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CubDefi.com - To Harvest or Not To Harvest?

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strenue
@strenue
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In my previous post, I mentioned that I got started on CubDeFi.com on Sunday, 11 April 2021. Today is Tuesday, 13 April 2021, which in the DeFi world feels like a month has past. Things are moving so quickly and new developments are in the works by the @leofinance team. I was reading a post by the team this morning talking about their upcoming functionality releases to CubDeFi.com. These upcoming releases include Kingdoms and LeoBridge.

Exciting Future

From what I was reading in the post it seems that the @leofinance team have been very hard at work in the background and making great progress. Before we know it they will release some amazing new developments to CubDeFi.com. These developments will further open up our access into the Binance Smart Chain and Ethereum Network, just the thought of this flexibility and the opportunities it presents gives me goose pumps. I am extremely excited for the future ahead and the roadmap that the @leofinance team have planned out for the remainder of 2021.

We are so lucky to have the @leofinance team and LEO community here on the HIVE platform. By the same token, HIVE is proving to be a very valuable asset for @leofinance, as it is such a powerful marketing and communications tool to get the word out about Cub Finance. The dedicated user base of HIVE are also proving to have very strong Diamond Paws for the Cub Token.

Harvesting and Compounding

What is Harvesting?

When you have an active Den or Liquidity Pool that is earning CUB Tokens, you will notice that there is a button that gives you the option to 'harvest' the CUB earned. This basically means you are claiming your CUB profits from your Den or Liquidity Pool.

What is Compounding?

When you 'harvest' or claim your CUB profits from your Den or Liquidity Pool, you have the ability to re-invest or re-stake your CUB Tokens back into your active Den or Liquidity Pool. This process is known as compounding, because you are using your earned CUB to increase your original position, resulting in the ability to earn even more CUB Tokens.

"Harvest and Compound! Duh!"

I can hear some of you who are reading this post thinking to yourselves, "Harvest and Compound! Duh! It is so obvious, do it whenever you can." In theory you are absolutely correct, but like most things is life, the devil is in the detail. You see there is this little thing that people often overlook and forget about when investing or trading known as transaction fees.

Transaction Fees

Transaction fees are inevitable when trading or investing, they are kind of in the same category as "death and taxes". They cannot be avoided, but you can endeavour to minimise the impact they have on your investment.

Below is a list of some of the transaction fees you will incur while using the Binance Smart Chain and CubDeFi.com:

  • When you trade or exchange a token, you pay a transaction fee.
  • When you add liquidity by creating a liquidity pair, you pay a transaction fee.
  • When you stake into a Den or a Liquidity Pool, you pay a transaction fee.
  • When you harvest CUB earned, you pay a transaction fee.
  • When you re-invest or compound CUB earned, you pay a transaction fee.

Each individual transaction fee is not exorbitant, but the cumulative effect of the fees can definitely have a negative impact of your overall returns. The other key thing to be aware of with these transaction fees, they are payable in Binance Coin. Always ensure you have an allocation of Binance Coin in your wallet, as you will need them to pay for your trading activity.

So this brings us full circle back to the title of the post, "To Harvest, or Not To Harvest?"

To Harvest, or Not To Harvest?

My personal opinion and strategy moving forward is a solid YES! Obviously, this is not financial advice, this is purely what I am choosing to do as it best suits my financial situation and risk appetite.

The penalty of transaction fees can be largely overcome if you are patient with your harvesting and compounding of Cub earned. Harvest and compound when your amount of CUB earned is large enough to minimise the the impact of the transaction fees.

I am still working out the optimal frequency for my Den and Liquidity Pool of when to harvest and compound my CUB earned. My current thinking is that I will harvest my CUB earned every Sunday evening. When I harvest my CUB, I plan to add more liquidity to my existing CUB-BUSD Liquidity Pool and re-invest CUB into my existing CUB Den. My goal is to use as few transactions as possible when re-investing my CUB. I will keep you updated as to how this works out.

Nervously Excited

I am nervously excited to see how my above plan and strategy are going to work. This DeFi space is definitely a high risk and high reward proposition at the moment. I am acutely aware that the excitement of quick gains can very easily turn into the disappointment of quick losses. I am definitely not venturing into this space blindly, I am fully aware of what could happen during a sudden market downturn.

At the present moment the returns are strong, the market is bullish and the upcoming @leofinance projects appear to offer even more upside, which is very exciting. I plan to remain vigilant and not get overexuberant, but at the same time I am loving this journey and the possibilities is presents. I intend to enjoy having Diamond Paws for the foreseeable future!

Post authored by @strenue

Posted Using LeoFinance Beta