Fun

Survey: Large Number of Yield Farmers Can’t Read Smart Contracts Despite High Risk

News Feed - 2020-09-23 10:09:08

Survey: Large Number of Yield Farmers Can"t Read Smart Contracts Despite High Risk


A new Coingecko survey has found that a large number of yield farmers do not know how to read smart contracts despite claiming they understand the risks that come with such investments.


According to the survey, which polled 1,347 people, around 40% of decentralized finance (defi) users cannot comprehend the smart contracts they use for farming. Some 33%, it says, have never heard of ‘impermanent loss’ – a temporary loss of funds that occurs when providing liquidity.


This “implies that they (farmers) don’t know their real return on investment (ROI) and are extreme risk-takers for the sake of the high returns,” concluded Coingecko, a data aggregator for the crypto industry.


Smart contracts are at the heart of defi protocols. Through them, investors can move their assets across different protocols looking for the best possible return in a process that has become to be known as ‘yield farming’.


Some of the most popular farming pools include compound (COMP), balancer (BAL), yearn.finance (YFI), curve.finance (CRV) and sushiswap (SUSHI). As of September 21, a total of $9 billion of value was locked in the entire defi market, up 300% since July, figures from Defipulse show.


Per the survey, more than half of farmers put up under $1,000 in capital to farm – but the returns have been astounding, as high as 500%. About 93% of respondents said they have earned as much profit from their ‘meager’ investment capital. For Coingecko, this was not unexpected.The result is not a surprise find as many of the current new pools provide insanely high APY of over 1,000%. Our opinion is that these high yields offered are not sustainable as it comes with high risk, and the spike in gas fees will be a barrier to entry and exit for farmers.


Coingecko observed “a behavior where farmers would ‘farm and dump’ after accumulating a substantial amount of reward tokens in the pool, which indicates that yield farming tokens are not being held long-term.”


Around 68% of users claimed they do not leverage their positions to minimize risk, and 49% said they would not invest in unaudited protocols, instead, relying on auditors to check the safety of the smart contract.


The majority of yield farmers hold ethereum (82.7%), with bitcoin accounting for 74%. Farmers holding chainlink reach around 26% with litecoin, polkadot, and tron each accounting for between 15% and 20%.


What do you think about yield farmers failing to interpret smart contracts? Let us know in the comments section below.Tokenized BTC Crosses $1B Notional: Ethereum Cements Role as Bitcoin"s Main SidechainNEWS | 4 hours agoCraig Wright"s Summary Judgment Denied - Billion Dollar Bitcoin Lawsuit Heads to TrialNEWS | 11 hours agoTags in this storybalancer (BAL), CoinGecko, compound (COMP), curve.finance (CRV), Decentralized finance (Defi), Defipulse, Smart Contracts, sushiswap (SUSHI), yearn.finance (YFI), yield farmers


Image Credits: Shutterstock, Pixabay, Wiki CommonsSpot-markets for Bitcoin, Bitcoin Cash, Ripple, Litecoin and more. Start your trading here.Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.Read disclaimerShow comments

News Feed

Onecoin Cryptoqueen Associates Appear in German Court
Onecoin Cryptoqueen Associates Appear in German Court Three people are facing trial in Germany for their roles in one of the crypto world’s most infamous scams, Onecoin. The defe
ETF staking addition is ‘positive development,' says ETC Group exec
Helen Partz12 hours agoETF staking addition is ‘positive development," says ETC Group execThe staking aspect of Ethereum ETFs is important because it’s similar to dividends in equities, ETC Group’s Chanchal Samadde
This Bear Market Indicator Says Bitcoin Price Is Headed For Crash To $40,000, Here’s When
Reason to trust Strict editorial policy that focuses on accuracy, relevance, and impartiality Created by industry experts and meticulously reviewed The highest standards in reporting and pu
Should Anthem Go Free-To-Play to Salvage EA-BioWare PR Nightmare?
Seemingly like clockwork, Anthem is back in the news for all the wrong reasons. This time, BioWare"s head of live service, Chad Robertson, has authored an update on the future of the struggling iron man suit-donning mult
US Law Enforcement Traces Bitcoin Transfers to Nab ‘Largest’ Child Porn Site
A U.S. federal grand jury indicted a South Korean citizen for operating the largest child porn site by volume, where visitors spent millions of dollars worth of bitcoin to pay for the illegal content.
‘I’m not leaving’ — Megaupload’s Kim Dotcom to fight US extradition
Martin Young5 hours ago‘I’m not leaving’ — Megaupload’s Kim Dotcom to fight US extradition“I love New Zealand. I’m not leaving,” said Bitcache and Megaupload founder Kim Dotcom on X after the New Zealand
Crypto Market Slides as Total Value Locked in Defi Falls Below $50 Billion Mark
Crypto Market Slides as Total Value Locked in Defi Falls Below $50 Billion Mark The value of the crypto market has started to slide again after a bullish run-up over the last seven
Binance-Backed Blockchain Completes Hard Fork to Mitigate Future Cross-Chain Bridge Hacks
Binance-Backed Blockchain Completes Hard Fork to Mitigate Future Cross-Chain Bridge Hacks The Bnb Smart Chain commenced the blockchain’s hard fork on October 12, at block he
Ex-fintech CEO sentenced to 3.75 years over price manipulation scheme
Turner Wright3 hours agoEx-fintech CEO sentenced to 3.75 years over price manipulation schemeA federal judge in Florida recognized the HYDRO token as an investment contract qualifying as a security under SEC guidelines.7
Kentucky Regulators Crack Down on Blockfi Interest-Bearing Accounts
Kentucky Regulators Crack Down on Blockfi Interest-Bearing Accounts The crypto lender Blockfi is now dealing with regulators from five states as Kentucky has joi
EU to Launch Comprehensive Crypto Regulation by 2024: Report
EU to Launch Comprehensive Crypto Regulation by 2024: ReportThe European Union is planning to implement comprehensive cryptocurrency regulation by 2024, two EU reports have reported
JPMorgan Shares Predictions on Crypto Markets, Ethereum’s Upgrades, Defi, NFTs
JPMorgan Shares Predictions on Crypto Markets, Ethereum"s Upgrades, Defi, NFTs Global investment bank JPMorgan has published a report on the future outlook of crypto markets, inclu