not currently support DeFi yield farming.