Harvest Finance is a decentralised yield farming protocol that automates the process of earning maximum returns on crypto investments. Launched in 2020 on the Ethereum blockchain, it functions as a yield aggregator that automatically moves users' funds between different DeFi protocols to capture the highest available yields. It now operates on additional blockchains such as Binance Smart Chain and Polygon.
The platform was designed to solve one of the biggest challenges in DeFi yield farming: the time and expertise needed to constantly monitor and switch between different protocols to maximise returns. Instead of users having to do this manually, Harvest Finance does it automatically, making yield farming accessible to everyone.
TLDR
Automated yield farming: Harvest Finance is a DeFi protocol that automatically farms the highest yields available from various DeFi protocols and pools, optimising returns using advanced farming techniques.
Yield aggregator: Harvest Finance serves as a yield aggregator where assets are deposited into strategic vaults to maximise their yield.
Vault system: Users deposit their crypto assets into specialised vaults, receiving fTokens in return that represent their share of the vault and accumulated rewards.
Native token (FARM): FARM is the governance token that allows holders to vote on protocol parameters and share in farming revenue. FARM token holders can vote on proposals for the operational treasury and may receive a fee from Harvest operations
What is Harvest Finance (FARM)?
Harvest Finance simplifies the complex world of yield farming by creating an automated system that does the hard work for users. When you deposit your crypto into a Harvest vault, the protocol automatically deploys your funds to various DeFi platforms that offer the best returns at any given time.
Think of it like having a professional fund manager for your crypto, but instead of a human making decisions, smart contracts automatically move your money to wherever it can earn the most. The protocol automatically farms the highest yield by moving funds between farming pools on your behalf, eliminating the need for users to constantly research and switch between different platforms.
The platform supports various types of assets including stablecoins, popular cryptocurrencies, and liquidity pool tokens. When you deposit assets, you receive fTokens (like fUSDC for USDC deposits) that represent your share of the vault and track your earnings over time.
Harvest Finance's goal is to make yield farming more accessible by automating the process and optimising the potential returns using the latest farming techniques, bringing sophisticated DeFi strategies to everyday users.
Who created Harvest Finance?
The founders of Harvest Finance remain anonymous, which was common for many DeFi projects launched in 2020. The team is completely anonymous, though the project succeeded in attracting a relatively sizable community and has been involved in the community by doling out grants.
Despite the anonymous nature of the founding team, Harvest Finance has built a strong reputation in the DeFi community through its transparent operations and community involvement. The token was distributed via fair launch with no token sales to investors, demonstrating the team's commitment to decentralised principles.
The project launched during the height of the 2020 DeFi summer when yield farming became extremely popular, and the anonymous team capitalised on the growing demand for automated yield optimisation tools.
How does Harvest Finance work?
Vault Strategy System
The platform operates through a system of specialised vaults, each designed for different types of assets and risk profiles. When you deposit crypto into a vault, you receive fTokens that represent your share of that vault's total holdings.
The magic happens behind the scenes, where the protocol's strategies automatically deploy your funds to various DeFi protocols like Compound, Curve, Uniswap, and others based on where they can earn the highest yields. The system constantly monitors yield opportunities and automatically rebalances to maximise returns.
Automated Yield Optimisation
Harvest Finance's protocol design automatically farms the highest available yields and distributes the profits to users in the pool. This means users don't need to understand the complexities of different DeFi protocols or spend time managing their positions.
The protocol uses sophisticated algorithms to determine the best allocation of funds across different yield farming opportunities, taking into account factors like APY rates, smart contract risks, and gas costs for rebalancing.
Profit Sharing Model
When the automated strategies generate profits, these are shared among all users in the vault proportional to their deposits. A portion of the profits is also distributed to FARM token holders who stake their tokens in profit-sharing pools, creating an additional incentive layer for the community.
What is FARM?
FARM serves as the governance and profit-sharing token of the Harvest Finance ecosystem:
- Governance Rights: Holders can vote on protocol parameters and propose or veto the introduction of new Vaults, giving the community control over the platform's direction.
- Profit Sharing: FARM, when deposited in Profit Sharing pools, becomes a means of participating in farming revenue, allowing token holders to earn a share of the protocol's success.
- Protocol Incentives: Harvest at launch required a native crypto so as to be able to incentivise yield farmers, and allow Harvest to stake other platforms and collect rewards in return.
- Community Participation: The token creates alignment between users and the protocol's long-term success, as both benefit from higher yields and more efficient farming strategies.
FARM operates as an ERC-20 token on Ethereum, making it compatible with the broader DeFi ecosystem and easily tradeable on decentralised exchanges. While FARM is originally an ERC-20 token, it also exists on other blockchain platforms such as Polygon and Binance Smart Chain, expanding to multiple blockchains to offer yield farming opportunities across different ecosystems
How can I buy and sell FARM?
For those looking to participate in automated yield farming, FARM tokens are readily available through the Tap app. You can purchase, sell, and store FARM tokens securely while managing them alongside your broader crypto portfolio.
This article is for general information purposes only and is not intended to constitute legal, financial or other professional advice or a recommendation of any kind whatsoever and should not be relied upon or treated as a substitute for specific advice relevant to particular circumstances. We make no warranties, representations or undertakings about any of the content of this article (including, without limitation, as to the quality, accuracy, completeness or fitness for any particular purpose of such content), or any content of any other material referred to or accessed by hyperlinks through this article. We make no representations, warranties or guarantees, whether express or implied, that the content on our site is accurate, complete or up-to-date.
