SFT Protocol’s bug-suggestion airdrop program is ongoing, and this article will introduce the Farms module in SFT Protocol’s ecosystem.
SFT Protocol’s Farms module is a platform where users earn income from FIL tokens by staking SFT tokens. Currently, the Farms module offers two revenue models: demand income and three-month fixed income.
Users can stake or withdraw SFT tokens at any time and receive an annualized FIL yield of 10% based on the number and time of stake. Users can redeem staked SFT and obtain FIL at any time.
Specifically, when users choose the demand income model, they receive a fixed 10% annualized FIL yield. Users generate a certain amount of FIL rewards every day, and this amount depends on the amount and duration of SFT they stake. Users can harvest the FIL rewards they have already generated at any time, and can also increase or decrease the amount of SFT they stake at any time.
Each time a user stakes or redeem, their previous rewards are automatically settled and new rewards are calculated based on their new number of stakes.
APY calculation formula:
Compared with the three-month regular income model, the current income model allows users to enjoy higher liquidity and flexibility and avoids the risk of a lock-up period and price fluctuations. However, the current income model also has a disadvantage: the annualized rate of return is low (10%), and it is impossible to enjoy value-added mechanisms such as compound.
Three-month regular income:
Users can choose single-coin staking or compound-investment mode to stake SFT tokens for three months and get different annualized FIL yields.
1. Under the single-currency stake mode, users will get an expected annualized FIL yield of 34%. Users generate a certain amount of FIL rewards every day, this amount depends on the amount and duration of SFT they stake, and users can harvest the proceeds daily.
APY calculation formula:
2. In the compound mode, users will get an annualized FIL yield of more than 40% expected. This rate of return is dynamic and increases as the user’s principal increases. Users generate a certain amount of FIL rewards every day, and these rewards are automatically converted into SFT tokens and reinvested into a three-month regular pool. In this way, the user’s staking principal will gradually increase, thereby increasing the final return.
Compared with the single-currency stake model, the compound mode can allow users to obtain a higher annualized rate of return (more than 40%), which is not yet open and will be launched later.
Regardless of which model the user chooses, SFT tokens need to be locked for three months, and it is not possible to redeem or get back the principal during this period.
Compared with the demand income model, the three-month regular income model allows users to enjoy a higher annualized rate of return (34%-40% or more) and can use value-added mechanisms such as reinvestment. However, the three-month regular income model also has a disadvantage, which is that it is less liquid (it needs to be locked in for three months).
In addition to the Farm module, SFT Protocol also has a Swap-LP module, which allows users to provide liquidity for SFT-FIL in Pancakeswap, earn LP tokens, and then stake LP tokens to SFT Protocol to earn additional FIL and SPD rewards. SPD is a governance token issued on the SFT Protocol platform, and holders can participate in platform governance and enjoy more benefits.
Precisely, on Pancakeswap, users can deposit SFT and FIL into a swap pool in a certain percentage to provide liquidity for SFT-FIL trading pairs. This way, other users can use SFT to buy and sell FIL, or vice versa. In return, LPs receive a percentage of transaction fees, and they also receive LP tokens that represent their contribution.
The rules for calculating FIL rewards are as follows:
When users stake LP tokens into the Swap-LP module, they receive two types of rewards at the same time: FIL and SPD.
After users stake LP tokens, FIL and SPD rewards are distributed according to their proportion to the total share of the pool. A certain number of FIL and fixed SPD rewards are distributed to all participants every day. Users can harvest the rewards they have already generated at any time, and can also redeem their LP tokens at any time.
By participating in the Swap-LP module, users can not only enjoy the transaction fee income on the DEX but also be able to obtain additional FIL and SPD income. This maximizes the utilization and rate of return on funds, and the module will be updated in a later version.
For more details about SFT Protocol, please follow the official account.