The constant need for Layer 1 alternatives and sidechains has brought a lot of blockchains into the mainstream light but it seems that Avalanche is capturing most of that attention. So far it has attracted more than $12B in liquidity with many new projects launching almost daily.
Part of this popularity can certainly be attributed to the Avalanche Rush program that has allocated more than $180M in rewards for liquidity miners on AVAX.
Farming is a lot more rewarding because Avalanche is adding more rewards on top of the regular earnings and here is how you can join the farmers on AVAX.
Metamask Setup #
From the dropdown menu in your Metamask wallet select “add network” or “custom RPC”.
To complete the setup, enter the following information and click “save”.
• Network Name: Avalanche Network
• New RPC URL: https://api.avax.network/ext/bc/C/rpc
• ChainID: 0xa86a
• Symbol: AVAX
• Block Explorer URL: https://cchain.explorer.avax.network/
Funding Your Wallet #
The Avalanche network uses AVAX as the native currency and all transaction fees are paid with AVAX. So, before you can start farming you will need some AVAX tokens in your wallet and this can be done in a few ways.
Centralized exchanges that offer AVAX pairs usually allow direct withdrawals to the Avalanche network as well. One way to get some would be to deposit some fiat or crypto on a CEX, swap it for AVAX and withdraw it directly to your wallet. Before doing so make sure that the withdrawal will be sent to Avalanches C-Chain that supports EVM compatibility.
DeFi bridges are also an option but bridging AVAX directly to your wallet can only be done from Ethereum mainnet for now. The Avalanche bridge is very easy to use and if you have some ERC-20 AVAX you can easily send it over to Avalanche.
Other bridges allow the sending of stablecoins such as USDT and USDC, but you will still need some AVAX to cover the swapping fees when they arrive. There are still no active faucets for AVAX so make sure that you are prepared before bridging any funds.
A Fiat onramp is available on Pangolin Dex. Payments can be made with MasterCard, Visa and Apple Pay while the AVAX tokens are deposited directly to your wallet.
Thanks to the liquidity mining program we mentioned earlier, farming on Avalanche can be performed in many ways. Lending platforms like Benqi are issuing liquidity mining rewards for depositors and lenders. The more funds you have in the protocol the more AVAX you will be earning on top of the regular rewards from the platform itself.
Dexes like Pangolin offer a “classical” farming experience for LP providers.
To earn rewards with these farms you will need to deposit funds in the appropriate liquidity pool and then stake the LP tokens in the farming contract.
For example, if you want to provide liquidity in the USDC/AVAX pool with $50 USDC, you will also need $50 worth of AVAX to match the pair. All assets are deposited at a 50/50 ratio and once you confirm the deposit transaction the protocol will issue LP tokens to your wallet that serve as proof of your deposit.
Once the LP tokens are deposited in the farming contract they will start generating passive rewards according to the APR percentage of that specific farm.
There are many other farms that can be found on Avalanche and the best way to do that is with Vfat tools. Before depositing funds in any of them it is extremely important to conduct research and make sure that the contracts aren’t malicious.
Farming Risks #
Farming risks are the same no matter which chain you are using. When you provide liquidity in 50/50 pools you are constantly exposed to impermanent loss that can be drastic in some cases. Making sure that you understand the risk-to-reward ratio at all times is very important for all sorts of DeFi farming.
Other risks include malicious contracts and unsustainable farm models that may lead to loss of funds. The best way to protect yourself from these risks is to know who is behind the project you are investing in and making sure that the contracts pose no risk to your funds.
The Avalanche farming season is well under way with a lot of rewards that can be earned with different protocols. When it comes to transaction fees, AVAX can sometimes lean toward the expensive side meaning that transactions could cost you up to a few dollars during very busy hours.
With all the pros and cons in mind, Avalanche is still worth exploring, especially if you are into DeFi farming.