Dot.Finance a new DeFi platform that will help accelerate the growth of the Polkadot ecosystem through financial incentives. Dot.Finance is designed to make DeFi accessible to a broad range of users by providing access to a variety of battle-tested high-performance financial instruments. This will expand the user base’s exposure to the many benefits of the Polkadot ecosystem. Dot.Finance is building its new DeFi products and services on top of Polkadot’s robust, secure, and scalable architecture, to increase adoption not only of Polkadot itself but also of many new DeFi products.
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A little background on Polkadot and Dot.Finance
Polkadot was created for the connection of several specialized blockchains to a coherent, unified network. A standalone blockchain is limited in its capacity, and all blockchains must make sacrifices to support multiple features. An optimized blockchain can give priority to security, while someone else might emphasize speed.
Polkadot was designed to deal with these difficulties. The multichain infrastructure of Polkadot enables it to process a multitude of transactions on the various chains concurrently. By doing this, obstructions are removed. The platform supports a range of blockchain architectures, each suited for a particular working scenario.
Polkadot is however addressing the scalability problem by interconnecting standalone blockchains to empower its users to exploit their whole range of functionality simultaneously, thus establishing Polkadot as a contender for blockchains of the future.
Over the last year, Polkadot has grown immensely due to its algorithms. According to the current market capitalization of DOT, the native token of Polkadot, DOT is in the top-10 crypto-assets. A number of ecosystems exist today that sponsor smart contract blockchains like Binance Chain and Ethereum. In spite of DeFi’s rapid expansion and broad appeal, the network is still only slightly established on the Polkadot network. A major motivation for Dot.Finance was intended to fulfill that need. To realize a world where financial services improvements can benefit everyone, Dot.Finance combines powerful DeFi solutions and the superior architecture of Polkadot.
In the Polkadot ecosystem, individual blockchains are called Parachains (parallel chains), while the main chain is called the Relay Chain. We envision a scenario in which Parachains and the relay chain can exchange information easily at any time. In the planned implementation of ETH 2.0, Parachains could be compared to individual shards.
Both Polkadot and Ethereum 2.0 use sharded blockchains. Consequently, they provide scalability by distributing transactions across several shards and by allowing messages between the shards to be transmitted.
A developer might explore the Polkadot ecosystem for a number of reasons. With the current state of blockchains, it is evident that there are a few core issues to be resolved: scaling, customization, interoperability, governance, and upgrades.
There are plenty of reasons to like Polkadot. Through its multichain architecture, it can process transfers between different chains at once. One of the biggest stumbling blocks to blockchain today has been removed in this way. Blockchain technology can be widely adopted on a global scale through parallel processing, which offers a significant improvement.
Polkadot offers a variety of customized features for users seeking customization. Currently, there isn’t a single blockchain infrastructure that can handle them all. Polkadot makes it possible for each chain to be customized specifically for its needs and requirements. Thanks to Substrate, developers can efficiently modify their chains based on the project’s requirements.
Interoperability is contingent upon applications and projects sharing data seamlessly. This could lead to many products and services, but it’s too early to tell what they will be. Every individual Parachain can handle one aspect at a time, thereby facilitating the creation of an entirely new financial ecosystem.
Parachain communities can govern their networks according to their own preferences. The whole Polkadot depends on all the communities’ cooperation. Feedback may be a beneficial insight from the community that can lead over time to improvements in initiatives.
The upgrade process for individual Parachains is very simple with Polkadot. The use of hard forks can fracture communities, therefore they are not necessary. Instead, the native chain may be upgraded without friction.
The emergence of DeFi initiatives is a result of current developments and the maturation of the crypto-monetary sector. As a result, new financial services solutions based on blockchain systems, such as yield farming and staking, have been developed. In these sectors, individual investors lend their tokens and assets to investment pools in exchange for incentives.
The PancakeSwap exchange notably operates with BEP-20, and Uniswap which are two decentralized exchanges offering liquidity pooling, staking, and associated DeFi services that Dot.Finance is developing around the Polkadot network.
Pancakeswap, for example, has been highly successful largely because BSC – the Binance Smart Chain – offers lower gas prices than Ethereum, which made DeFi a better choice than Ethereum. This induced a fertile ground for many other BSC projects like Pancakebunny, which gave Binance the potential to grow its ecosystem via its native token, BUNNY. The bunny can be earned through staking and serving as liquidity for Pancakebunny pools.
A similar investment strategy is followed by Dot.Finance, but the company focuses on developing the Polkadot ecosystem. Dot.Finance currently supports tokens that operate on the BSC platform and belong to the DOT ecosystem.
We predict that because Polkadot, BSC, and Ethereum networks do not offer the same services and architecture, the Polkadot network will see users and projects migrate because they want better, faster, cheaper, and more secure services.
The Dot. Finance platform was developed to drive Polkadot’s growth by making it easier to participate in DeFi products such as liquidity pooling or staking, as well as improving efficiency and effectiveness.
Yield Farming with Dot.Finance
Yield farmers are profit-seeking investors in Decentralized Finance (DeFi) who take advantage of the market. Yield farming is a way to get passive income by using Decentralized Finance (DeFi) protocols. You can lend, borrow, trade, or provide liquidity with your funds instead of stowing them away in a zero-interest account. By offering native tokens and a portion of transaction fees, Dot.Finance encourages users to participate in the ecosystem.
Yield Farming Strategies
Yield farming is a method of farming that typically involves a model called an automated market maker. The model usually involves liquidity providers and liquidity pools. To facilitate a marketplace that is fast, safe, and reliable, liquidity providers deposit funds into a liquidity pool. This pool powers the LEND network, which allows users to lend, borrow and exchange any token of their choice. The LEND network is operated by an autonomous smart contract system. An AMM is made up of independently owned liquidity providers. These providers are assigned a share of the liquidity pool, which grows as the platform grows.
The implementation of this technology may differ substantially based on the fact that it is a new technology. New techniques are on the way that will improve upon current implementations without a doubt.
The amount of your contribution to the pool is represented by the LP token you receive when liquidity is added. You can stake the LP tokens in various farms to earn rewards, but you can also receive a portion of the swap fees from the pool with the LP tokens. In exchange for stake engagement, stakers are rewarded with new tokens (e.g. PancakeSwap rewards LP token holders with CAKE tokens), which can be swapped or staked between farms and pools. A range of options and varying returns increase the complexity of strategies quickly.
It takes a lot of effort and time to stay on top of fluctuating rates and market conditions. You may notice a significant decrease in your annual percentage yield if you make an error or miss the optimal compounding times. The high gas costs associated with Ethereum farming can also cut into your yields. It seems as if only whales can make a profit from Ethereum yield farming. Dot.Finance yield aggregation platform makes it easy for farmers to bypass these intricacies and maximize their returns. With the Binance Smart Chain (BSC), transactions are swift, while gas fees are relatively low.. Boost your APY and share the fees across farms with our smart contracts that compound your returns at the optimal frequency. Farmers get automated compounding and automation at scale.
Maximizing Yields With Dot.Finance
One of the best-known platforms in the space, PancakeSwap is the highest volume Decentralized Exchange (DEX) on BSC. We’re taking these strengths and integrating them into yield farming to make it more effective. Following a liquidity contribution to a pool on PanCakeSwap and receiving LP tokens, you are eligible to stake them and earn CAKE. Through CAKE, farmers are rewarded for supplying liquidity to PanCakeSwap pools, but the process does require more effort and time from the farmers. If you want to compound returns, you can convert those CAKE tokens into more LP tokens or stake them in pools to earn other tokens. Since most PanCakeSwap pools and farms do not have automatic compounding, funds must be manually converted and reinvested. You can feel like magic when you reap the benefits of optimal compounding.
CAKE yields are automatically compounded for you via our yield aggregator by converting them into LP tokens and then staked. Dot.Finance platform ensures that your yields compound at the best rate and you receive a share of the Pink Distribution. In return for harvesting your yield (collecting rewards), we give you 70% of your earnings in LP, 30% in BNB then issue native PINK tokens based on the ratio of PINK/BNB. In this case, your principal remains untouched, but only your profits are included.
PINK Stakers receive a 30% performance fee (which is explained below). As the PINK Distribution is not likely to fall below the IDO price, we expect to generate higher profit margins than with BNB alone.
The Dot Finance Token Distribution
In general, 70% of profits claimable from our standard farms are returned in the original token form (e.g., DOT-BNB LP). As for the other 30%, it will be converted into pink tokens and issued at the designated mint rate between pink and BNB. PINK/BNB prices will be tracked on a regular basis to take into account the fluctuating mint rate.
The PINK token will launch at a price of $0.10, To illustrate what the PINK token distribution may look like in reality, let’s live with the assumption that the mintage rate of 4000 PINK per 1 BNB allocated for the distribution of PINK. For the PINK $0.10 IDO price and the $400 BNB price, this would be the rate. This is important to remember when reading the hypothetical below. Mathematically, things stay the same even if the numbers change. Please get your calculator handy.
Imagine you’re a stakeholder in one of our farms, and you’ve earned 10 BNB in interest over the course of your investment (Principal amount, excluded). Let’s assume 1 BNB earns $300, which equates to $3000 in total interest if BNB rewards are all received.
You wouldn’t simply get 7 BNB ($2100) and $900 in pink tokens if you held Dot.Finance. Remember, PINK is exchanged for 4000PINK for 1BNB, and 30% of profit is 3BNB. In other words, you receive 7 BNB + (3 x 4,000 PINK) or 7 BNB + 12,000 PINK when you withdraw.
Let’s say $0.10 is the price of PINK. A return of $3300 would be calculated by taking 7 BNB at $2100 and 12,00 PINK dollars at $1200. You get an extra dough of $300 more than you would have gotten for a BNB!
PINK Distribution + Auto Compounded = higher Annual Percentage Yield.
The token staking feature is another distinguishing feature. We are going to build PINK Staking farms, where you can stake tokens and receive a share of profits from PINK Distribution. Those profits were taken from the 30% of BNB users who were allowed to withdraw. Our protocol uses this mechanism to distribute earnings among all PINK holders. It Dot Finance’s goal to make the protocol a success for the entire community while being inclusive of everyone.
PINK tokens that are staked in the original PINK farm are added to the community’s PINK Distribution.
Farms Under Support
The following farms will be supported by the Polkadot platform when it goes live. There is so much more to come. With the Polkadot ecosystem evolving and growing, additional farms will be added to it.
Two stable coin farms will be built as well. Though BUSD is not on Polkadot, Polkadot is pleased to provide this as a contribution to their efforts in hosting Polkadot and making it something special.
Step-By-Step Instructions To Start Polkadot Farming
Simply connect your wallet to PancakeSwap and provide liquidity in one of the pools that support our farms to begin farming the sweet yields. To begin farming, you will need to stake the LP tokens on Dot. Finance after you obtain your tokens. You don’t have to labor over these tokens to get the best returns. Simply set the auto-compounding up and forget it.
Private = 13,500,000 @ $0.065
Vesting — 10% on TGE, then 11% monthly
Public = 4,500,000 @ $0.0825
Vesting = 50% TGE, 50% after 1 month
Token Fees & Mechanics
It goes beyond just other governance tokens. Utilizing the PINK platform, you can maximize your returns and increase liquidity provision. WBNB can be staked to earn income and APR multipliers can be applied to reap profits. PINK is a token that will grow alongside the project as a whole. Therefore, Pink would like to introduce you to the following charge structure:
The 30% performance fee (PINK distribution) means that upon user withdrawal, 30% of profits will be converted into PINK tokens. Token holders who staked their PINK tokens in the PINK staking farm are rewarded with the original BNB profits. A 0.5% withdrawal fee applies if the withdrawal occurs within 72 hours after the deposit.
📢 This article and blog post contain information that is solely meant for educational and entertainment purposes. The only thing I am is a crypto enthusiast who believes that blockchain technology will change the world, not a financial advisor or legal expert. Be sure to do your own research before investing in any crypto and or platform, and be aware of the risks! Cryptocurrencies are extremely volatile digital assets that come with significant risks.