If you want to get into liquidity pools but find ETH gas fees prohibitively expensive then two much cheaper alternatives you can use, via Binance Smart Chain, are:
These two sites both offer several options for staking and receiving a very decent return on a range of coins with returns ranging from 20 something to 100% APY, paid out in a combination of both the token you stake and AUTO on autofarm and just Cake if you go into the liquidity farms on Pancake. (I think there may be an option of just adding liquidity on Pancake too and earning fees, but that's not the route I explored.)
It's taken me a few hours to get my head around connecting my Metamask Wallet with the Binance Smart Chain, moving some liquid sums around, exploring the various pooling options and deciding which to stake to, but I've ended up with funds in four different pools, two on each platform, yielding me from between an 85% to a 200% return at time of writing.
(These returns can go go up or down depending on the value of the native token you are rewarded in and presumably depending on the respective popularity of the pools.)
Below I'm going to outline my experience with setting up Binance Smart Chain and getting starting on these two platforms.
NB I was initially just looking for somewhere to park my stablecoins, but I also staked some LTC/ BNB and TWT along the way. These sites kind of suck you in, but I was reasonably constrained!
A big shout out to @dalz who put me onto these two options - Autofarm and Pancake, following a query I made in the Leo Discord, so this is another win for LEO as far as I'm concerned.
Getting set up with Binance Smart Chain
NB I'm not an ETH whale, and so I've rejected Uniswap and Curve as staking options for the time being (and possibly until ETH 2.0 is up and running) because the ETH fees are just too prohibitive at the moment.
Both Pancake and Autofarm use Binance Smart Chain (Bsc) which allows you transfer (compatible) funds out of Binance for around $0.20 and to stake to pools for just under $2, with signing fees being around $0.10.
So compared to ETH, you can transfer and pool for $3 rather than $30!
To get started with Binance Smart Chain I integrated it with my Metamask account, simply by following word for word the instructions in this most post by the most excellent @empoderat: How to get started in Binance Smart Chain with Metamask - of course @empoderat is three months ahead of me, but trust me, read that post it will tell you exactly what you need to do to get started with Binance Smart Chain. Maybe send him a Hive tip too!
Once you're set up, your Metamask wallet will function in exactly the same way as it does when interacting with ETH except it will be interacting with the Binance chain, and cost you 10 times less per transaction - OK it's more centralised, but it's cheaper!
Transfer of funds from Binance to Metamask
I sent five different coins in total to my Bsc metamask wallet over the course of the evening:
- BNB - which you need to pay for transactions (like ETH) - annoyingly its symbol is that of ETH even though its on Bsc!
- USDT
- USDC
- LTC (yes, on Bsc!)
- TWT (Trust Wallet Token)
You send every token to the same address - your ETH address on your Metamask wallet - you just cut and paste that address into Binance, but make sure you've got the Binance Smart Chain option clicked when you set up the address and when you withdraw.
Note the low fees compared to ETH!
It took a while to set up these five addresses simply because I had to double verify all of them with email and text codes. I also sent a few small test amounts first of all, which I tend to do to new addresses - and you can do this with the small fees.
The transactions are pretty fast - everything arrived within 2-3 minutes, so another advantage over ETH is the fees.
Don't forget to add the tokens to your list of assets on Metamask, otherwise you won't see them in your wallet. Although even without them added you can see your transactions on the block explorer, and I also found that the two defi sites managed to read my wallet fine even though my USDT (for some reason) never registered with Metamask itself.
In short, everything arrived safely and quickly!
Connecting to and staking to autofarm
This was very simple. I simply connected my Metamask wallet, there's an option when you go to the site for the first time.
And once my USDT and BUSD were transferred, autofarm could read them in my connected wallet and I simply 'Deposited' them to the various individual token pools for a 90% ish return, to be paid out in a combination of USDT/ BUSD and AUTO. You can see the proportions in the APY calculations below...
It really was that simple. NB there are other options which offer a much better return - the BNB - AUTO pool is offering > 500% for example, but I just wanted somewhere for my stable coins for now, I might explore the more exotic options later.
It's pretty cool to be able to watch your balance just go up and up and up!
Getting started with Pancake
I was quite surprised by the feel of Pancake. It's got a very accessible front-end - which isn't what I was expecting from a defi project built on an Eth alternative like Bsc, but they've done a great job of gamifying defi and making it seem fun.
(Although given the risks involved I'm not sure this is ethical!?!)
If you click on the 'farms' options to the left you get to the liquidity pooling choices, of which there are several:
It's a bit more complex than Autofarm to stake to one of these pools, but if you're used to Uniswap, you'll recognise the format.
I opted to stake into the BNB-LTC pool - I've got a bit of an irrational soft-spot for LTC - to stake you just click on the details option of the pool from the page above and you get a link to where you add liquidity:
As with Uniswap, you add to both sides, so you'll need both tokens in your Metamask wallet, and (still on Binance Smart Chain remember) you then do your confirmations and add liquidity.
What's different from Uniswap is that you then get 'pool tokens' which you have to stake to farm for cake, and there's one more click to activate this phase back on the 'farms' page.
Once I'd got my LTC-BNB pool up and running for a 90% return, I couldn't resist punting on this one too:
Rewards in platform tokens not fees
Just remember on these two platforms you're rewarded in AUTO and CAKE respectively and you'll need to claim them periodically - I'm guessing there is a gas fee for this, so every few days I imagine would be optimal.
Further risks and rewards
Whether you compound your token rewards is up to you - there are some very high returns on offer for Auto and Cake pools - but you might prefer to sell and take profit while defi is still pumping.
There's a risk that the returns will go down as mentioned above, and with returns all round of 100% per annum, this is clearly a bubble, it can't go on forever, so enjoy it while it lasts!
Also there's a hacking risk too, and impermanent losses apply in any pool, although if you're pooling stable coins, that will be almost non-existent.
Final thoughts...
I'm VERY pleased with my evenings work exploring Defi options, very happy to have some more funds staked and earning for me, I've now got funds in four different pools and I've made about $0.20 in the time it took me to write this post.
One just has to be careful to keep an eye on the defi market and be ready to jump ship as and when the returns dip.
But for now, it's all good so happy days!