A lot of people are getting interested in DeFi. It's the next alt-finance craze riding on the cusp of crypto starting to push out the legacy financial system. Stocks? Psshh, that's so last century, get into crypto :D

DeFi is taking crypto to new heights. The fear of missing out (FOMO) is increasing as more people start hearing about it. If you get in early, you could, potentially, ride a nice wave up to greater financial freedom. As always there is risk when you invest your money. Some projects that sprung up on the Uniswap craze from Ethereum, and subsequent Binance side-chain (BSC) have pulled-the-rug and taken people's money.

LeoFinance has a good track record when it comes to who you can trust. I am aware of a hack that occurred early on with wLEO, and the founder @khaleelkazi refunded everyone's losses. That's huge and goes a long way to establish trust and confidence in a product or service.

CubDeFi is getting a lot of attention, and people want to learn more about how it works. My last post explaining the X-Factor and APR was well received. A lot of people appreciated the explanation as to how that worked. People want to know how this new DeFi stuff works.

I received a comment with lots of questions by @hivecoffee:

So do we just harvest our farm forever? Do we have to compound, or can we just harvest the yeild and leave the LP? Will it diminish over time, or is that just a function of the price? Like lets say I just stop adding liqudity, and dont put any more cub in my den. Can I just keep harvesting for a year? Or is this just short term?

There are probably other who want to know some of the things that they are asking. So I'm going to provide some information that may answer these questions to a satisfiable degree.

Harvesting

In any den or farm you put stake into, you have a Harvest button that you can click once you have earned any amount of CUB. Harvesting the CUB lets you use it however you want. That could be to:

• re-stake/re-invest and compound into the same den/farm, or another you're already staked into
• trade/exchange for another token to re-stake somewhere else or sell that token on an exchange somewhere

Yes, you can harvest as many times as you want. But you don't want to do this.

Why not? When you stake into any den or farm, you pay a transaction fee. When you harvest, you pay a transaction fee. The fee is around $0.30 or more depending on the price of BNB. If you have 1 CUB, do you really want to be paying a transaction fee just for one CUB? No, you want to wait until you have enough CUB to make it worth your while to pay that fee.

If you stake a lot, then you earn a lot more CUB than staking less. Those who earn more CUB faster can harvest more often. Why? Because it's more beneficial to use the CUB as stake in one of the farms or dens you are already staked into than to leave it there just doing nothing.

The point of the DeFi system is to have your money make money. Just letting it sit there is not making you money. Again, if you aren't earning much quickly, then don't harvest it too often, otherwise you're paying more fees than you are going to be getting new CUB earned as a result of re-investing it.

Compounding

When you take your harvest, and re-invest it into a farm or den you are already staked into, that's called compounding. You can only do the compounding part in one step (for the time being) in the CUB den. Kingdoms will be coming out soon on CubDeFi where this can be done automatically for you (as I understand it).

The CUB den allows you to compound with one button click.

In the non-CUB dens and all the farms, you have to Harvest you CUB and pay the transactions (txn) fee. Then you can compound it back by selling you CUB to buy into the tokens you want to compound back into.

For example, if you are farming the CUB-BUSD farm, you would have to sell half the CUB you earned for the USD equivalent of BUSD on the Exchange. Then go to the Liquidity section and buy the LP token for that pair.

Get ready to pay a lot of txn fees for doing this. You have to pay to Harvest. Then pay to exchange half the CUB into the other token in the Exchange. Then pay to merge them into an LP token in the Liquidity section. Then you have to pay again to Stake those new LP tokens into the farm. They aren't actually 'tokens' like the other crypto tokens, but I'm calling them tokens for simplicity.

Or if you are going into another farm that doesn't have CUB, then you have to sell 1/2 the CUB into one of the token pairs, and sell the other half of the CUB into the other token pair for that farm.

So I think that takes care of Compounding.

Short Term and Long Term Earnings

If you want to leave the farm and not earn their anymore, you can do that and Harvest the CUB there at the same time by click the - button to extract your LP stake. Then you can go to the Liquidity section and extract the two tokens from the LP token.

You can enter and exist and den and any farm at your leisure, for a txn fee of course. It's up to you what you want to do and when you want to do it. Nothing is locked for a duration of time.

If you want to try out a den or farm for a day or a week, that's up to you. You can try another den or farm after that, or just get out of CubDeFi with your tokens.

If you have confidence in where you staked, or don't know yet, you can just leave it and let the CUB earnings pile up. But compounding is a great way to increase the the yield of your earnings as time goes on. It's good for the long term, and even short term if you have enough USD value stake in a farm or den to make it worth it to pay the txn fees and add to your investment and returns.

Losses in Farms

One thing to be aware of is Impermanent Loss in farms. This is when one of the pairs of tokens you have gets sold off to buy the other tokens in your LP. Why does this happen? Because that token went up in value. Recall that when you create the LP token paring in the Liquidity section, you have to put in an equal amount of tokens. And this is measured in USD value of each token.

If you're in the CUB-BNB farm, and then BNB goes up in price, then BNB gets sold off to buy CUB. If CUB goes up, then your CUB gets sold off to buy more BNB. Each half of the LP pair will always have equal USD value. Both added up equal your total USD investment in that farm.

If you want to find out what your total staked value is on CubDefi, go to https://mycublp.holdings/ and connect your wallet. It will show you exactly how much USD you have staked in the system. It doesn't count the CUB you have sitting in earnings.

I hope this explanation helps some people understand DeFi and CubDefi more. Do your own research. Make your own decisions. Good luck in whatever you choose to do :)

Posted Using LeoFinance ^Beta