Farming has become an essential part of DeFi and even though it may sound complex, it really isn’t that hard to grasp. Hopefully, if you follow all the steps in this guide closely, you will be farming in less than 20 minutes on Polygon!
Metamask Setup #
First thing’s first. You will need to get your Metamask wallet ready before you can start farming.
From the dropdown menu select “Add network” or “Custom RPC” (depending on the version you are using) and enter the following:
Network Name: Matic Mainnet
New RPC URL: https://rpc-mainnet.matic.network
Block Explorer URL: Polygon (MATIC) Blockchain Explorer
If done correctly it should look like this.
Save the settings and you are all set to use the Matic network. All you need now is some Matic in your wallet.
Funding Your Wallet #
There are two ways wallets can be funded for farming on Polygon. You can either use a centralized exchange to withdraw directly to your wallet or you can bridge funds from other chains.
Almost all well-known centralized exchanges have Matic listed and direct withdrawals enabled. All you have to do is deposit USD or some Crypto to Binance, Huobi, KuCoin or others and convert it to Matic.
Once you have the tokens, withdraw them to your address. Keep in mind that your ETH mainnet wallet address will stay the same for any other chain you may be accessing through Metamask.
Bridging can also work but in some instances. Just like with Ethereum, Polygon will require some Matic tokens to cover the transaction fees. If you can’t bridge Matic directly from another chain, then you won’t be able to use the network.
For example, Hop Protocol will allow you to send Matic directly to your wallet from many different chains while other bridges will only allow you to send stablecoins.
If, for any reason, you can’t get Matic directly to your wallet you can get a very small amount from faucets. This should be enough to cover one transaction so even if you bridged stablecoins you will be able to swap them to Matic.
If you followed all of the steps so far you are now ready to find some farming opportunities on Polygon. The easiest way to do this is by checking the list of farms on Vfat tools. Go through the list, do your fair share of research and once you have made your decision finalize the process.
Farming usually incentivizes liquidity so no matter which farm you choose you will likely need to deposit some funds in a liquidity pool before you can start earning. This means that you will be depositing two currencies in one pool at a 50/50 rate.
If you are depositing manually be sure to have the same USD value of the two currencies of your choice in the wallet. Search for an “add liquidity” button, make the deposit and the protocol will give you LP tokens as proof that you pooled funds. These LP tokens are then deposited on farms to generate yield.
If you want to simplify the process, try using DApps such as Autofarm. Instead of doing everything manually these DApps will allow you to make one-click deposits by automating the whole process.
Once you are done with farming, just reverse the process and you will get your initial deposit back. Withdraw LP tokens from the farm, remove liquidity form AMM using LP tokens and your funds will be back in your wallet.
Farming Risks #
High APR numbers can be attractive, but it is always good to know the risks involved in the process as well.
Pooling tokens in an automated market maker comes with the risk of impermanent loss. If one asset goes up in price while the other stagnates or goes down, you will not benefit much from the rising price. Your farming rewards will stay unchanged, but the underlying position will be worth less than if you held the assets separately in your wallet.
Also, look for farms and projects that have audited contracts. Anyone can deploy a contract or protocol so be sure that you know where you are depositing your money. If the underlying code is malicious you could lose your whole investment.
Farming can be profitable and fun at the same time but without the required knowledge users may end up losing a lot of their capital due to bad timing, lack of research or any other factor.
If you do decide to give it a try make sure that all security measures are in place and enough research was done before liquidity was added to the farm.