Binance Smart Chain (BSC) has seen explosive growth in March 2021 when Ethereum fees were slowly becoming unbearable for small investors. Since then, the chain has attracted more than $18B in TVL with many farming opportunities for everyday users. If you are one of them and want to get started with yield farming on BSC, here is how you can do it in 20 minutes or less!
Metamask Setup #
Setting up your wallet is the first step in the process. Open your Metamask and in the dropdown menu select “Custom RPC” or “Add network” (depending on the version) and enter the following information:
Network Name: Binance Smart Chain
New RPC URL: https://bsc-dataseed.binance.org/
ChainID: 56
Symbol: BNB
Block Explorer URL: Binance (BNB) Blockchain Explorer
Click “save” and your BSC network is all set up.
Funding Your Wallet #
BSC uses BNB as its native currency and all fees are paid in this cryptocurrency. Because of this you will need some BNB in your wallet and there are a few ways this can be done.
If you are a Binance.com user you can simply purchase some BNB on the Binance CEX and withdraw it to the wallet. Your ETH mainnet address will be the same for all additional networks you may be using with Metamask so make sure that the withdrawal address is the same as your ETH mainnet one.
During the withdrawal process select Binance Smart Chain as your preferred option and your BNB will arrive in your Metamask wallet in less than a minute.
Another way to get funds over to BNB is to use a bridge that would allow you to send some crypto to BSC from another chain. For example, you can send USDC or USDT from Matic (and many other networks) using the Hop Protocol.
If you choose this option keep in mind that swapping stablecoins back to BNB will also require a transaction fee. If you have 0 BNB in your wallet you will be unable to pay it so you will either need to get a small amount from a friend or by using a faucet.
Farming #
Once you have set everything up and transferred some funds over to BSC you can start farming. As always, Vfat tools will give you a good idea where to start. Go through the list, do some research before trusting a protocol with your money. Once you have decided you can start farming in a few minutes.
Whichever pair you chose will require a 50/50 deposit of the two assets that are being deposited in the pool. For example, if you are farming with stablecoins and want to put 100 USDT in a pool you will need 100 USDC as well to create an even pair.
If done manually, look for an “add liquidity” button on your chosen farm or platform, deposit your funds and you will receive LP tokens. These tokens then need to be deposited on the farming page for the corresponding pair in order to generate yield.
An automated solution would be Autofarm or any similar protocol that allows you to deposit one asset and the protocol takes care of the rest. Instead of converting your crypto into two different assets manually and then depositing everything in the liquidity pool the protocol will do all of that for you. Simply put it is a one-click solution for a simplified farming experience.
Conclusion #
DeFi yield farming is a great way to generate passive income with your crypto holdings but it does come with some risks. The most popular one is impermanent loss where your assets lose value because of price fluctuations within the pair that you deposited.
This is why it is very important that you get familiar with the risks involved before depositing your money in unknown protocols.
