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Because of its integration with the NFT marketplace OpenSea.io, Polygon and its token MATIC saw an increase in popularity in 2021. The ability to mint NFTs for free on OpenSea using the Polygon network as well as minimal transaction fees and reduced transaction completion times caused many people, and especially creators, to move away from Ethereum and start using Polygon instead.
But with such low transaction fees, other trading activities become accessible to smaller investors or less-experienced traders who are looking for a way to expand their knowledge without risking a ton of money in the process.
Yield farming and liquidity pools, for example, are generally concepts difficult to approach by people new to crypto. The barrier to entry becomes even higher when every transaction comes at a high cost because of the astronomic gas fees of the Ethereum network.
In comes Kogefarm.io, a platform built on the Polygon network allowing users to dive into yield farming and liquidity pools with the possibility of profiting from impressively high APY rates while paying only minimal gas fees for each transaction.
What is Yield Farming?
In essence, yield farming is the process of receiving rewards for lending your crypto assets to a decentralized exchange. When backed by proper research, yield farming can be a great way to make some passive income from your cryptocurrency assets, instead of having them sit idle in your wallet.
Liquidity pools are a way for decentralized exchanges to provide liquidity for people wanting to trade certain cryptocurrencies. Crypto holders can choose to participate in liquidity pools and become liquidity providers. A liquidity pool can be compared to a small business within the DeFi exchange that focuses on a specific currency pair. Different pools give different APY (Annual Percentage Yield) depending on the demand and trading volume of that specific trading pair in proportion to how many people are participating in the pool and the value it contains.
One of the reasons Kogefarm.io is able to provide such attractive APYs is because of its auto-compound feature.
From their documentation:
KogeFarm is a low-fee, multi-chain yield aggregator/optimizer that automates reward harvesting and yield compounding across hundreds of farms from dozens of yield farm platforms. [...] Once a user deposits funds into a vault, KogeFarm begins automatically harvesting rewards for you. It's able to amplify your yield by not only harvesting reward tokens but also using that reward token to add liquidity to the underlying liquidity pool thus increasing your stake in the farm.
On most platforms, users need to harvest their yields manually in order to reinvest them. This means it's necessary to check back in on the platform regularly and pay gas fees for each manual transaction executed. Kogefarm's auto-compound feature automatically harvests and compounds your assets into more LP (Liquidity Pool) tokens, further reducing transaction fees and the need for engaging with the market daily. Because of that, Kogefarm is able to provide impressive returns to its users.
For example, at the moment of writing, placing assets in the KOGECOIN Vault promises a 220% APY. Not too shabby. It should be noted, though, that such appealing returns don't come without certain risks.
How to Start Yield Farming on Kogefarm.io
Before taking part in any project, make sure to do your own research. In this case, it's important to know that Kogefarm.io has its own token called KOGECOIN. This small step-by-step guide is intended for people who wish to participate in vaults involving the native token of the platform. You can read more about Kogecoin here.
Since Kogefarm uses the Polygon network, you'll first need to own some MATIC tokens. If your MATIC tokens are currently in an exchange wallet, transfer them to a Polygon-supported wallet such as Metamask.
- Visit Kogefarm.io. If you are new to liquidity pools and yield farming, it's recommended to start with a single asset vault, in this case, the vault containing only Kogecoins.
- Click on the arrow on the Kogecoin vault to expand the details and then click on "Get KOGECOIN". This will take you to the QuickSwap exchange where you'll be able to exchange your Matic tokens for Kogecoins. Note: You'll see a warning about it being an imported token. That's ok. Check "I understand" and continue with the steps.
- Convert you MATIC tokens to Kogecoin but make sure to keep some MATIC in your wallet. You'll need a small amount of them to pay the gas fees for future transactions. The gas fees are minimal, but they still exist. Leaving 2 MATIC in your wallet should be more than enough for multiple future transactions.
- To have the KOGECOIN asset appear in your wallet, you'll have to import it. To do that, find the coin in the token list on QuickSwap (click on KOGECOIN, you'll see the list appear) and then click on the "+" sign next to it. This should prompt Metamask to import the token into your wallet. Another alternative is to click "Import Token" directly in Metamask, find the Kogecoin contract address, and paste it there. The rest should autofill.
- Now that you have some Kogecoins in your wallet, you're all set to start farming. Go back to the KOGECOIN Vault on Kogefarm.io and click on "Enable Vault". This should prompt a transaction from your wallet and you'll have to pay a minimal gas fee to accept the contract.
- Once the vault is enabled, you'll see two options appear: "Deposit" and "Withdraw". Simply click on "Deposit", select MAX to stake all your Kogecoins (unless you have other plans and prefer to keep some in your wallet) and that's it, you're done!
If you'd like to have a more in-depth guide on how to get started on Kogefarm, the team did a great job in creating this easy-to-follow video tutorial.
Keeping track of your profits
If you're planning on investing in multiple vaults or even multiple platforms, it can become confusing to keep track of your profits. A useful app for this is the 0xtracker app. This app keeps track of your wallet address and finds all the pools and farms your assets are invested in (as long as they are in pools and farms supported by the app).
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