<h2>Intro</h2>In the crypto world, liquidity plays an important role in ensuring efficient trading. But what exactly does it take to become a crypto liquidity provider? Becoming one isn't just about investing in digital assets in the market, it's a process that involves a deep understanding of market dynamics, risk management, and technology. This article from&nbsp;<a href="https://go.notum.ai/umftqt">Notum</a> delves into the world of liquidity provision in the crypto space, exploring its main features and types, and answers the question of how to start providing liquidity in simple steps.<h2>What Is Liquidity in Crypto?</h2>Liquidity in crypto refers to how easily a digital asset can be bought or sold in the market without significantly affecting its price. It's a fundamental concept that plays a crucial role in the functionality and attractiveness of a crypto or <a href="https://notum.ai/glossary/token">token</a> to traders and investors. Basically, higher liquidity implies that there is a more active market for a particular cryptocurrency, making it more appealing for participants.&nbsp;Liquidity is typically assessed by examining the depth of the order book on crypto exchanges. The order book displays the list of buy and sell orders at various price levels. A crypto with high liquidity will have a substantial volume of orders at different price points, allowing traders to execute large orders without causing significant price fluctuations. And, on the contrary, crypto with low liquidity will have fewer orders, making it challenging to trade large amounts without impacting the market price.There are multiple benefits of high liquidity in the crypto market. First and foremost, it provides traders with the ability to enter and exit positions quickly and at desired prices. This minimizes slippage, where the execution price differs from the expected price due to limited liquidity. Additionally, high liquidity promotes price stability and attracts investors who require enough liquidity for their large trades. As a result, traders and investors often take liquidity into account when selecting assets to trade or invest in.<h2>Market Liquidity</h2>Market liquidity, also known as trading liquidity, is perhaps the more commonly understood form of liquidity in the crypto world. It refers to the ease with which crypto can be bought or sold in the open market without causing significant price fluctuations. High market liquidity implies that there is a deep order book with a substantial number of buy and sell orders at various price levels. As a result, large trades can be executed without impacting the asset's price significantly.&nbsp;<blockquote>“A market is said to be liquid when the transaction of assets happens at fair prices. Meaning, the smaller the gap between the sell price and the ask price, the more liquid the market is.” – <a href="https://hackernoon.com/how-done-one-become-a-crypto-liquidity-provider">Hackermoon</a>.</blockquote>Key points of market liquidity:<ul><li>It is a measure of how easily an asset can be traded in the open market;</li><li>High market liquidity is desirable for traders as it allows for efficient execution of orders with minimal slippage;</li><li>Liquidity varies between cryptocurrencies, with major assets typically having higher market liquidity than lesser-known altcoins.</li></ul><h2>How Does Liquidity Providing Work?</h2>Liquidity providing in crypto involves depositing digital assets primarily onto <a href="https://notum.ai/glossary/dex">DEXs</a> to facilitate trading. Users typically provide an equal value of two different cryptos to a <a href="https://notum.ai/glossary/liquidity%20pool">liquidity pool</a>, creating a balanced pair for trading. In return, they receive LP (liquidity provider) <a href="https://notum.ai/glossary/token">tokens</a>, representing their ownership share in the pool. When traders conduct transactions within the <a href="https://notum.ai/glossary/liquidity%20pool">pool</a>, they pay fees, which are distributed among LP <a href="https://notum.ai/glossary/token">token</a> holders proportional to their contribution. This stimulates liquidity providers to participate, as they can earn a portion of the trading fees generated by the <a href="https://notum.ai/glossary/dex">DEX</a>.However, liquidity providers should be aware of some potential risks, such as impermanent loss. This occurs when the price of a token changes, causing the user's share of the liquidity pool to become less than the value of their deposit. Of course, the most vulnerable to this type of risk are volatile crypto pairs. To reduce it, it is recommended to choose stablecoin pairs with a smaller price range. Despite this risk, liquidity providing can be quite profitable, particularly for those seeking to earn passive income in the crypto market while supporting decentralized trading and liquidity provision services. <img src="https://storage.googleapis.com/notum-platform/blog/repl2.png"><h6 style="text-align:center;">Source: <a href="https://support.uniswap.org/hc/en-us/articles/7423194619661-How-to-provide-liquidity-on-Uniswap-V3">Uniswap</a></h6><h2>How To Become a Liquidity Provider?</h2>As known, becoming a crypto liquidity provider involves engaging in a form of trading that entails supplying liquidity to various crypto markets, typically by offering a range of buy and sell orders for a particular trading pair. So, how does one become a liquidity provider? Explore several main steps:<ol><li>Select a Platform. Choose an automated market maker (<a href="https://chain.link/education-hub/what-is-an-automated-market-maker-amm#:~:text=Automated%20market%20makers%20(AMMs)%20are%20a%20type%20of%20decentralized%20exchange,trade%20directly%20through%20the%20AMM.">AMM</a>) platform where you want to provide liquidity. Some popular options include <a href="https://uniswap.org/">Uniswap</a>, <a href="https://www.sushi.com/">SushiSwap</a> and <a href="https://balancer.fi/">Balancer</a>. Make sure to consider factors like <a href="https://notum.ai/glossary/liquidity%20pool">liquidity pool</a> size, fees, and assets that are included in the pool when selecting a platform.</li><li>Choose a Liquidity Pool. On the chosen platform, select the specific <a href="https://notum.ai/glossary/liquidity%20pool">liquidity pool</a> you want to contribute. This typically involves choosing a cryptocurrency pair (e.g., ETH/USDC) and finding the corresponding pool.</li><li>Buy the Assets and Deposit Funds. As a rule, you'll need an equal value of both cryptos in the selected pair to provide liquidity. If you don't already have these assets, you'll need to buy them through a crypto exchange or <a href="https://notum.ai/glossary/wallet">wallet</a>. After, go to the <a href="https://notum.ai/glossary/liquidity%20pool">liquidity pool</a> page and deposit your assets into the pool. As a result, you'll receive LP <a href="https://notum.ai/glossary/token">token</a> in return for your deposit.</li><li>Monitor and Manage Your Investments. Regularly check your <a href="https://notum.ai/glossary/liquidity%20pool">liquidity pool's</a> performance, as well as the fees you're earning. You can adjust your liquidity or withdraw it at any time, depending on your goals and market conditions.</li></ol><h6 style="text-align:center;">If you decide to stop providing liquidity, return your LP <a href="https://notum.ai/glossary/token">token</a> to the <a href="https://notum.ai/glossary/liquidity%20pool">pool</a>, and you'll receive your share of the assets plus any earned fees. <img src="https://storage.googleapis.com/notum-platform/blog/repl1.png" width="2438" height="1212">Source: <a href="https://info.uniswap.org/#/pools">Uniswap</a></h6><h2>Why Do People Become Liquidity Providers?</h2>First and foremost, users become crypto liquidity providers as they are attracted by the potential to earn passive income through fees generated by <a href="https://notum.ai/glossary/dex">DEXs</a> and <a href="https://notum.ai/glossary/liquidity%20pool">liquidity pools</a>. By providing their crypto assets to these platforms, they enable others to trade, and in return, they receive a share of the transaction fees. This can be a profitable way to grow their crypto holdings without actively trading or taking on excessive risks. Additionally, some users become providers to support the growth and stability of the <a href="https://notum.ai/glossary/defi">DeFi</a> ecosystem. By providing liquidity, they contribute to the overall liquidity depth of a market, which can lead to lower slippage and more efficient trading. This, in turn, can attract more users and traders to the <a href="https://notum.ai/glossary/defi">DeFi</a> space, increasing the adoption and utility of cryptocurrencies.Liquidity providers can also benefit from <a href="https://notum.ai/glossary/token">token</a> incentives and governance rights offered by some <a href="https://notum.ai/glossary/defi">DeFi</a> projects. These incentives may include native <a href="https://notum.ai/glossary/token">tokens</a>, which can increase in value, and the ability to participate in the decision-making process of the protocol. Overall, users become crypto liquidity providers for a combination of financial incentives, ecosystem support, and potential governance involvement in the <a href="https://notum.ai/glossary/defi">DeFi</a> space.<h2>Summing Up</h2>Liquidity providing is one of the main aspects of the <a href="https://notum.ai/glossary/defi">decentralized finance</a> world, offering a dynamic way for users to participate in the crypto ecosystem. It involves contributing assets to <a href="https://notum.ai/glossary/liquidity%20pool">liquidity pools</a> on <a href="https://notum.ai/glossary/dex">decentralized exchanges</a>, facilitating smoother and more efficient trading for others while earning fees as compensation. However, becoming a crypto liquidity provider requires careful research, risk assessment, and responsible management.To begin as a liquidity provider, start by understanding the specific <a href="https://notum.ai/glossary/defi">DeFi</a> platforms and <a href="https://notum.ai/glossary/liquidity%20pool">liquidity pools</a> that meet your investment goals and risk tolerance. Stay cautious and monitor your liquidity contributions regularly, adjusting your portfolio as market conditions evolve. Additionally, consider factors such as fees, <a href="https://notum.ai/glossary/token">token</a> incentives, and governance rights when selecting a <a href="https://notum.ai/glossary/liquidity%20pool">liquidity pool</a>. As the crypto space develops, becoming a liquidity provider represents not only a financial opportunity but also a means to actively participate in the growth of the <a href="https://notum.ai/glossary/defi">DeFi</a> space.Disclaimer: Notum does not provide any investment, tax, legal, or accounting advice. This article is written for informational purposes only. Cryptocurrency is subject to market risk. Please do your own research and trade with caution.

Today Notum delves into the world of liquidity provision in DeFi, exploring its main features and types. We will also find out how to start providing liquidity in several simple steps.

How Does One Become a Crypto Liquidity Provider? I Notum

<h3>Intro</h3>In the ever-evolving world of&nbsp;<a href="https://notum.ai/glossary/blockchain">blockchain</a>, the ability to seamlessly move assets between different networks has become increasingly important. Bridging assets allows users to tap into the unique advantages of various&nbsp;<a href="https://notum.ai/glossary/blockchain">blockchains</a>. In this guide, we'll explore how to bridge Ethereum (<a href="https://coinmarketcap.com/currencies/ethereum/">ETH</a>) to&nbsp;<a href="https://polygon.technology">Polygon</a> using&nbsp;<a href="https://go.notum.ai/vA4YoI">Notum</a>, a popular bridging solution.<h3>Why Bridge to the Polygon Network?</h3>The&nbsp;<a href="https://polygon.technology">Polygon</a> network offers a range of features that might appeal to&nbsp;<a href="https://ethereum.org/en/">Ethereum</a> users, from faster transaction times to potentially lower fees. By bridging&nbsp;<a href="https://coinmarketcap.com/currencies/ethereum/">ETH</a> to&nbsp;<a href="https://polygon.technology">Polygon</a>, users can access these features while still leveraging the value and utility of their&nbsp;<a href="https://coinmarketcap.com/currencies/ethereum/">ETH</a> holdings.<h3>Bridging ETH to Polygon Network With Notum</h3><a href="https://notum.ai/">Notum</a> provides a user-friendly interface that makes the bridging process straightforward, even for those new to the concept. Here's a step-by-step guide:<ol><li>Access Notum's Swap Page: Begin by navigating to the swap page on&nbsp;<a href="https://app.notum.ai">app.notum.ai</a>. <img src="https://storage.googleapis.com/notum-platform/blog/oneeeee.png"></li><li>Select Your Networks: In the first field, choose the network from which you want to transfer your assets. In this case, select the Ethereum network. In the second field, select the Polygon network as your destination.&nbsp; <img src="https://storage.googleapis.com/notum-platform/blog/twoooo.png"></li><li>Choose Your Assets and Value: From the dropdown menu, select ETH (or any Ethereum-based asset you wish to bridge). Input the amount of ETH you want to exchange. Ensure you have enough ETH in your wallet to cover both the amount you're bridging and any associated fees. <img src="https://storage.googleapis.com/notum-platform/blog/three.png"></li><li>Initiate the Exchange: Once you've selected your assets and input the desired amount, you'll be prompted to connect and authorize the transaction with your&nbsp;<a href="https://notum.ai/glossary/wallet">wallet</a>. This ensures the secure transfer of your assets. Follow the on-screen instructions to complete the transaction. Depending on network congestion and other factors, the bridging process might take some time. It's essential to be patient and not interrupt the transaction once initiated.</li><li>Confirm the Transfer: After the transaction is complete, you can check your Polygon network&nbsp;<a href="https://notum.ai/glossary/wallet">wallet</a> to confirm that the bridged ETH has been received. It's always a good practice to verify transactions on both the sending and receiving ends.</li></ol><h3>Using Protocol-Developed Bridges</h3>Many&nbsp;<a href="https://notum.ai/glossary/blockchain">blockchains</a> develop their own bridges to facilitate the transfer of assets between their network and others. These bridges are often optimized for the specific characteristics of the networks they connect.How to Use:<ul><li>Access the official Polygon network's <a href="https://polygon.technology">website</a> or platform.</li><li>Navigate to their bridging or transfer section.</li><li>Follow the on-screen instructions, ensuring you select Ethereum as the source and Polygon network as the destination.</li><li>Confirm the transaction in your Ethereum&nbsp;<a href="https://notum.ai/glossary/wallet">wallet</a>.</li></ul><h3>Wrap It Up</h3>Bridging assets between networks, such as&nbsp;<a href="https://coinmarketcap.com/currencies/ethereum/">ETH</a> to the&nbsp;<a href="https://polygon.technology">Polygon</a>&nbsp;network, has never been easier thanks to platforms like&nbsp;<a href="https://notum.ai">Notum</a>. By following the steps outlined above, users can quickly and securely move their assets and enjoy the benefits of multiple&nbsp;<a href="https://notum.ai/glossary/blockchain">blockchain</a> ecosystems.&nbsp;As always, remember to exercise caution, double-check transaction details, and ensure you're using official and trusted platforms when bridging assets.Disclaimer: Notum does not provide any investment, tax, legal, or accounting advice. This article is written for informational purposes only. Cryptocurrency is subject to market risk. Please do your own research and trade with caution.<h3>Follow Us on Social Media</h3><a href="https://notum.ai/">Website</a> |&nbsp;<a href="https://app.notum.ai/">DApp</a> |&nbsp;<a href="https://twitter.com/NotumDefi">Twitter</a> |&nbsp;<a href="https://discord.gg/notum">Discord</a> |&nbsp;<a href="https://t.me/notumDefi">Telegram</a> |&nbsp;<a href="https://mirror.xyz/notum.eth">Mirror</a> |&nbsp;<a href="https://debank.com/official-account/111578/">DeBank</a>

In this guide, we'll explore how to bridge Ethereum (ETH) to Polygon using Notum, a popular bridging solution.

How to Invest Ethereum (ETH) to Polygon With Notum?

In today's review from Notum, we'll take a closer look at the Stargate protocol, as well as pay attention to its investment strategies and distinctive features.

Stargate Protocol: Decoded by Notum

<h3>Lido DeFi Protocol Overview</h3>In 2023, <a href="https://notum.ai/blog/liquid-staking-by-notum">liquid staking</a> has become one of the most popular ways to earn passive income in the crypto space. Since this investment strategy has a low level of risk and does not require active user involvement, it's in demand among both experienced investors and newcomers.The ability to use staked assets without a lock-in period is also one of the main reasons why users prefer liquid staking over traditional ones.<a href="https://lido.fi">Lido</a> is a platform that has practically monopolized the liquid staking market, offering users profitable <a href="https://notum.ai/glossary/apr">APRs</a>, a simple interface, and an almost automated process of receiving rewards. Today's review from <a href="https://notum.ai/">Notum</a> will delve into how the <a href="https://lido.fi">Lido platform</a> works, what advantages it offers, and why you consider investing in liquid staking with Lido.As liquid staking continues to grow and develop, Lido, as a matter of logic, will also align with this financial trend in the future. Besides, some experienced researchers, such as <a href="https://www.hashkey.com">HashKey</a>, also claim that liquid staking derivatives, and therefore Lido, will soon become the most dominant DeFi sector.<h3>Lido Protocol: The Essentials</h3><ul><li>TVL:&nbsp;$16,000,000,000</li><li>Average APY:&nbsp;5.13%</li><li>Risk Level:&nbsp;<a href="https://help.lido.fi/en/articles/5230603-what-are-the-risks-of-staking-with-lido">Low</a></li><li>Blockchains:&nbsp;Ethereum, Polygon</li><li>Foundation Date:&nbsp;Oct, 2020</li></ul><a href="https://lido.fi">Lido</a> is a decentralized protocol for liquid staking of ETH on the <a href="https://ethereum.org/en/">Ethereum</a> network and MATIC on the <a href="https://polygon.technology">Polygon</a> network.<a href="https://solana.com/">Solana</a> was also available on Lido, but from the 16th of October, 2023, the protocol stopped supporting this network.<a href="https://lido.fi">Lido protocol</a> dominates the liquid staking market and provides users with the opportunity to stake ETH and MATIC and along with it receive additional tokens (such as stETH) that can be used in the <a href="https://notum.ai/glossary/defi">DeFi</a> space. This way, users can earn income from liquid staking while maintaining liquidity and the ability to quickly exchange their funds for other assets.<blockquote>“By issuing a liquid, tradeable asset, stETH, Lido enables users to utilize their interest-bearing staked ETH as a productive asset in DeFi.” - <a href="https://www.mjl.capital/blog-posts/protocol-deep-dive-lido-finance">Mjl.capital</a></blockquote>As said, Lido provides users with the ability to place liquidity staking through its platform on Ethereum and Polygon networks. The operating principle of Lido is quite simple: the user deposits an asset, for example, ETH, into the Lido smart contract and receives an additional one (stETH – or staked Ethereum if the user stakes ETH) in return.The advantage of this additional staked token is that while staking the main asset, the user can still use stAsset in the DeFi space. For example, stETH can be exchanged for the original asset or even sold at the market price of ETH.One of Lido's main goals is also to maintain security through its distributed validator nodes and governance mechanisms. As known, “<a href="https://lido.fi/">Lido</a>&nbsp;operates through a network of node operators who manage the technical aspects of staking and enable users to earn rewards while maintaining liquidity.” - <a href="https://notum.ai/blog/liquid-staking-by-notum">Notum</a>. In addition, protocol users have the opportunity to participate in the governance of Lido through governance tokens, influencing decisions related to protocol updates.<h3>Why Invest in Liquid Staking With Lido?</h3>As you know, users choose <a href="https://notum.ai/blog/liquid-staking-by-notum">liquid staking</a> as an investment strategy for several reasons:<ul><li>Increased liquidity. Liquid staking allows users to have access to their crypto assets even while staking, namely selling or trading their stTokens. Moreover, they can also withdraw their funds from the pool at any time, which provides high liquidity compared to other forms of crypto investments.</li><li>Additional tokens and rewards. Besides the main assets that users stake, liquid staking also provides users with additional stTokens that can also be used to earn extra rewards.</li><li>Participation in decision-making. By choosing liquid staking, token holders can usually vote on key issues of the chosen protocol or platform, propose changes, and influence their development.</li></ul><blockquote>“Liquid staking enables users to maintain liquidity by participating in staking networks, while still earning rewards.” - <a href="https://notum.ai/blog/liquid-staking-by-notum">Notum</a></blockquote>Lido is the best solution for investing in liquid staking since it is the largest player in the crypto investing market. As of November 2023, Lido has over <a href="https://defillama.com/lsd">77%</a> of all staked ETH on its platform. Lido's closest competitor in Ethereum staking is <a href="https://rocketpool.net">Rocketpool</a>, which has only 8.77% of the market share.Also, compared to other liquid staking platforms, Lido offers one of the best <a href="https://notum.ai/glossary/lsd">LSD</a> APR which is 4.00%. Rocketpool, for example, only offers 3.43%.However, before investing in liquid staking with Lido, remember that it only supports two networks – Ethereum and Polygon. So, if you are interested in liquid staking of ETH or MATIC, Lido will be the best option on the market due to its interest rates, global recognition, and contribution to network security.<figure class="image"><img style="aspect-ratio:1546/728;" src="https://storage.googleapis.com/notum-platform/blog/llama.png" width="1546" height="728"></figure>Source: <a href="https://defillama.com/lsd">Defillama</a><h3>Investment Strategies on Lido</h3>As known, now <a href="https://lido.fi">Lido</a> has only two supported networks for staking tokens - <a href="https://ethereum.org/en/">Ethereum</a> and <a href="https://polygon.technology">Polygon</a>. Let's take a closer look at both investment strategies offered by Lido:stETH - 3.90% APR; Low RiskLidoFi offers users the opportunity to stake any amount of Ethereum and receive daily rewards for their contribution to network security. When staking Ethereum on Lido, users receive an additional <a href="https://app.notum.ai/explore/liquid-staking?name=Lido%20Staked%20Ether">stETH</a> token that represents the staked version of Ethereum. This additional token allows users to use it across the DeFi ecosystem and L2, including exchanging and selling. The protocol currently has over 8.9 million <a href="https://app.notum.ai/explore/liquid-staking?name=Lido%20Staked%20Ether">stETH</a> staked and has paid out over 452 thousand ETH rewards.Since the amount of stETH in balance can change daily due to staking rewards, Lido encourages users to use a wrapped version of <a href="https://app.notum.ai/explore/liquid-staking?name=Lido%20Staked%20Ether">stETH</a> (<a href="https://help.lido.fi/en/articles/5231836-what-is-wrapped-steth-wsteth">wstETH</a>). The advantage of wstETH is that it keeps your stETH balance unchanged, using a share system for reflecting your staking income.Lido APR for staking ETH varies around 3-4% on average.stMATIC - 4.30% APR ; Low RiskLido also allows users to stake MATIC while supporting the network and receiving daily rewards. <a href="https://app.notum.ai/explore/liquid-staking?name=Lido%20Staked%20Matic">stMATIC</a> tokens represent MATIC tokens staked with the Lido validator node plus staking rewards. You can think of <a href="https://app.notum.ai/explore/liquid-staking?name=Lido%20Staked%20Matic">stMATIC</a> tokens as a share of the total pool of staked assets and accumulated rewards. As a result, the price of stMATIC is higher than the price of regular MATIC tokens. You can always unstake <a href="https://app.notum.ai/explore/liquid-staking?name=Lido%20Staked%20Matic">stMATIC</a> via Lido and get back your MATIC tokens.The stToken allows users to place it in the DeFi space to operate in the Polygon ecosystems. At the moment of writing, the protocol has more than 144 million <a href="https://app.notum.ai/explore/liquid-staking?name=Lido%20Staked%20Matic">stMATIC</a> staked and has paid out more than 12 million MATIC rewards.Lido APR for staking MATIC varies around 4-5% on average.Regardless of which of the proposed assets you choose to stake, the protocol will offer you a simple and convenient Lido staking calculator to understand potential monthly and annual rewards you can receive on the platform.<figure class="image"><img src="https://storage.googleapis.com/notum-platform/blog/calc.png"></figure>Source: <a href="https://lido.fi/ethereum">Lido.Fi</a><h3>What Can You Do With stAssets?</h3>As you know, when staking ETH or MATIC, users receive additional stETH and stMATIC tokens, which they can also use in the DeFi space. However, what exactly are the use cases for stTokens?<ul><li>Holding tokens. If you don't want to actively interact with stAssets, you can simply store your stTokens in your crypto <a href="https://notum.ai/glossary/wallet">wallet</a> and accumulate staking rewards.</li><li>Providing liquidity. You can use your stETH and stMATIC for liquidity and exchange them for other assets.</li><li>Decentralized applications. You can use your stAssets in various <a href="https://notum.ai/glossary/dapp">dApps</a> that support these tokens.</li><li>Sale or Exchange. The advantage of stTokens is that if you wish, you can sell or exchange these tokens at any time.</li><li>Trading. stTokens are also available for trading on various centralized and decentralized exchanges.</li><li>Lending/Borrowing. You can also use stETH and stMATIC as collateral for a loan or lend them out through other platforms.</li></ul><h3>Is Lido Staking Safe?</h3><a href="https://lido.fi">Lido</a> is the number one liquid staking protocol recognized by the crypto community, so its use is quite safe. At the moment, Lido offers the largest <a href="https://lido.fi/ethereum">Ethereum pool</a> in the entire DeFi space, which also speaks of the efficient liquidity and security of the protocol itself. In addition, Lido has a global community that also takes part in updating the protocol and building its future.The protocol regularly improves security measures to ensure that staking on Lido is as safe as possible. For example, the protocol is open source and regularly checks all code for errors. To avoid the risk of staking, Lido also has the best-elected validators, and the use of <a href="https://notum.ai/glossary/dao">DAO</a> for decision-making also contributes to risk management. You can read more about the security of the Lido protocol on their official website in the <a href="https://lido.fi/faq">FAQ</a> – Security section.Lido has been audited by a large number of platforms, including Certora, StateMind, and Hexens.However, Lido, like any other protocol, has some risks that should be considered before investing in liquid staking. The main risks of the protocol include smart contract security, splashing, and stToken price risk.<h3>Notum’s Verdict</h3>Lido is a unique protocol that has monopolized the liquid staking market and has the largest Ethereum staking pool in existence. Founded in 2020, Lido already has a TVL of over $16 billion and offers a simple and secure way to earn passive income through staking. Lido supports the Ethereum and Polygon blockchains, allowing users to receive rewards for staking ETH and MATIC. Since liquid staking is expected to be a dominant part of DeFi in the future, Lido, as a monopolizer of this strategy, will also remain popular and will most likely offer new investment solutionsThe Lido protocol is more popular due to its relatively high APR from 3 to 5%, low-risk level, and low user involvement. However, although Lido offers users increased liquidity, additional tokens and rewards, and participation in decision-making, it only interacts with two blockchains, which should be taken into account before you start investing. However, despite some risks, Lido continues to own the largest part of the market share and is more than twice as large as its closest competitor, which indicates its impeccable reputation and undoubted potential for future development and obtaining new inflows.<h3>Follow Us on Socials</h3><a href="https://notum.ai/">Website</a> |&nbsp;<a href="https://app.notum.ai/">DApp</a> |&nbsp;<a href="https://twitter.com/NotumDefi">Twitter</a> |&nbsp;<a href="https://discord.gg/notum">Discord</a> |&nbsp;<a href="https://t.me/notumDefi">Telegram</a> |&nbsp;<a href="https://mirror.xyz/notum.eth">Mirror</a> |&nbsp;<a href="https://debank.com/official-account/111578/">DeBank</a>Disclaimer: Notum does not provide any investment, tax, legal, or accounting advice. This article is written for informational purposes only. Cryptocurrency is subject to market risk. Please do your own research and trade with caution.

Today's review from Notum will delve into how the Lido platform works, what advantages it offers, and why you consider investing in liquid staking with Lido.

Lido | Yield Strategies

<h3>How to Invest in Liquid Staking on Notum</h3><a href="https://notum.ai/blog/what-is-liquid-staking-and-how-does-it-work-notum">Liquid staking</a> (or LS) is an innovative way to generate passive income by placing and locking crypto assets in a <a href="https://notum.ai/glossary/liquidity%20pool">liquidity pool</a> while receiving additional tokens in return.LS allows users not only to receive rewards from staking assets based on the pool's performance but also to use additional tokens in other <a href="https://notum.ai/glossary/defi">DeFi</a> apps.Example: If you have an ETH asset and want to earn passive income, you lock it in the liquidity pool on the platform and receive additional <a href="https://notum.ai/assets/lido-staked-eth">stETH</a> tokens in return. These tokens can be used to vote or participate in DeFi applications and receive rewards for your contributions to the network.The main advantage of LS is the ability to earn money from your crypto assets while still being able to freely use them in the DeFi space.<ul><li>Risk Level: Low</li><li>User Involvement: Low to Moderate</li><li>Potential Returns: Low</li><li>Automated or not: Mostly Automated</li><li>Potential Risks: Market Volatility, Smart Contract Risks, Protocol Changes</li><li>Key Features: Staking Rewards, Liquidity</li><li>Common Platforms: <a href="https://lido.fi">Lido</a>, <a href="https://rocketpool.net">RocketPool</a></li></ul><h3>What Are the Benefits of Liquid Staking?</h3>While investing in liquid staking, users receive additional tokens that represent their assets, which they can still use and at the same time profit from real holdings. Thus, they can not only maintain access to assets while staking but also earn passive income.LS enables users to maintain <a href="https://notum.ai/glossary/liquidity">liquidity</a> by participating in staking networks, while still earning rewards.Liquid staking is an investment strategy that is worth choosing if you want to not only contribute to the security of the network but also receive high profits and increased liquidity compared to traditional staking.Pros:<ul><li>Potential for high returns;</li><li>Enhanced liquidity compared to traditional staking;</li><li>Contribution to network security and functionality;</li><li>Access to a growing sector in DeFi.</li></ul>Cons:<ul><li>Market volatility can affect potential returns;</li><li>Exposure to smart contract risks;</li><li>Limited control over staked assets;</li><li>Regulatory uncertainty in the DeFi space.</li></ul>If you decide to invest in liquid staking, but don’t know which platform to choose, below you can consider two popular options &nbsp;— <a href="https://lido.fi">Lido</a> and <a href="https://rocketpool.net">RocketPool</a>.<h3>Liquid Staking With Lido</h3><a href="https://lido.fi">Lido</a> is one of the leading platforms for liquid staking services, allowing users to earn rewards without locking up their assets.<ul><li>TVL: $16,000,000,000</li><li>Average APY: 5.13%</li><li>Risk Level: <a href="https://help.lido.fi/en/articles/5230603-what-are-the-risks-of-staking-with-lido">Low</a></li><li>Blockchains: Ethereum, Polygon</li><li>Foundation Date: Oct, 2020</li></ul><a href="https://lido.fi">Lido</a> operates through a network of node operators who manage the technical aspects of staking and enable users to earn rewards while maintaining liquidity. Lido nodes distribute rewards to stakers and ensure the security and decentralization of the network.By <a href="https://notum.ai/blog/liquid-staking-with-lido-notum">staking on Lido</a>, users receive additional staking tokens (such as <a href="https://notum.ai/assets/lido-staked-eth">stETH</a> for <a href="https://ethereum.org/en/">Ethereum</a>) which can be used in DeFi protocols. These tokens are more liquid and flexible, as they allow users to use them in the <a href="https://notum.ai/glossary/defi">DeFi</a> space while still earning staking rewards.<h3>Investment Strategies on Lido</h3>stETH - 3.80% APR; Low RiskWhen users <a href="https://stake.lido.fi">stake ETH</a> on Lido, their asset is locked and can't be used within the DeFi space. However, they receive additional tokens (<a href="https://notum.ai/assets/lido-staked-eth">stETH</a> in the case of ETH) that they can still utilize when their real asset is used to generate rewards. Staking ETH on <a href="https://lido.fi">Lido</a> brings users <a href="https://notum.ai/glossary/apr">APR</a> of around 3-4%.stMATIC - 4.30% APR ; Low RiskLido also allows users to <a href="https://polygon.lido.fi">stake MATIC</a>, which is also locked in the pool for the whole staking period. If staking MATIC, they receive an additional token, which they can use as desired, while still being paid for staking real assets. This Lido investment strategy brings <a href="https://notum.ai/glossary/apr">APR</a> of around 4-5%.<h3>Lido's Strategies: Pros &amp; Cons</h3>Pros:<ul><li>High liquidity</li></ul>Lido allows users to stake their assets and receive liquid stETH or stMATIC tokens in return. These tokens can be traded, used in DeFi protocols, or easily transferred, providing users with instant liquidity for their staked assets.<ul><li>No lock-up periods</li></ul>Unlike traditional staking, Lido doesn't have a lock-up period. Users can easily access their staked assets at any time, allowing for more flexibility in managing their investments.<ul><li>Potential for high returns</li></ul>By participating in <a href="https://notum.ai/glossary/pos">PoS</a> networks through Lido, users can earn rewards and still use their assets. Even though there is a risk associated with the underlying blockchain network's performance, it's less risky than other investment types, like trading or yield farming.Cons:<ul><li>Smart contract risks</li></ul>While smart contracts can automate processes and enhance transparency, they can have coding errors or vulnerabilities that may be used to steal users' assets. Besides, the smart contracts may require updates that can lead to bugs or disruptions to the platform's functionality.<ul><li>Market volatility</li></ul>When users stake assets through Lido, they are still exposed to the crypto's price fluctuations. The returns generated through staking are not guaranteed and may vary significantly based on the market price.<ul><li>Network performance</li></ul>Factors like transaction costs and network scalability issues can influence the efficiency of the staking process and the returns users receive. If the network experiences congestion, it can lead to higher gas fees and affect your returns.<h3>Why Invest?</h3>Lido is a low-risk investment according to the potential for high returns, added liquidity, and no lock-up period.<a href="https://lido.fi">Lido</a> offers a secure and efficient way to stake <a href="https://stake.lido.fi">Ethereum</a> and <a href="https://polygon.lido.fi">Polygon</a> assets, allowing users to earn staking rewards without running their own validator node. Besides, Lido provides liquidity for the staked assets, allowing users to use them in the DeFi space.<h3>Liquid Staking With RocketPool</h3><a href="https://rocketpool.net">RocketPool</a> is a liquid staking protocol that offers decentralized and permissionless <a href="https://ethereum.org/en/">Ethereum</a> staking.<ul><li>TVL: $2,025,000,000</li><li>Average APY: 3.03%</li><li>Risk Level: Low</li><li>Blockchains: Ethereum</li><li>Foundation Date: Sept, 2016</li></ul><a href="https://rocketpool.net">RocketPool</a> operates by allowing users to deposit their Ether into a smart contract. Then it is used to participate in Ethereum's <a href="https://notum.ai/glossary/pos">PoS</a> network, generating staking rewards.With <a href="https://rocketpool.net">RocketPool</a> users can deposit their assets to the <a href="https://notum.ai/glossary/liquidity%20pool">liquidity pools</a> for generating rewards and at the same time receive additional tokens, known as <a href="https://stake.rocketpool.net">rETH</a>. These tokens can be used and traded in the DeFi space, while original assets are bringing passive income.<h3>Investment Strategy on RocketPool</h3>rETH - 3.03% APR; Low RiskWhile staking ETH on <a href="https://rocketpool.net">Rocket Pool</a>, users block their assets in the pool and receive additional rETH tokens. They can use rETH as they wish within the DeFi space and still get paid for staking ETH. Rocket Pool's staking of ETH brings users a potential APR of about 3-4%.<h3>RocketPool's Strategies: Pros &amp; Cons</h3>Pros<ul><li>User-friendly interface</li></ul>Its intuitive design and easy-to-navigate platform ensure that both newcomers and experienced crypto investors can efficiently manage their investments and participate in staking pools for earning rewards.<ul><li>High returns with reasonable risk</li></ul>By participating in a staking pool, users can enjoy high returns on their investments. The risk is managed collectively within the pool, decreasing some of the volatility associated with individual staking.<ul><li>No lock-up period</li></ul>Users can withdraw their funds at any time without facing a lock-up period. This advantage provides liquidity and allows flexibility in investment decisions.Cons<ul><li>Market volatility</li></ul>Since the price of rETH is influenced by the overall crypto market, users may experience fluctuations in the value of their staked assets. This can lead to both gains and losses, depending on the market's performance.<ul><li>Limited staking options</li></ul>Rocket Pool mainly focuses on Ethereum 2.0 staking, which means that it has limited options compared to other platforms that support various crypto assets.<ul><li>Smart contract risks</li></ul>Even though smart contracts offer security, they can still have bugs, vulnerabilities, or exploits. Users who stake their assets on Rocket Pool are exposed to smart contract risks, which could lead to the loss of their assets in case of a security breach or technical issues.<h3>Why Invest in RocketPool?</h3>&nbsp;<a href="https://rocketpool.net">RocketPool</a> is a low-risk investment according to its decentralized and secure approach to Ethereum 2.0 staking, offering a reliable way to earn rewards without the lock-up period.<a href="https://rocketpool.net">RocketPool</a> allows users to comfortably stake Ethereum while maintaining control of their funds. The platform's flexibility offers to enter and exit staking at any time, providing liquidity to staked assets.<h3>Notum’s Verdict</h3>Liquid staking is a simple, low-risk way to earn passive income by locking crypto assets in a liquidity pool, which allows users to receive rewards from staking assets. Liquid staking is mostly automated, so it doesn’t require much user involvement. Thus, this is an ideal option for those seeking passive income without actively participating in the process. While investing, users get potential rewards from 3 to 8% and strengthen the network security.Lido and RocketPool are the leading platforms for providing liquidity, allowing users to earn staking rewards with an average APY of 5.13% for Lido and 3.03% for RocketPool without locking up their assets. However, before choosing a platform, please be aware of risks such as market volatility, smart contract risks, and protocol changes. To learn more on the topic, please refer to <a href="https://docs.notum.ai/risk-assessment/risk-assessment-framework">Notum’s methodology</a>.All in all, if you are looking for a stable and low-risk investment, liquid staking might be an option you are looking for. Explore all LS strategies on the Notum platform today.<h3>Follow Us on Socials</h3><a href="https://notum.ai/">Website</a> |&nbsp;<a href="https://app.notum.ai/">DApp</a> |&nbsp;<a href="https://twitter.com/NotumDefi">Twitter</a> |&nbsp;<a href="https://discord.gg/notum">Discord</a> |&nbsp;<a href="https://t.me/notumDefi">Telegram</a> |&nbsp;<a href="https://mirror.xyz/notum.eth">Mirror</a> |&nbsp;<a href="https://debank.com/official-account/111578/">DeBank</a>Disclaimer: Notum does not provide any investment, tax, legal, or accounting advice. This article is written for informational purposes only. Cryptocurrency is subject to market risk. Please do your own research and trade with caution.

Liquid staking is an innovative way to generate passive income by placing and locking crypto assets in a liquidity pool while receiving additional tokens in return. Let's find out why it is worth investing in liquidt staking and which platforms you should consider.

Liquid Staking: Simplified by Notum

In today’s article from Notum, we will answer questions about how yield aggregators function, what the distinctive features of this strategy are, and why it is worth investing in it, as well as pay attention to 2 popular protocols for yield aggregation investments.

Investment Idea: Yield Aggregators I Notum

<h1>Intro</h1>2023, as expected, has seen another surge in interest in <a href="https://notum.ai/glossary/defi">DeFi</a>, which also affected the adoption of <a href="https://notum.ai/glossary/blockchain">blockchain</a> technology in financial applications. The enormous popularity of DeFi protocols has led to the fact that now they have more than $20 billion locked, which directly highlights the bright future of decentralized finance. Interest in DeFi has influenced many areas, including DeFi lending, which allows users to receive fairly high rewards for lending their assets. Today's review from <a href="https://go.notum.ai/idea_defilending">Notum</a> will help you understand the world of DeFi lending, pay attention to its pros and cons, and explore the platforms and investment strategies that you can use to profit from your crypto assets.<h1>How to Invest in DeFi Lending on Notum</h1><a href="https://notum.ai/blog/defi-lending-vs-traditional-lending-notum">DeFi lending</a> is part of the cryptocurrency ecosystem, which appeared on the market relatively recently, but already has quite a lot of popularity and recognition in the crypto community. These types of DeFi loans provide users with the opportunity to lend their cryptocurrency and earn a profit for it.DeFi lending is the provision of loans on decentralized platforms, where some users can borrow assets for their own purposes, while others earn interest on the coins provided.Decentralized finance lending is a lot like <a href="https://notum.ai/blog/defi-lending-vs-traditional-lending-notum">traditional lending</a>, where some people deposit money into a bank at interest, and others borrow that money from the bank. The difference between DeFi lending is <a href="https://notum.ai/glossary/p2p">P2P</a> decentralized applications that provide transparency and security. Thus, DeFi lending platforms provide users with the opportunity to borrow and lend funds, which allows investors to receive interest on their crypto assets.This type of investment is popular among crypto users and investors as it provides a transparent, open-source financial environment that does not require permission.<ul><li>User Involvement: Low</li><li>Potential Returns: Conservative</li><li>Automated or not: Automated</li><li>Potential Risks: Smart-Contract Risks, Protocol Changes</li><li>Key Features: Earning interest</li><li>Common Platforms: <a href="https://aave.com">AAVE</a>, <a href="https://compound.finance">Compound</a>, <a href="https://venus.io">Venus</a>, <a href="https://makerdao.com/en/">Maker DAO</a></li></ul><figure class="media"><div data-oembed-url="https://www.youtube.com/watch?v=aTp9er6S73M"><div style="position: relative; padding-bottom: 100%; height: 0; padding-bottom: 56.2493%;"><iframe src="https://www.youtube.com/embed/aTp9er6S73M" style="position: absolute; width: 100%; height: 100%; top: 0; left: 0;" frameborder="0" allow="autoplay; encrypted-media" allowfullscreen=""></iframe></div></div></figure><h1>How Do You Earn With DeFi Lending?</h1>Since DeFi lending is in many ways similar to traditional lending, the principles of its operation are quite simple and easy to understand. It uses a trustless approach to provide crypto loans, which means users independently lock their assets on the DeFi platform without the need for an intermediary. Borrowers, in turn, can also independently choose a DeFi loan on a decentralized platform, relying on <a href="https://notum.ai/glossary/p2p">P2P</a> lending.DeFi lending allows users to act as a lender and provide their crypto assets to those in need, without having to interact with third parties like banks and share their profits with them.Thus, a user who doesn’t use his crypto assets can lend them to another user and accrue interest on a loan, thereby making a profit. This happens thanks to lending pools, where users deposit their funds for subsequent distribution among borrowers using smart contracts.<figure class="image"><img style="aspect-ratio:801/601;" src="https://storage.googleapis.com/notum-platform/blog/info29.webp" width="801" height="601"></figure><h6 style="text-align:center;">Source: <a href="https://appinventiv.com/blog/">Appinventiv</a></h6><h1>Why Invest in DeFi Lending?</h1><a href="https://notum.ai/blog/defi-lending-vs-traditional-lending-notum">DeFi lending</a> is undoubtedly an important part of the decentralized finance sector, as it allows users to seamlessly lend and borrow crypto assets without third parties. Besides this, this investment strategy is a great way to earn interest on your crypto that you are not going to use for some time.DeFi offers much faster loans than traditional lending if the user meets all the necessary requirements.Overall, this investment strategy offers users a lot of benefits and does not require active involvement in the process, so it is good for both beginners and experienced investors.Pros:<ul><li>Speed. DeFi loans are processed as quickly as possible, which means users can access their funds immediately after loan approval. This speed is achieved since crypto lending platforms operate on cloud services, capable of detecting fraud and reducing other risks of decentralized finance</li><li>Transparency and security. Since the blockchain is decentralized, it ensures the authenticity of all transactions and can also be verified by any user on the network.</li><li>Availability. The permissionless nature of decentralized finance allows virtually any user with a crypto wallet to get access to lending and other DeFi apps.</li><li>Interoperability. As you know, many DeFi protocols easily integrate and interact with each other, allowing users to borrow funds and use them immediately.</li></ul>Cons:<ul><li>Risk of smart contracts. Like any DeFi applications and platforms built on smart art contracts, DeFi lending services also have the risk of bugs and vulnerabilities.</li><li>Scalability. DeFi transactions may take some time to confirm, while protocol transactions may become more expensive during the congestion period.</li><li>Human factor. Since DeFi lending works without intermediaries, the user is responsible for his decisions and deposited funds. Thus, if an investor makes a mistake, the DeFi platform is not responsible for it.</li></ul>In today's article from <a href="https://notum.ai/">Notum</a>, we will look at two DeFi lending protocols - <a href="https://venus.io">Venus</a> and <a href="https://compound.finance">Compound</a>. We'll take a look at their distinctive features, potential rewards, and the investment decisions these platforms are worth considering in 2023.<h1>DeFi Lending With Venus</h1><a href="https://venus.io">Venus</a> is a community-driven decentralized protocol that, according to its official website, provides best-in-class functionality for various cryptocurrency markets. This DeFi lending protocol runs on the <a href="https://www.bnbchain.org/">BNB Chain</a> and allows users to offer and receive cryptocurrency loans.<ul><li>TVL: $778,470,000</li><li>Risk Level: Low-Medium</li><li>Blockchains: BNB Chain, the Binance Smart Chain</li><li>Foundation Date: 2020</li></ul><a href="https://venus.io">Venus</a> lending protocol is a permissionless algorithmic money market that allows users to receive cryptocurrency loans at low-interest rates. Lenders who provide their assets to the DeFi lending <a href="https://notum.ai/glossary/liquidity%20pool">pools</a> receive rewards without involving an arbitrator.As of December 2023, the Venus protocol has a total value locked of more than $778,47 millio<figure class="image"><img style="aspect-ratio:1521/713;" src="https://storage.googleapis.com/notum-platform/blog/venusss.png" width="1521" height="713"></figure><h6 style="text-align:center;">Source: <a href="https://venus.io/">Venus</a></h6><h1>Investment Strategies on Venus</h1>BTCB on <a href="https://defillama.com/yields/pool/87c8ee0d-b812-47c1-803f-f91a3907079e">BSC</a>&nbsp; Total APY - 0.28%, TVL - $449,3mThis investment strategy allows users to deposit their BTCB assets on the Binance Smart Chain to receive passive rewards that average 0.25% - 0.30% APY. Borrow APY of BTCB is currently 1.69%.WBNB on <a href="https://defillama.com/yields/pool/747b58ab-aefd-42e1-a312-01ad5a0ab7f5">BSC</a>&nbsp; Total APY - 35.37%, TVL - $83,85mAccording to <a href="https://app.notum.ai/investments?assets=WBNB&amp;protocols=Venus&amp;networks=BNB%20Smart%20Chain">Notum</a>, this investment strategy is low-risk and offers a total APY of 34% to 36%. The total locked value of this pool is over 83 million, making it a popular investment with high liquidity.<h1>Venus and Its Strategies: Pros &amp; Cons</h1>&nbsp;Pros:<ul><li>Possible high income. Depending on the pool and asset chosen, users can receive relatively high rewards compared to banks and other traditional financial institutions.</li><li>Decentralization. Venus integrates traditional financial services into decentralized blockchain-based protocols, making the lending process secure without involving third parties.</li><li>Automated interest. DeFi lending interest rates on the platform are automated and depend on the requirements of a particular crypto market. However, during the protocol governance process, minimum and maximum interest rate levels are set.</li><li>Diversity of assets. The Venus Protocol supports a fairly large number of assets available for collateral and lending.</li></ul>Cons:<ul><li>Risk of smart contracts. Since DeFi projects like Venus use smart contract systems, they can be prone to bugs and vulnerabilities, which can lead to loss of funds.</li><li>Volatility. Crypto assets used as collateral or lending assets are often quite volatile, which can also lead to some losses.</li><li>Difficulty of usage. The large number of pools, assets and opportunities on Venus can confuse newcomers and lead to mistakes that will affect their investments.</li></ul><h1>Why Invest?</h1><a href="https://venus.io">Venus</a> is a low-to-medium risk decentralized lending protocol that offers lending services with the ability to receive and provide cryptocurrency at interest. Potentially high passive income and asset diversity make the platform a good choice for crypto users looking to invest in DeFi lending.Venus offers users loans at low-interest rates while investors receive automated rewards.<h1>DeFi Lending With Compound</h1><a href="https://compound.finance">Compound</a> is a decentralized, blockchain-based protocol that allows users to lend and borrow crypto assets. Compound operates on the <a href="https://ethereum.org/en/">Ethereum network</a> and works as a decentralized app.<ul><li>TVL: $2,366,000,000</li><li>Risk Level: Medium</li><li>Blockchains: Ethereum, Polygon, Arbitrum, Base</li><li>Foundation Date: 2017</li></ul>The compound supports 4 networks and allows any user who owns cryptocurrency to send, lock, deposit and lend crypto assets for any amount. This decentralized blockchain-based protocol locks the user's cryptocurrency in the <a href="https://freewallet.org/comp-wallet">Compound wallet</a>, after which liquidity provider immediately starts earning rewards.<blockquote>“The interest you earn is denominated in the same token that you lent.” – <a href="https://www.gemini.com/cryptopedia/what-is-compound-and-how-does-it-work">Gemini</a>.</blockquote><figure class="image"><img style="aspect-ratio:1795/681;" src="https://storage.googleapis.com/notum-platform/blog/compound.png" width="1795" height="681"></figure><h6 style="text-align:center;">Source: <a href="https://compound.finance">Compound</a></h6><h1>Investments Strategies on Compound</h1>USDC on <a href="https://defillama.com/yields/pool/a17d8b32-48cb-4446-aad7-ed4278f144e0">Polygon</a>&nbsp; Total APY - 11.32%, TVL - $1,23mThis investment strategy allows users to deposit their USDC assets on Polygon to receive passive rewards that often range from 11% to 12% APY.USDT on <a href="https://defillama.com/yields/pool/57647093-2868-4e65-97ab-9cae8ec74e7d">Ethereum</a> Total APY - 8.55%, TVL - $37,09mAnother well-known investment strategy on Compound allows users to invest USDT on the Ethereum network to earn rewards. The average APY for depositing a given stablecoin is often between 8% and 9%.<h1>Compound and Its Strategies: Pros &amp; Cons</h1>Pros:<ul><li>Supports four blockchains. The Compound platform currently supports Ethereum, Polygon, Arbitrum and Base networks, which provides users with more investment opportunities.</li><li>Safety. Compound calls itself “the most secure protocol for money” as the platform is audited and verified by multiple projects, such as <a href="https://blog.openzeppelin.com/compound-audit">Open Zeppelin</a>, <a href="https://blog.openzeppelin.com/compound-audit">Trail of Bits</a> and <a href="https://docs.compound.finance/v2/security/#formal-verification">Certora</a>. In addition, the protocol has a <a href="https://docs.compound.finance/v2/security/#bug-bounty-program">Bug Bounty Program</a>, which encourages the community to review contracts, security, and identify problems.</li><li>App. The platform offers users a convenient application where they can connect a wallet and get access to the dashboard, markets, extensions, and vote tabs.</li><li>Diversity of assets. Compound supports a large number of cryptocurrencies, including stablecoins, allowing users to lend and borrow the assets they need.</li></ul>Cons:<ul><li>Risk of smart contracts. As is known, platforms running on smart contracts may encounter bugs and vulnerabilities that could potentially lead to the loss of funds.</li><li>Difficult to use. Since Compound operates on 4 blockchains across 8 markets, it can be quite difficult for beginners to understand the structure of the platform and how to use it.</li><li>Market Risks. DeFi interest rates on Compound are largely dependent on the market and are therefore notoriously volatile, which is often reflected in the lending or borrowing returns.</li></ul><figure class="image"><img style="aspect-ratio:1650/750;" src="https://storage.googleapis.com/notum-platform/blog/compound2.png" width="1650" height="750"></figure><h6 style="text-align:center;">Source: <a href="https://compound.finance">Compound</a></h6><h1>Why Invest?</h1><a href="https://compound.finance">Compound</a> is a popular decentralized protocol with a moderate level of risk, which over 6 years of existence on the market has earned a good reputation and recognition from the community. It offers users lending and borrowing services with favorable interest rates. Investors, in turn, receive relatively high passive income without actively engaging in lending, which is why this platform can be a good option for both borrowers and lenders.<h1>Notum's Verdict</h1>Lending is a popular investment strategy in 2023, which allows users to easily borrow and lend crypto assets at favorable interest rates. With a low user engagement rate, it is a great option for both newbies and experienced crypto investors. Since the lending is largely automated, users don't have to regularly monitor the pools and move their assets for the biggest rewards.Venus and Compound are two popular decentralized protocols that offer users lending and borrowing opportunities on different blockchains. While investors can provide liquidity to platforms to earn rewards, borrowers can borrow cryptocurrency against collateral at favorable interest rates. Despite the risks of smart contracts, market volatility, and possible protocol changes, lending is an important part of the DeFi sector and an excellent opportunity to receive passive income with minimal involvement.Disclaimer: Notum does not provide any investment, tax, legal, or accounting advice. This article is written for informational purposes only. Cryptocurrency is subject to market risk. Please do your own research and trade with caution.

Today's review from Notum will help you understand the world of DeFi lending, pay attention to its pros and cons, and explore the platforms and investment strategies that you can use to profit from your crypto assets.

Investment Idea: DeFi Lending With Notum

<h2>Intro</h2>The year 2023 can be described as another period where more people realize the value and importance of cryptocurrency. At the moment, some crypto users prefer to trade tokens on exchanges, while others prefer to use various investment strategies to generate passive income. One of the most dynamically developing strategies that continues to popularize cryptocurrency is <a href="https://notum.ai/blog/what-is-a-yield-farming">yield farming</a>.Crypto yield farming is an investment strategy that involves distributing capital to various DeFi protocols to receive rewards.This way, users who don’t use their cryptocurrency at the moment can provide it to other people on DeFi platforms and receive rewards for it. By depositing their funds, investors take part in <a href="https://notum.ai/glossary/liquidity%20pool">liquidity pools</a>, lending and borrowing in <a href="https://notum.ai/glossary/dapp">dApps</a>.This investment strategy is very popular as it allows users to receive fairly high rewards and secure the network by depositing their tokens there.At the moment, the market offers a huge number of different DeFi protocols that make the yield farming process simpler and more comfortable. Today's article from <a href="https://go.notum.ai/convex_decoded">Notum</a> will tell you about the <a href="https://www.convexfinance.com">Convex platform</a>, its distinctive features, specific uses and investment strategies that are worth paying attention to in 2023.<h2>Convex Finance: The Essentials</h2><ul><li>TVL: $1,819,000,000</li><li>Average APY: 3.50%</li><li>Risk Level: Medium-high</li><li>Blockchains: <a href="https://ethereum.org/en/">Ethereum</a>, <a href="https://arbitrum.io">Arbitrum</a>, <a href="https://polygon.technology">Polygon</a></li><li>Foundation Date: May, 2021</li></ul><a href="https://www.convexfinance.com">Convex</a> is a fairly popular DeFi platform that combines several important functions. Convex Finance is a multi-chain protocol that supports three networks - <a href="https://ethereum.org/en/">Ethereum</a>, <a href="https://arbitrum.io">Arbitrum</a>, <a href="https://polygon.technology">Polygon</a>, and also acts as “yield optimizer for <a href="https://iq.wiki/wiki/curve-dao-token">CRV</a> token holders and Curve <a href="https://iq.wiki/wiki/liquidity-providers">liquidity providers</a>” - <a href="https://iq.wiki/wiki/convex-finance#cite-id-f675ayr7ivb">Wiki</a>. Apart from this, the platform is also engaged in providing <a href="https://notum.ai/glossary/staking">staking</a> rewards on <a href="https://curve.fi">Curve</a>.Convex protocol optimizes yield and also provides rewards for mining liquidity on Curve.<figure class="image"><img style="aspect-ratio:1675/630;" src="https://storage.googleapis.com/notum-platform/blog/convex1.png" width="1675" height="630"></figure><h6 style="text-align:center;">Source: <a href="https://www.convexfinance.com">Convex</a></h6>This DeFi protocol provides users with yield farming services, allowing them to receive fairly high rewards for providing liquidity. The Convex platform was originally created to work with the Curve <a href="https://notum.ai/glossary/dex">DEX</a>, and Convex Finance staking was intended primarily for liquidity providers on <a href="https://curve.fi">Curve</a>.In order for Curve to increase income from providing liquidity, it is necessary to additionally freeze the <a href="https://coinmarketcap.com/currencies/curve-dao-token/">CRV tokens</a> received for providing liquidity, due to which the profitability of the pool can be increased by 2 times.Convex Finance allows users to take a simpler path for the user and receive income from the commissions of the Curve exchange. This is achieved through CRV boosting without locking tokens in the pool. Thus, rewards appear through staking of Curve liquidity provider tokens. So, by depositing tokens into the staking pool, the user can earn on exchange commissions and at the same time earn additional money from boosting.Despite the fact that Convex Finance was created in May 2021, it ranks first in the market among the yield TVL ranking. The total value locked on the platform is $1.819 billion, while its closest rival Aura has a TVL of only $388 million.Convex Finance has a native <a href="https://notum.ai/glossary/erc%20-%2020%20token">ERC-20</a> <a href="https://coinmarketcap.com/currencies/convex-finance/">CVX crypto</a> token that is distributed to users as a reward for providing liquidity through Curve. The maximum supply of the token is 1,000,000,000 CVX, and the price in December 2023 is $3.48.To generate additional income, platform users can also take advantage of CVX staking to receive a share of Curve LP CRV earnings. In addition, CVX coin can also be used to participate in token distribution voting on Convex. However, before being able to participate in protocol governance, users must lock their CVX tokens for a minimum period.<blockquote>“Staking through Convex allows users to earn Convex’s native CVX token as well as a share of boosted CRV as rewards” - <a href="https://www.kraken.com/ru-ru/learn/what-is-convex-cvx">Kraken</a>.</blockquote><figure class="image"><img src="https://storage.googleapis.com/notum-platform/blog/convex-2.png"></figure><h6 style="text-align:center;">Source: <a href="https://www.convexfinance.com">Convex</a></h6><h2>Why Invest in Yield Farming with Convex?</h2>As you know, the yield farming strategy itself has a number of advantages, making it a preferable choice for many investors. The main ones are:<ul><li>High passive income. Yield farming offers a fairly high income not only relative to the traditional financial sector, but also to crypto investment strategies. By depositing funds into liquidity pools, users can not only receive high APYs, but also earn additional tokens as rewards.</li><li>Accessibility. Unlike the traditional financial sector, where a number of restrictions await the user, yield farming, on the contrary, allows almost any crypto owner to participate in the DeFi world and freely earn rewards.</li><li>Wide choice of strategies. Yield farming includes a huge number of options with different levels of risk, which means both beginners and experienced investors will be able to choose a suitable strategy.</li><li>Providing liquidity. Users participating in yield farming provide liquidity for various DeFi protocols, which not only secures the entire decentralized finance space, but also allows for more efficient trading on <a href="https://notum.ai/glossary/dex">DEXs</a>.</li></ul>Convex, in turn, is a great investment option because after depositing tokens, users not only earn Curve trading fees, but can also stake CRV for additional rewards. In addition, an important advantage of Convex Finance is the absence of commissions for withdrawal of funds and minimum commissions for placing funds in the pool, which reduces gas costs when the network load is low. Thus, by investing on Convex, users receive two sources of income, a user-friendly interface and decentralization of the platform, allowing them to invest without restrictions.<h2>Convex’s Investment Strategies</h2>Today we will look at two popular <a href="https://www.convexfinance.com">Convex Finance</a> strategies taken from <a href="https://notum.ai">Notum</a> that allow users to receive relatively high rewards from yield farming in 2023:&nbsp;<a href="https://app.notum.ai/investments/0x4807862AA8b2bF68830e4C8dc86D0e9A998e085a?&amp;protocol=Convex%20Finance&amp;chainId=1">BUSD-3CRV</a>&nbsp; Total APY – 1.19%, TVL – $206.4KThis investment strategy allows users to deposit their BUSD and 3CRV assets into a liquidity pool on the Ethereum network to generate income. The average profit from participating in the pool is often between 1.10% and 1.30% and has a low level of risk , which can be beneficial for novice investors. Users also receive rewards in the form of CRV and CVX tokens, which can be used to generate additional profits.<figure class="image"><img src="https://storage.googleapis.com/notum-platform/blog/convex3.png"></figure><h6 style="text-align:center;">Source: <a href="https://app.notum.ai/investments/0x4807862AA8b2bF68830e4C8dc86D0e9A998e085a?&amp;protocol=Convex%20Finance&amp;chainId=1">BUSD-3CRV</a> on <a href="https://notum.ai">Notum</a></h6><a href="https://app.notum.ai/investments/0x9c3B46C0Ceb5B9e304FCd6D88Fc50f7DD24B31Bc?&amp;protocol=Convex%20Finance&amp;chainId=1">WETH-FRXETH</a>&nbsp; Total APY - 3.67%, TVL - $96.3MAnother investment strategy by Convex allows users to invest their WETH and FRXETH assets into a liquidity pool on the Ethereum network for getting passive income. WETH-FRXETH pool has a low level of risk, and the total annual percentage yield varies from 3.3% to 4.0%.Participation in this liquidity pool not only allows users to earn interest, but also receive CRV and CVX reward tokens. In addition, WETH-FRXETH is a pool with high liquidity, as its TVL is over 96 million as of December 2023.<figure class="image"><img src="https://storage.googleapis.com/notum-platform/blog/convex4.png"></figure><h6 style="text-align:center;">Source: <a href="https://app.notum.ai/investments/0x9c3B46C0Ceb5B9e304FCd6D88Fc50f7DD24B31Bc?&amp;protocol=Convex%20Finance&amp;chainId=1">WETH-FRXETH</a> on <a href="https://notum.ai">Notum</a></h6><h2>Convex Finance: Risks</h2>Even though the developers of decentralized platforms try to secure them as much as possible, they are still not without risks. Convex, like other yield optimizers, has its drawbacks that you should pay attention to before you start investing:<ul><li>Risk of smart contracts. Since most decentralized platforms run on smart contracts, they are also susceptible to various hacks, bugs and vulnerabilities.</li><li>Market risks. Yield farming, like many other investment strategies, is quite volatile. Since the assets deposited into the liquidity pool may change in value, this may result in some losses. Downturns in the market can also negatively impact future returns.</li><li>Impermanent loss. As is known, the cost of a token in a pool may differ from the usual token holding, which can also lead to a decrease in the overall income received from farming.</li><li>Platform’s complexity. Since Convex is directly linked to Curve, it can be quite difficult for new and inexperienced investors to understand the ecosystem of the platform, which can also be reflected in the choice of the wrong strategy and lead to potential losses.</li></ul><h2>Notum’s Verdict</h2>Convex is a popular medium-risk yield optimizing platform that offers users rewards for providing liquidity. Despite its rather short history of existence since May 2021, Convex has already managed to gain recognition from the crypto community and boasts an impressive total value locked of $1.819 billion. Besides, the platform also has its own ERC-20 standard cryptocurrency, CVX, which is provided as a reward to Curve’s LPs.The platform offers various strategies for generating income with different levels of risk, which is suitable for both experienced investors and beginners. The average APY on Convex Finance is 3.50%, and additional tokens received for providing liquidity can be used to generate extra income. Thus, if you are looking for a well-established DeFi platform for yield farming with a good level of security - Convex may be a good option for you.<h2>Follow Us on Socials</h2><a href="https://notum.ai/">Website</a>&nbsp;|&nbsp;<a href="https://go.notum.ai/U3l8tq">DApp</a>&nbsp;|&nbsp;<a href="https://twitter.com/NotumDefi">Twitter</a>&nbsp;|&nbsp;<a href="https://discord.gg/notum">Discord</a>&nbsp;|&nbsp;<a href="https://t.me/notumDefi">Telegram</a>&nbsp;|&nbsp;<a href="https://mirror.xyz/notum.eth">Mirror</a>&nbsp;|&nbsp;<a href="https://debank.com/official-account/111578/">DeBank</a>Disclaimer: Notum does not provide any investment, tax, legal, or accounting advice. This article is written for informational purposes only. Cryptocurrency is subject to market risk. Please do your own research and trade with caution.

Today we will guide you through the Convex platform, its distinctive features, specific use cases and investment strategies that are worth paying attention to in 2023.

Convex Finance: Decoded by Notum

<h2>Intro</h2>Over the past few years, investing in cryptocurrency has become one of the most popular ways to earn passive income. Since there are now a huge number of strategies, everyone, from beginners to experienced investors, can choose the right option for generating additional income. One investment option that is rapidly growing in 2023 is DeFi indexes, which allow users to gain diversified access to DeFi projects through one convenient token.When creating DeFi indices,<a href="https://notum.ai/glossary/smart%20contract">&nbsp;smart contracts</a> automatically manage the investment portfolio, balancing it according to established rules.Thus, this strategy provides investors with the opportunity to purchase index tokens, which represent a share in a portfolio of assets, and accordingly receive income from the growth in the value of these assets. This investment method is a fairly simple way to generate passive income without actively managing various tokens and projects. Today's article from<a href="https://go.notum.ai/1viNkX">&nbsp;Notum</a> will tell you about the<a href="https://indexcoop.com">&nbsp;Index Coop</a> project, which allows you to gain exposure to DeFi indices, its advantages, risks, and perspective strategies for generating income.<img src="https://lh7-us.googleusercontent.com/CwvIs1uLv4AzIlEPYE4NGS0I5KWtf1F-v-ubnArFyk2G3CQKeEWl9iZoSWkFShO-hCLxol6lwXo01M1xXkh4g5qOq61Tuge695JnGqM709tyAjR0S7nuez7D_nDARXoc7FBG9gPbYMR-cW6L3W3Uhpc" width="602" height="309"><h6 style="text-align:center;">Source:<a href="https://indexcoop.com">&nbsp;IndexCoop</a></h6><h2>Index Coop: Essentials</h2><ul><li>TVL: $70,180,000</li><li>Risk Level: Medium</li><li>Blockchains:&nbsp;<a href="https://ethereum.org/en/">Ethereum</a> and EVM-compatible networks</li><li>Foundation Date: Oct, 2020</li></ul>The<a href="https://indexcoop.com">&nbsp;Index Coop</a> is a project that was launched on October 6th, 2020 by<a href="https://www.tokensets.com/#/">&nbsp;Set Labs</a> as a decentralized autonomous organization to create and maintain crypto-native structured products. However, since its inception, it has undergone changes and is now a project consisting of core contributors INDEX investors, and supporters. As a<a href="https://notum.ai/glossary/dao">&nbsp;DAO</a>, Index Coop is still creating secure and accessible products using a decentralized network.<figure class="media"><div data-oembed-url="https://www.youtube.com/watch?v=7odlQKPlBdA"><div style="position: relative; padding-bottom: 100%; height: 0; padding-bottom: 56.2493%;"><iframe src="https://www.youtube.com/embed/7odlQKPlBdA" style="position: absolute; width: 100%; height: 100%; top: 0; left: 0;" frameborder="0" allow="autoplay; encrypted-media" allowfullscreen=""></iframe></div></div></figure>&nbsp;The Index Cooperative project consists of DeFi experts, financial specialists, and engineers providing access to various digital assets through index products that automatically adjust to market changes.The crypto index products themselves are in many ways similar to traditional market indices, as they also track specific topics, namely Decentralized Finance and others. One of the most popular crypto indices is the<a href="https://notum.ai/glossary/dpi-index%20">&nbsp;DeFi Pulse Index</a>, which tracks the performance of decentralized finance tokens. DPI was created by Index Cooperative and its main goal is to provide users with a convenient way to gain diversified exposure to DeFi without the need for active portfolio management. Another popular index offered by Index Coop is the<a href="https://indexcoop.com/products/metaverse-index">&nbsp;Metaverse Index</a>.<blockquote>“The Metaverse index (MVI) is designed to capture the trend of entertainment, social activity and business moving to take place in virtual economies, powered by NFTs and blockchain technology” –<a href="https://indexcoop.com/products/metaverse-index">&nbsp;IndexCoop</a>.</blockquote>The DeFi Pulse Index is a way to diversify a portfolio with assets representing different protocols and projects in the DeFi field. Index creators not only define a management strategy but create smart contracts that automatically manage the portfolio in accordance with that strategy.At the moment, Index Coop is a project that supports the best crypto indices on the market and simplifies the purchase of digital assets as much as possible.The way Index Coop works is to help users generate income by holding an index token that represents a stake in underlying assets. As the value of the underlying assets increases, so does the value of the index token. Thus, users benefit from a simple way to acquire and hold digital assets. After product’s most recent launch of the<a href="https://indexcoop.com/products/coindesk-eth-trend-index">&nbsp;Index Coop CoinDesk ETH Trend Index</a>, their products cover 4 categories: sector, leverage, yield and automated strategy.<h2>Why Use Index Coop?</h2>DeFi indices is a fairly innovative approach to portfolio diversification in DeFi and has several main advantages that become even more attractive thanks to Index Cooperative:<ul><li>Automated portfolio management. Since DeFi indices are created using smart contracts, they offer rebalancing and automatic inclusion/exclusion of new projects into the index without the need for active investor participation. In addition, DeFi index smart contracts can regulate asset allocation, and participate in various financial transactions such as staking and liquidity provision. Index Coop's automation saves investors time by giving them the ability to monitor the market without constant intervention.</li><li>Simplicity of products. While many income generating strategies can be difficult to understand, Index Coop strives to make the user experience as simple as possible and provide every investor with access to crypto products.</li><li>Portfolio diversification. Since DeFi indices can be described as a pool of different DeFi projects and tokens, allocation of indices through Index Coop allows you to diversify your portfolio by spreading risk across different assets. In this way, users reduce the risk of failure and the impact of market conditions on overall profits.</li><li>Participation in the DeFi ecosystem. The decentralized finance market is growing and developing quite quickly, attracting more and more users and investors every year. Thus, DeFi indices with Index Coop allows users to participate in the growth of this sector while receiving rewards.</li><li>Liquidity. Since DeFi indices are a liquid asset and traded on various DEXs, users can quickly and seamlessly buy or sell them without the restrictions associated with the traditional financial sector.</li></ul><h2>Index Coop: Investment Strategies</h2>Today we will look at two popular strategies that allow users to earn passive income on<a href="https://indexcoop.com">&nbsp;Index Coop</a> without being actively involved in the process:DPI on<a href="https://defillama.com/yields/pool/d5fe4849-e117-496f-ab5e-06ab07a8a752">&nbsp;Ethereum</a>&nbsp; Total APY - 0.00%, TVL - $25mAs you know, the<a href="https://notum.ai/glossary/dpi-index%20">&nbsp;DeFi Pulse Index</a> or (DPI) tracks the performance of DeFi tokens depending on their market capitalization. The DPI index structure caps each token exposure at 25%, which not only ensures risk management but also improves the diversity of your portfolio.&nbsp;<blockquote>“Any excess weight above 25% that would have been allocated to the token is redistributed to the remaining components of the DeFi Pulse Index on a proportional basis.” –<a href="https://app.notum.ai/explore/defi-indexes?name=DeFi%20Pulse%20Index">&nbsp;Notum</a>.</blockquote><img src="https://lh7-us.googleusercontent.com/mhHbMXh2H-BrcX_nnyjn-y-fGrMMLqnngCZR5W46Soe-hUNSBl5bIdIm0VqRy6SexCTbq27DYe6T-tipg3RRyMiQ_zx2QHU0EImXwgiNIrghQCfSxZHCIj6A49Ur1mVZlbnsSar1sPOOLBhskfYbhzc" width="602" height="57"><h6 style="text-align:center;">Source:<a href="https://app.notum.ai/explore/defi-indexes?name=DeFi%20Pulse%20Index">&nbsp;Notum</a></h6>MVI on<a href="https://defillama.com/yields/pool/2431aeec-d0b9-4e62-ab5e-ff8718ad45fc">&nbsp;Ethereum</a>&nbsp; Total APY - 0.09%, TVL - $5,6m<a href="https://indexcoop.com/products/metaverse-index">The Metaverse index</a> is another DeFi index token from Index Coop, based on blockchain and<a href="https://notum.ai/glossary/nft">&nbsp;NFT</a> technologies. MVI shows trends in the development of business, entertainment and social activity in the virtual economy. To obtain the final weights, the index uses a combination of market cap and DEX liquidity.<a href="https://indexcoop.com/products/metaverse-index">&nbsp;MVI</a> can be a profitable option as it diversifies the evolving digital landscape and balances its impact on the<a href="https://about.meta.com/metaverse/">&nbsp;Metaverse</a>.<img src="https://lh7-us.googleusercontent.com/oR_VO9Xlos0u2NC2IFnqyHZiMmXxgOmcWJKF32T-hTKjrZAN0ZefyjF5AJ42dlt0ZK8VO-6ecmaTmDpIlMfjcd-QiimBeHmUnY2Ugzs85-J-0ZEZN8LnUnGhqj7OUnzb1CrtRfWVGXS8tCkEdJoCfqc" width="602" height="57"><h6 style="text-align:center;">Source:<a href="https://app.notum.ai/explore/defi-indexes?name=Metaverse%20Index">&nbsp;Notum</a></h6><h2>How Risky Is Index Coop?</h2>The products offered by<a href="https://indexcoop.com/products">&nbsp;Index Coop</a> are built on one of two protocols -<a href="https://www.notion.so/index-coop-community-handbook/protocols/set-protocol-v2">&nbsp;Set Protocol v2</a> or Index Protocol. The project’s website itself states that protocol security is a top priority for their DAO, so Set Labs and Index Coop pay due attention to this. Both of these systems have been tested by different security firms and undergone<a href="https://docs.indexcoop.com/index-coop-community-handbook/protocols/security">&nbsp;several audits</a>, such as Sherlock, OpenZeppelin, ABDK and others.However, Index Coop, like most DeFi projects, is subject to some risks that you should pay attention to before investing in indices:<ul><li>Market volatility. As you know, the cryptocurrency market is quite changeable and subject to price fluctuations, which means DeFi indices are also a volatile asset.</li><li>Smart contracts. Since Index Coop uses smart contracts for automatic portfolio management and other functions, it is also subject to smart contract risks such as vulnerabilities, bugs, and others that can lead to loss of funds.</li><li>Changes in DeFi protocols. Since the developers of<a href="https://d.docs.live.net/index-coop-community-handbook/protocols/set-protocol-v2">&nbsp;Set Protocol v2</a> or I<a href="https://d.docs.live.net/index-coop-community-handbook/protocols/index-protocol">ndex Protocol</a> may make changes to the structure of the protocols, this may have an impact on the reward structure, terms of use, commissions, investment returns, and more.</li></ul><h2>Index Coop Token (INDEX)</h2><ul><li>Total supply: 10,000,000 INDEX</li><li>Maximum supply: 10,000,000 INDEX</li><li>All-time high INDEX coin price: $133.14</li><li>All-time low INDEX coin price: $0.7946</li></ul>Index Coop has its own governance token,<a href="https://indexcoop.com/products/index-token">&nbsp;INDEX</a>, which is used to vote on various project proposals. Thus, holders of the<a href="https://coinmarketcap.com/currencies/index-cooperative/">&nbsp;$INDEX</a> token can both influence changes in existing Index Coop projects and vote for new products. In addition, token owners can influence the distribution of funds and manage external protocols. INDEX is a<a href="https://notum.ai/glossary/pos">&nbsp;PoS</a> token and was originally deployed to the<a href="https://ethereum.org/en/">&nbsp;Ethereum mainnet</a>. As of December 27, 2023, the Index Coop token price is $3.50 according to<a href="https://coinmarketcap.com/currencies/index-cooperative/">&nbsp;Coin Market Cap</a>.<img src="https://lh7-us.googleusercontent.com/XsD9kmdbtD0LnqVylmD3u48d74VJ0BPKpw5gmJrDDpKodSISW1ZcRj4e9JF2zEeLgkFHbwhneLLvOz2l9X-cRqg3KdVXkHTQBEcgbHtbPhhUeHgUQN5mR1AVh1YKIJJ7SeNt9-NpJtK_abiNeW0g6Bk" width="602" height="247"><h6 style="text-align:center;">Source:<a href="https://indexcoop.com/products/index-token">&nbsp;IndexCoop</a></h6><h2>Notum’s Verdict</h2>Index Coop is a project that, since 2020, has been offering users affordable and secure products in the field of decentralized finance. The index products offered by the platform automatically adapt to market changes and require a low level of user involvement to receive rewards. A notable feature of the platform is the creation of the DeFiPulse Index, which provides users with a simple and convenient way to gain diversified exposure to DeFi without actively engaging in the process.Despite the underlying risks of smart contracts and market volatility, the platform is quite secure due to the security checks and audits carried out. Thus, Index Coop builds simple, but powerful index tokens that make the best of DeFi more accessible. An automated portfolio management system, ease of use, and user-friendly interface make Index Coop a great solution for those wishing to gain exposure to DeFi indices.<h2>Follow Us on Socials</h2><a href="https://notum.ai/">Website</a>&nbsp;|&nbsp;<a href="https://go.notum.ai/U3l8tq">DApp</a>&nbsp;|&nbsp;<a href="https://twitter.com/NotumDefi">Twitter</a>&nbsp;|&nbsp;<a href="https://discord.gg/notum">Discord</a>&nbsp;|&nbsp;<a href="https://t.me/notumDefi">Telegram</a>&nbsp;|&nbsp;<a href="https://mirror.xyz/notum.eth">Mirror</a>&nbsp;|&nbsp;<a href="https://debank.com/official-account/111578/">DeBank</a>Disclaimer: Notum does not provide any investment, tax, legal, or accounting advice. This article is written for informational purposes only. Cryptocurrency is subject to market risk. Please do your own research and trade with caution.

Today Notum will tell you about the Index Coop project, which allows you to gain exposure to DeFi indices, its advantages, risks, and perspective strategies for generating more passive income.

How to Gain Exposure to DeFi Indices on Notum

In today's article from Notum, we will take a detailed look at yield farming, its main advantages and disadvantages, platforms for farming, as well as their investment strategies that are worth considering in 2023.

Yield Farming Investments | How earn rewards from LP with Notum

<h2>Balancer Protocol Overview</h2>The crypto world is growing and evolving, thereby offering users a variety of options and investment opportunities. One of the most popular strategies in 2024 is the <a href="https://notum.ai/blog/how-why-invest-in-liquidity-pool-provision-notum-x-virtuswap">liquidity pool provision</a>, allowing users to deposit their assets and receive fairly high rewards in return.A <a href="https://notum.ai/glossary/liquidity%20pool">liquidity pool</a> is a collection of assets deposited by users into smart contracts. Money held in liquidity pools is available for various financial transactions, such as decentralized financing, trading, lending, and so on.One of the main purposes of these pools is to provide liquidity to various decentralized exchanges. In order to incentivize investors to provide their assets, they are paid rewards in the form of trading fees and additional tokens.There are now a huge number of different platforms and protocols for providing liquidity to pools to generate income. Today's article from <a href="https://go.notum.ai/balancer_decoded">Notum</a> will help you get acquainted with one of the most popular protocols for providing liquidity to pools - <a href="https://balancer.fi/">Balancer</a>, as well as study its main features, profitable investment strategies, and pay attention to its advantages and risks.<figure class="media"><div data-oembed-url="https://www.youtube.com/watch?v=cizLhxSKrAc"><div style="position: relative; padding-bottom: 100%; height: 0; padding-bottom: 56.2493%;"><iframe src="https://www.youtube.com/embed/cizLhxSKrAc" style="position: absolute; width: 100%; height: 100%; top: 0; left: 0;" frameborder="0" allow="autoplay; encrypted-media" allowfullscreen=""></iframe></div></div></figure><h2>Balancer Protocol: The Essentials</h2><ul><li>Balancer TVL:&nbsp;$987,980,000</li><li>Average APY: up to 16,5%</li><li>Risk Level:&nbsp;Medium - High</li><li>Blockchains:&nbsp;<a href="https://ethereum.org/en">Ethereum</a>, <a href="https://polygon.technology/">Polygon</a>, <a href="https://arbitrum.io/">Arbitrum</a>, <a href="https://www.gnosis.io/">Gnosis</a>, <a href="https://www.optimism.io/">Optimism</a>, <a href="https://www.avax.network/">Avalanche</a>, <a href="https://base.org/">Base</a></li><li>Foundation Date:&nbsp;2018</li></ul><a href="https://balancer.fi/">Balancer Labs</a> is an decentralized finance <a href="https://notum.ai/glossary/algorithmic%20money%20market%20(amm)">AMM</a> protocol designed to automatically balance a token portfolio in <a href="https://notum.ai/glossary/dapp">DeFi applications</a>. The protocol runs on <a href="https://ethereum.org/">Ethereum</a> and allows users to create liquidity for various tokens, manage a portfolio, and earn fees for lending assets. Thus, any investor can provide liquidity to the <a href="https://app.balancer.fi/#/">Balancer pools</a> by simply depositing assets there.Automated market maker (AMM) is an algorithm that uses liquidity pools instead of actual market makers to provide users with the most secure and free environment for trading crypto assets. Thus, instead of direct user interaction, such transactions use smart contracts.Users who contribute crypto assets to <a href="https://balancer.fi/">Balancer</a>'s liquidity pools receive a portion of the trading fees paid to the network for using their funds as a reward. In addition, the protocol also rewards investors with its own cryptocurrency, <a href="https://coinmarketcap.com/currencies/balancer/">BAL</a>. Depositing assets into pools provides the liquidity that users need to buy and sell assets on Balancer.<blockquote>«This means Balancer must incentivize both sides of its market in order to operate – crypto users who might wish to make some of their holdings available to be traded, and traders seeking the best possible price for an asset» - <a href="https://www.kraken.com/learn/what-is-balancer-bal">Kraken</a>.</blockquote>Although the Balancer operates similar to other decentralized exchanges such as <a href="https://uniswap.org/">Uniswap</a>, it offers users a number of distinctive features. For example, the protocol has the ability to bundle up to eight tokens in the same pool and use liquidity in different proportions.Balancer offers private, public and smart pools, which means each user can choose the option suitable for their needs and risk level.<figure class="image"><img src="https://storage.googleapis.com/notum-platform/blog/-20240115-20.06.59.png"></figure><h6 style="text-align:center;">Source: <a href="https://balancer.fi/">Balancer</a></h6><h2>Balancer V2</h2><ul><li>Balancer V1 TVL: $139,25m</li><li>Balancer V2 TVL: $841,86m</li></ul>As you know, Balancer V1 was released back in 2018 based on the Balancer Protocol. However, on May 11, 2021, Balancer Labs, the company responsible for the development of the platform, introduced Balancer Version 2. The main components of the new version were capital and gas efficiency, flexibility and security.A distinctive feature of Balancer V2 is the new single Vault architecture, which is not only capable of managing all assets added to the protocol pools, but also significantly simplifies pool contracts. Thus, the new version included asset managers that allowed to increase capital efficiency with the following features:<ul><li>a single vault for all Balancer Pool assets;</li><li>reduced trading costs and gas fees.</li></ul><h2>Why Invest in Liquidity Pool Provision with Balancer?</h2>The liquidity pool provision is not only an important part of the DeFi sector, but also allows investors to receive fairly large rewards. <a href="https://balancer.fi/">Balancer Finance</a>, in turn, has a number of advantages that make investing in liquidity pools especially attractive:<ul><li>Decentralization. The Balancer protocol runs on the <a href="https://ethereum.org/">Ethereum blockchain</a> and uses smart contracts to automate trading and portfolio management. Thus, the protocol is decentralized and safe to use, which is very important in a crypto environment.</li><li>Automated portfolio. A definite advantage of Balancer is the automatic balancing of the token portfolio in accordance with predefined parameters. This way, investors can maintain the proportions of assets in their portfolio they want without the need for active involvement.</li><li>Multi-token pools. Unlike many other liquidity protocols, Balancer allows users to create liquidity pools with more than two tokens, which sets it apart from most competitors. Currently, the protocol allows you to combine up to 8 tokens in one pool.</li><li>Pool flexibility. Investors providing liquidity to the protocol's pools can customize the parameters of their pools, such as token allocation percentages and trading fees. Thus, Balancer provides significant flexibility and control over money management.</li><li>Token swaps. The protocol provides users with exchange one token for another through liquidity pools, which makes trading assets on Balancer quite comfortable and safe.</li><li>High rewards. Users who contribute their assets to Balancer liquidity pools receive a portion of the transaction fees that occur in the pools and also earn BAL tokens as rewards.</li><li>Compatibility with other protocols. As Balancer runs on <a href="https://ethereum.org/">Ethereum</a>, it can integrate with other DeFi protocols on the network, allowing user funds to secure the decentralized finance system.</li></ul><h2>Investment Strategies on Balancer</h2>As mentioned, <a href="https://balancer.fi/">Balancer.Finance</a> offers users a large number of different investment strategies to earn rewards for providing liquidity on the platform. On the protocol website, in the “pools” section, users can select one of 7 networks and then filter the pools of the selected network by tokens.Balancer also has several types of pools to choose from - Weighted, Stable, CLP, LBP, and New so that the users could find the most suitable option for them. In addition, investors have the opportunity to create a pool themselves by selecting tokens and weights.Today we will look at two popular investment strategies on Balancer with a medium level of risk that will allow you to earn quite high rewards in 2024:<h3 style="text-align:center;"><a href="https://defillama.com/yields/pool/88a48fa9-bea0-499b-aa4d-e32079bf1fce">RDNT / WETH</a> on Arbitrum&nbsp;</h3><a href="https://defillama.com/yields/pool/88a48fa9-bea0-499b-aa4d-e32079bf1fce">RDNT / WETH</a> on Arbitrum&nbsp; Total APY – 21.25%, TVL – $71,38mThis liquidity pool on the <a href="https://arbitrum.io/">Arbitrum</a> network allows users to deposit <a href="https://coinmarketcap.com/currencies/radiant-capital/">RDNT</a> and <a href="https://coinmarketcap.com/currencies/weth/">WETH</a> assets to receive fairly high rewards. Total APR in the pool varies from 18% to 27%, and dynamic swap fees are 0.5%. Pool weight is 80.00% RDNT and 20.00% WETH. Although the pool itself is immutable, swap fees can be edited by the pool owner.<figure class="image"><img style="aspect-ratio:2472/310;" src="https://storage.googleapis.com/notum-platform/blog/-20240115-20.09.19.png" width="2472" height="310"></figure><h6 style="text-align:center;">Source: <a href="https://app.balancer.fi/#/arbitrum/pool/0x32df62dc3aed2cd6224193052ce665dc181658410002000000000000000003bd">Balancer</a>&nbsp;</h6><h3 style="text-align:center;"><a href="https://defillama.com/yields/pool/ddca6577-479e-419d-b443-1442b1b49d60">MAGIC / USDC</a> on Arbitrum&nbsp;</h3><a href="https://defillama.com/yields/pool/ddca6577-479e-419d-b443-1442b1b49d60">MAGIC / USDC</a> on Arbitrum&nbsp; Total APY – 24.67%, TVL – $2,44mMAGIC/USDC is a moderate-risk liquidity Balancer pool on <a href="https://arbitrum.io/">Arbitrum</a> that allows investors to deposit <a href="https://coinmarketcap.com/currencies/magic-token/">MAGIC</a> and <a href="https://coinmarketcap.com/currencies/usd-coin/">USDC</a> tokens, each weighing 50.00%. The total APR of this pool ranges from 24% to 28%, while swap fees are currently fixed at 0.3%. As with RDNT/WETH, the attributes of this pool are immutable, with the exception of the swap fee, which can be edited by Management.<figure class="image"><img src="https://storage.googleapis.com/notum-platform/blog/-20240115-20.10.54.png"></figure><h6 style="text-align:center;">Source: <a href="https://app.balancer.fi/#/arbitrum/pool/0xb3028ca124b80cfe6e9ca57b70ef2f0ccc41ebd40002000000000000000000ba">Balancer</a></h6>However, Balancer, like other decentralized finance platforms, faces certain risks that should be considered before investing. Smart contract vulnerabilities pose a significant threat as bugs or exploits can lead to loss of funds. In addition, market risks such as sudden price fluctuations or low liquidity of certain assets may lead to slippage and negatively impact users' earnings.Another potential risk is vault hacking, thanks to which attackers can gain access to all tokens of the protocol. However, in May 2021, the protocol underwent a thorough audit, which indicates an adequate level of security.<h2>Notum’s Verdict</h2>Balancer is a fairly popular AMM decentralized finance protocol that offers a large number of advantages, such as automatic portfolio balancing, multi-token pools and others. The protocol is built on the Ethereum blockchain and is decentralized, which is ensured through the use of smart contracts. In addition to Ethereum, Balancer supports six other networks and a huge number of tokens, giving the user a wide variety of investment strategies.The protocol is not automated and requires medium to high user involvement, which is most suitable for investors with some experience. However, the advantage of Balancer is the potentially high rewards, which depend on the chosen network, strategy and tokens. Despite potential risks such as market volatility, protocol changes, smart contract risk and others, Balancer is a fairly reliable option that will help you get started in the world of investing in liquidity pools.<h2>Follow Us on Socials</h2><a href="https://notum.ai/">Website</a>&nbsp;|&nbsp;<a href="https://go.notum.ai/U3l8tq">DApp</a>&nbsp;|&nbsp;<a href="https://twitter.com/NotumDefi">Twitter</a>&nbsp;|&nbsp;<a href="https://discord.gg/notum">Discord</a>&nbsp;|&nbsp;<a href="https://t.me/notumDefi">Telegram</a>&nbsp;|&nbsp;<a href="https://mirror.xyz/notum.eth">Mirror</a>&nbsp;|&nbsp;<a href="https://debank.com/official-account/111578/">DeBank</a>Disclaimer: Notum does not provide any investment, tax, legal, or accounting advice. This article is written for informational purposes only. Cryptocurrency is subject to market risk. Please do your own research and trade with caution.

Today Notum will help you get acquainted with one of the most popular protocols for providing liquidity to pools —Balancer, as well as study its main features, and profitable investment strategies, and pay attention to its advantages and risks.

Balancer Protocol Overview I Notum

Understanding the challenges of choosing the right platform for liquidity staking, we want you to pay attention to the best option the DeFi market offers. That's why today we'll tell about Stader Labs.

Stader Labs: Decoded by Notum

<h2>Intro</h2>Liquid staking is an investment strategy that is popular among both beginners and experienced investors. Most users find this option attractive due to the passive income, minimal risks and low level of engagement.As known, <a href="https://notum.ai/blog/liquid-staking-by-notum">liquid staking</a> involves locking assets in a liquidity pool for a certain period of time to receive a reward. However, unlike <a href="https://notum.ai/glossary/staking">traditional staking</a>, users receive additional tokens in return for staked assets, indicating their stake in the pool.The advantage of liquid staking is the ability to use additional tokens in the DeFi space to generate extra income.<a href="https://rocketpool.net/">Rocket Pool</a> is the most popular <a href="https://ethereum.org/">Ethereum</a> liquid staking platform in the world, allowing users to deposit any amount of ETH and earn fairly decent rewards. Today <a href="https://go.notum.ai/nmBanP">Notum</a> will take a closer look at the Rocket Pool protocol, highlight its main benefits and risks, and pay attention to its investment strategy for generating income in 2024.<h2>Rocket Pool: The Essentials</h2><ul><li>TVL: $2,748,000,000</li><li>Average APY: 2.89%</li><li>Risk Level: Low</li><li>Blockchains: <a href="https://ethereum.org/">Ethereum</a></li><li>Foundation Date: Sept, 2016</li></ul><a href="https://rocketpool.net/">Rocket Pool</a> is the largest liquid staking platform for <a href="https://ethereum.org/">Ethereum</a>. The platform was founded back in 2016 and is still popular among ETH investors around the world.As of January 2024, its Total Value Locked is over 2.7 billion, making it the second most popular liquid staking platform in the world after <a href="https://lido.fi/">Lido</a>.Liquid staking with Rocket Pool provides users with the opportunity to deposit their ETH assets to a staking service provider to receive rewards. In return for investing liquidity, users receive a receipt token which shows their stake, which increases over time. Thus, the staking process on the platform is as simple and convenient as possible.As said, by depositing their assets to the liquidity pool on Rocket Pool, users earn so-called <a href="https://coinmarketcap.com/currencies/rocket-pool-eth/">rETH</a> tokens, which can be used in the DeFi space for various purposes.While the main ETH investment generates passive income, rETH can be traded on exchanges, used as collateral, and used in other DeFi operations.In order to receive liquid staking rewards for ETH on Rocket Pool, a user only needs to invest 0.01 ETH or more. Thus, during the time the asset is locked in the pool, the investor will receive rewards equivalent to his contribution. However, if necessary, the user can unstake his ETH at any time without any lockup period.In addition to liquid staking, <a href="https://rocketpool.net/">Rocket Pool</a> offers users an investment strategy such as <a href="https://rocketpool.net/node-staking/what-is-node-staking">node staking</a>, which means that the user must hold and stake ETH, as well as operate an Ethereum validating node.<blockquote>«To participate in Ethereum staking, individuals must hold &amp; stake a minimum of 32 ETH &amp; run an Ethereum validating node» - <a href="https://rocketpool.net/liquid-staking/what-is-liquid-staking">RocketPool</a>.</blockquote><figure class="image"><img src="https://storage.googleapis.com/notum-platform/blog/block101.png"></figure><h6 style="text-align:center;">Source: <a href="https://theblock101.com/rocket-pool-la-gi">The Block101</a></h6><h2>Rocket Pool Rewards</h2>Rocket Pool incentivizes participation in its network through multiple ways to earn rewards. Let's look at the main ones:<ul><li>Rocket Pool Protocol Token ($RPL)</li></ul><a href="https://coinmarketcap.com/currencies/rocket-pool/">RPL</a> is the main protocol token on the <a href="https://ethereum.org/">Ethereum blockchain</a>. Rocket Pool Protocol Token is used to manage the <a href="https://rocketpool.net/governance/protocol-dao">protocol DAO</a>. In addition, RPL crypto can also be staked by node operators to receive rewards.<ul><li>Rocket Pool Staking Deposit Token (rETH)</li></ul><a href="https://coinmarketcap.com/currencies/rocket-pool-eth/">rETH</a> is a kind of tokenized deposit that represents the reward that the user receives over time on the Rocket Pool network.Thus, by depositing their assets into the protocol, users receive rETH which can be used in the DeFi space for trading, selling and other financial transactions.<ul><li>ETH token</li></ul>For sure, by staking their <a href="https://coinmarketcap.com/currencies/ethereum/">ETH assets</a> into the Rocket Pool, users will also earn rewards on their investments. However, Rocket Pool's APR for staking Ethereum may vary depending on the state of the network.<ul><li>Staking Pool Comissions</li></ul>Users who operate nodes also receive commissions from the ETH assets placed in the pool. This way they have additional motivation to contribute to the development and safety of the network.<h2>Why Invest in Liquid Staking with Rocket Pool?</h2>As you know, there are now a huge number of different platforms for investing in liquid staking. However, Rocket Pool, which has been around since 2016, captivates with its reliability, security and ever-increasing TVL. However, let's look at the specific reasons why you should pay attention to this liquid staking protocol:<ul><li>Additional income. By depositing their ETH crypto into Rocket Pool liquidity pools, users can have access to their assets even while staking. By investing, the protocol provides users with rETH tokens that can be used for various financial transactions in the DeFi space.</li><li>No lock-up period. While many platforms have a certain period of time they need to wait before withdrawal, Rocket Pool gives its users the opportunity to unstake their ETH without having to wait for a minimum staking period.</li><li>Safety. Rocket Pool staking is famous for its non-custodial and trustless nature, as well as the proper level of decentralization, which gives users a guarantee of their assets’ safety. Moreover, the protocol has passed several serious audits, including <a href="https://github.com/trailofbits/publications/blob/master/reviews/RocketPool.pdf">Trail of Bits</a>, <a href="https://rocketpool.net/files/sigma-prime-audit.pdf">Sigma Prime</a> and <a href="https://consensys.io/diligence/audits/2021/04/rocketpool/">Consensys Diligence</a>, which indicates the proper level of reliability.</li><li>Perfect Score. The official Ethereum website has a <a href="https://ethereum.org/en/staking/pools#explore-staking-pools">page</a> explaining how liquidity pools work and recommending the best pools for investment. Exactly according to <a href="https://ethereum.org/en/staking/pools/#explore-staking-pools">ethereum.org.</a> Rocket Pool is the only platform with an excellent score.</li><li>Community governance. Rocket Pool is a protocol that has a fairly large and wholesome community that plays a fairly large role in the governance of the protocol.</li></ul><figure class="image"><img src="https://storage.googleapis.com/notum-platform/blog/why-invest.png"></figure><h6 style="text-align:center;">Source: <a href="https://stake.rocketpool.net/">RocketPool</a></h6><h2>Investment Strategies on Rocket Pool</h2>If you own ETH assets and have decided to invest in liquid staking, choosing the right liquidity pool is a pretty important point. The investment strategy below will allow you to securely stake ETH and receive regular passive rewards.RETH on <a href="https://defillama.com/yields/pool/d4b3c522-6127-4b89-bedf-83641cdcd2eb">Ethereum</a>&nbsp; Total APY – 2.89%, TVL – $2,496bThis investment strategy from Rocket Pool is the most popular <a href="https://app.notum.ai/investments/0xae78736cd615f374d3085123a210448e74fc6393?protocol=Rocket+Pool&amp;chainId=1">rETH liquid staking pool</a> in the world. Its Total Value Locked reaches almost $2.5 billion, while its closest rival, rETH pool on <a href="https://docs.aave.com/developers/getting-started/readme">AAVE v3</a>, has a TVL of only $113.54 million. Moreover, a high TVL means high pool performance and indicates a decent level of security.A significant advantage of this strategy is that it is not subject to impermanent loss, which leads to a potentially low investment risk. In addition, this rETH pool gives investors the opportunity to earn from 2.5% to 3.5% APY without active management or involvement.<figure class="image"><img src="https://storage.googleapis.com/notum-platform/blog/rocket-pool-investment.1png.png"></figure><h6 style="text-align:center;">Source: <a href="https://app.notum.ai/investments/0xae78736cd615f374d3085123a210448e74fc6393?protocol=Rocket+Pool&amp;chainId=1">Notum</a></h6><h2>Rocket Pool: Risks and Disadvantages</h2>As you know, Rocket Pool is the most popular platform focused on Ethereum staking, but it is also not without risks and disadvantages. Despite the fact that the protocol has undergone several audits, which already indicate the proper level of security and safety of investments, before choosing Rocket Pool for liquid staking you should familiarize yourself with some nuances:<ul><li>Required ETH amount. While the <a href="https://lido.fi/">Lido platform</a> allows users to stake any amount of Ethereum they have, Rocket Pool requires a minimum amount of 0.01 ETH. Thus, if you do not have the minimum deposit required by the protocol, which is equivalent to $22 in January 2024, you will not be able to stake ETH on RocketPool.</li><li>Smart contract risk. Like most other decentralized finance platforms, Rocket Pool runs on smart contracts to facilitate the staking process. However, as you know, smart contracts can be subject to bugs, vulnerabilities, or exploits, which can lead to loss of funds.</li><li>Dependency on Ethereum. As you know, Rocket Pool operates on the Ethereum blockchain, which means the functionality of the protocol also depends on it. In other words, any problems in the Ethereum network such as network congestion can lead to deterioration in the performance of Rocket Pool.</li><li>Market volatility. As known, the cryptocurrency market is subject to various fluctuations and price changes, which directly affects the value of staked assets. Thus, if the value of ETH falls, users will also suffer potential losses.</li></ul>Therefore, if you are looking to invest with Rocket pool crypto staking, it is important to do your research, carefully examine the advantages and disadvantages of the platform and make sure that it suits your wants and needs.<h2>Notum’s Verdict</h2>Rocket Pool is a low-risk liquid staking platform for Ethereum that offers users options for earning passive income. Its friendly and intuitive interface is suitable for both experienced crypto investors and beginners who are just exploring the world of liquid staking. The platform offers the world's most popular rETH liquidity pool, which brings investors passive income from 2.5% to 3.5% APY. Despite the potential risks associated with smart contracts, market volatility and dependence on Ethereum, Rocket Pool has a strong position in the liquid staking market and offers profitable investment strategies for earning rewards.<h2>Follow Us on Socials</h2><a href="https://notum.ai/">Website</a>&nbsp;|&nbsp;<a href="https://go.notum.ai/U3l8tq">DApp</a>&nbsp;|&nbsp;<a href="https://twitter.com/NotumDefi">Twitter</a>&nbsp;|&nbsp;<a href="https://discord.gg/notum">Discord</a>&nbsp;|&nbsp;<a href="https://t.me/notumDefi">Telegram</a>&nbsp;|&nbsp;<a href="https://mirror.xyz/notum.eth">Mirror</a>&nbsp;|&nbsp;<a href="https://debank.com/official-account/111578/">DeBank</a>Disclaimer: Notum does not provide any investment, tax, legal, or accounting advice. This article is written for informational purposes only. Cryptocurrency is subject to market risk. Please do your own research and trade with caution.

Today Notum will take a closer look at the Rocket Pool protocol, highlight its main benefits and risks, and pay attention to its investment strategy for generating income in 2024.

Rocket Pool Overview by Notum

<h3>Intro</h3>In 2023, the DeFi space is almost impossible to imagine without yield aggregation since this strategy offers users maximum rewards from their crypto investments. Yield aggregation combines various smart contracts and strategies, puts user investments together, and automatically invests them in the most profitable projects.Even though yield aggregators are similar in many ways, they are distinguished by the blockchains they support and the strategies they use.<a href="https://yieldyak.com">Yield Yak</a> is one of the most popular DeFi projects to increase yield from<a href="https://notum.ai/glossary/yield%20farming">&nbsp;farming</a>. Even though the platform only operates on two blockchains, it offers unique innovative features and high rewards. Today's review from<a href="https://notum.ai/">&nbsp;Notum</a> will help you understand how the<a href="https://yieldyak.com">&nbsp;Yield Yak DeFi platform</a> works, what its main functions and tools are, as well as what networks and currencies it supports. In addition, we will talk about the risks of this yield aggregator and shed light on its native cryptocurrency<a href="https://coinmarketcap.com/currencies/yield-yak/">&nbsp;YAK.</a>As interest in crypto investment strategies continues to grow, yield aggregation, as one of the most profitable, will continue to grow and develop in the future. Yield Yak, as one of the innovative platforms, will also continue to surprise users of the DeFi sector with its features and capabilities.<h3>Yield Yak Platform: The Essentials</h3><ul><li>TVL: $25,980,000</li><li>Average APY: 5.13%</li><li>Risk Level: Medium</li><li>Blockchains: Avalanche, Arbitrum</li><li>Foundation Date: 2021</li></ul><a href="https://yieldyak.com">Yield Yak</a> is a platform that combines several products: namely auto-compounder, DEX aggregator, yield booster, and Avalanche<a href="https://notum.ai/blog/liquid-staking-by-notum">&nbsp;liquid staking</a> provider. In other words, this project offers various investment tools for DeFi users.Initially, Yield Yak was a platform that operated only on the<a href="https://www.avax.network">&nbsp;Avalanche network</a>, but now the project also supports<a href="https://arbitrum.io">&nbsp;Arbitrum</a>.Yield Yak's innovation lies in its community-driven initiative, meaning its team independently supports the most diverse and accessible auto-compounders on the market. The Yield Yak community has also made it self-sufficient as it offers new methods and ways to improve the project. At the moment, Yield Yak farms can continuously exist without requiring team intervention.Yield Yak works the following way: users contribute their assets to<a href="https://yieldyak.com/farms">&nbsp;pools</a> on the platform. Each pool is a farm that earns reward tokens, and then this farm reinvests the rewards. Thus,<a href="https://yieldyak.com/farms">&nbsp;Yield Yak farms</a> increase the deposit of each user, and each investor receives a high frequency of Yield Yak compounding.Yield Yak auto-compounded yield farm rewards allow users to earn high rewards on their deposits.At the moment, the platform provides users with several investment tools:<ol><li>Yak Swap. This feature allows you to<a href="https://yieldyak.com/swap">&nbsp;perform swaps</a> at the best price with just one click. In addition, Yak Swap independently takes into account all commissions and executes multi-hop routes. Currently, Yak Swap is not only the fastest DEX aggregator on Avalanche, but also constantly introduces innovative swap sources such as Woo Finance.</li><li>Yak Pools. Yield Yak offers users a huge number of<a href="https://yieldyak.com/farms">&nbsp;autocompounding pools</a> allowing them to receive fairly high APYs. With Yield Yak, investors can earn rewards even on stablecoins such as<a href="https://coinmarketcap.com/community/profile/USDC/">&nbsp;USDC</a> and<a href="https://coinmarketcap.com/community/search/top/tether/">&nbsp;USDT</a>.</li><li>Liquid Staking. Yield Yak also provides the option to receive native rewards without having to lock up funds from the<a href="https://www.avax.network">&nbsp;Avalanche network</a>. The average APR for liquid staking on the platform is 5.53%.</li></ol>In addition to the above features of Yield Yak, holders of the native currency of the YAK platform can stake it and earn from platform fees.Currently, the APY for staking<a href="https://coinmarketcap.com/community/search/top/yield-yak/">&nbsp;YAK</a> on the platform is 1.8%.<figure class="image"><img src="https://storage.googleapis.com/notum-platform/blog/yieldddd.png"></figure>Source:<a href="https://yieldyak.com/stake">&nbsp;Yield Yak</a><h3>Why Invest in Yield Aggregation With Yield Yak?</h3>Yield aggregation is an investment strategy that has a large number of advantages. Yield Yak, in turn, offers the following investment benefits:<ul><li>Automatic reinvestment. The platform helps users maximize profits by automatically reinvesting rewards received from farms. Thanks to this, Yield Yak investors receive income from the pools and rewards from reinvesting winnings.</li><li>Innovative solutions. The platform's community has made it the best and most diverse yield optimizer. Now farms on Yield Yak automatically compound rewards, which saves the user time. Moreover, the Yield Booster on the platform's website allows you to get greater rewards using Yield Yak strategies than the user can get on their own.</li><li>DEX Aggregation.<a href="https://yieldyak.com/swap">&nbsp;Yak Swap</a> on the protocol website offers users a one-click trade execution. Moreover, investors can also benefit from multi-step routes and low slippage.</li></ul><blockquote>“Yak Swap executes your swap at the best price with one-click, while querying all on-chain liquidity sources and taking into account gas costs, slippage, and swap fees.” -<a href="https://yieldyak.com/swap">&nbsp;Yield Yak</a>.</blockquote><h3>Investment Strategies on Yield Yak</h3>As mentioned,<a href="https://yieldyak.com">&nbsp;Yield Yak</a> offers a large number of different investment strategies. Today we will look at two popular options that you can use to make a profit on the platform:AVAX on<a href="https://yieldyak.com/farms/detail/0x8B414448de8B609e96bd63Dcf2A8aDbd5ddf7fdd">&nbsp;Benqi</a>&nbsp; Total APY – 3.7%, TVL - $4.55MThis investment strategy allows users to deposit<a href="https://coinmarketcap.com/community/search/top/avalanche/">&nbsp;AVAX</a> into a pool to receive rewards in the form of AVAX tokens. Profit rates from farming can vary and are often between 3 and 4%. The way this strategy works is that it repeatedly lends and borrows AVAX to optimize the rewards as much as possible. Besides, depositing AVAX on Yield Yak is a low-risk strategy.<figure class="image"><img src="https://storage.googleapis.com/notum-platform/blog/stststtsts.png"></figure>Source:<a href="https://yieldyak.com/farms/detail/0x8B414448de8B609e96bd63Dcf2A8aDbd5ddf7fdd">&nbsp;Yield Yak</a>USDC on<a href="https://yieldyak.com/farms/detail/0xFB692D03BBEA21D8665035779dd3082c2B1622d0">&nbsp;Benqi</a>&nbsp; Total APY – 6.7%, TVL - $905KThis strategy on Yield Yak allows users to earn rewards from stablecoin farming. By placing their<a href="https://coinmarketcap.com/community/profile/USDC/">&nbsp;USDC</a> in pools, users can expect to earn an APY of 6 to 7%. This strategy also optimizes the rewards for the user by lending and borrowing the asset to get the most USDC as income. Even though USDC farming also has low risks, it brings quite high income.In addition, in the<a href="https://yieldyak.com/farms">&nbsp;Yak Pools</a> tab, the platform allows users to explore the most popular pools on Yield Yak, the most popular pools for stablecoins, native AVAX, and recently added pools, which helps to easily navigate the site.<figure class="image"><img src="https://storage.googleapis.com/notum-platform/blog/ussdddd.png"></figure>Source:<a href="https://yieldyak.com/farms/detail/0xFB692D03BBEA21D8665035779dd3082c2B1622d0">&nbsp;Yield Yak</a><h3>YAK Native Token I Tokenomics</h3><ul><li>Circulating supply: 10,000 YAK</li><li>Total supply: 10,000 YAK</li><li>All-time high YAK coin price: $16,040</li><li>All-time low YAK coin price: $185.38</li></ul>Yield Yak platform has its own cryptocurrency called<a href="https://coinmarketcap.com/community/search/top/yield-yak/">&nbsp;YAK</a> with a total supply of 10,000 tokens. Users can stake this fixed-supply token to earn platform fees. The YAK tokenomics is quite unique in that no additional YAK tokens can be minted. As of December 1, 2023, the value of Yield Yak crypto is $611.89.There are currently several ways to use YAK. For example, users can stake it on the platform to receive AVAX and ETH rewards. Investors can also deposit tokens to earn additional Yield Yak tokens.&nbsp;<h3>Is Yield Yak Safe?</h3>Despite that all DeFi platforms try to make their use as secure as possible, they all involve certain risks, and Yield Yak is no exception. The main ones are:<ul><li>Smart contracts. Yield Yak is a project that uses smart contracts from other platforms that it cannot control. Thus, these contracts may be unaudited and contain bugs and vulnerabilities that lead to loss of funds.</li><li>Farms audit. The platform itself warns that although it partners with CoinFabrik to audit high-TVL strategies from time to time, not all of them are verified. This is why it is important to do your own research and pay special attention to new strategies.</li><li>Farming risks. Also, before depositing money into Yield Yak, be aware of the known risks of yield farming, such as price volatility, protocol risks, security and regulatory risks, liquidity risks, and others.</li></ul><h3>Notum’s Verdict</h3>Yield Yak is a fairly popular DeFi platform aimed at increasing yield from farming. With a TVL of over $25 million and a medium risk level, Yield Yak offers various investment tools for DeFi users on two networks - Avalanche and Arbitrum. On the platform, users have access to Yak Swaps, Yak Pools, and liquid staking to receive fairly high rewards. Yield Yak works by reinvesting user rewards earned from farming their tokens, thereby providing investors with maximum rewards. The uniqueness of Yield Yak lies in its community, which has made it the most diverse and accessible auto-compounder on the market.The platform's investment strategies provide users with regular rewards that vary by network, asset, and platform. The most profitable liquidity pools such as LYD-AVAX can bring the user APY up to 59.5%.Overall, Yield Yak is a convenient platform with a user-friendly interface that can help the user maximize profits from farming which will likely continue to gain popularity due to its innovative solutions, automatic reinvestment, and wide range of pools for providing liquidity with high APY.<h3>Follow Us on Socials</h3><a href="https://notum.ai/">Website</a> |&nbsp;<a href="https://go.notum.ai/U3l8tq">DApp</a> |&nbsp;<a href="https://twitter.com/NotumDefi">Twitter</a> |&nbsp;<a href="https://discord.gg/notum">Discord</a> |&nbsp;<a href="https://t.me/notumDefi">Telegram</a> |&nbsp;<a href="https://mirror.xyz/notum.eth">Mirror</a> |&nbsp;<a href="https://debank.com/official-account/111578/">DeBank</a>Disclaimer: Notum does not provide any investment, tax, legal, or accounting advice. This article is written for informational purposes only. Cryptocurrency is subject to market risk. Please do your own research and trade with caution.

How to earn more yield over your assets? Explore exciting options that Yield Yak and Notum open up for you!

Yield Yak: Decoded by Notum

<h2>Intro</h2>In the last few years, <a href="https://notum.ai/blog/liquid-staking-by-notum">liquid staking</a> investment strategy has become quite popular. In 2024, there are a huge number of different platforms and protocols offering users opportunity to deposit their assets to receive passive rewards.The advantage of liquid staking is that the user can receive income without active asset management and large initial capital.Liquid staking is an excellent option for beginners and those investors who do not want to get involved in more complex investment strategies such as <a href="https://notum.ai/blog/investment-idea-yield-aggregators-notum">yield aggregation</a>. Thus, by providing their assets to the <a href="https://notum.ai/glossary/liquidity%20pool">liquidity pool</a>, users can not only receive rewards but also continue to use their funds.By depositing funds into pools, investors receive additional tokens in return indicating their share, which can be used in the crypto space to generate additional income.At the moment, the decentralized finance market has a huge number of options for investing in liquid staking, each of which has its own advantages and disadvantages. In today's article from <a href="https://go.notum.ai/iSphYM">Notum</a>, we will take a detailed look at the <a href="https://frax.finance/">Frax Finance</a> platform and its distinctive features, and also pay attention to investment strategies that will bring you a stable income from liquid staking.<figure class="image"><img src="https://storage.googleapis.com/notum-platform/blog/frax.png"></figure><h6 style="text-align:center;">Source: <a href="https://frax.finance/">Frax Finance</a></h6><h2>FraxFinance: The Essentials</h2><ul><li>TVL: $947,680,000</li><li>Average APY: 3.79%</li><li>Risk Level: Low</li><li>Blockchains: Ethereum, Dogechain, Avalanche, Fantom, BSC, Polygon, Arbitrum, and Moonbeam</li><li>Foundation Date: 2019</li></ul>In fact, <a href="https://frax.finance/">FraxFinance</a> is a fairly large ecosystem with its own infrastructure. Moreover, the platform even has its own DeFi economy where its own stablecoins are used as currency.The platform is governed through two utility tokens - <a href="https://coinmarketcap.com/currencies/frax-share/">Frax Share (FXS)</a> and <a href="https://coinmarketcap.com/currencies/frax-price-index-share/">Frax Price Index Share (FPIS)</a>.The Frax infrastructure includes several sub-protocols, each of which has its own tasks and integrates with the platform's stablecoins. The main ones include:<ol><li>FraxSwap. <a href="https://app.frax.finance/swap/main">Fraxswap</a> is the first <a href="https://notum.ai/glossary/algorithmic%20money%20market%20(amm)">AMM</a> in the DeFi space that has an embedded time-weighted average market maker (TWAMM) allowing large trades to be made over a long period of time. This AMM is built on <a href="https://uniswap.org/">Uniswap V2</a> and is completely permissionless, which allows traders to execute large orders.</li><li>Fraxlend. <a href="https://app.frax.finance/fraxlend/available-pairs">Fraxlend</a> is a reliable lending platform that aims to provide lending markets between pairs of <a href="https://notum.ai/glossary/erc%20-%2020%20token">ERC-20 tokens</a>. Since each such pair represents an isolated market, this offers each user the opportunity to borrow or lend cryptoassets.</li><li>Fraxferry. Another popular Frax Finance product is <a href="https://app.frax.finance/fraxferry?src=ethereum">Fraxferry</a>, which is a non-custodial method for transferring protocol tokens across many blockchains. The advantage of this method is that it does not require any third-party applications or bridges to perform the permissionless transfer.</li></ol>Speaking of liquid staking, the platform offers users <a href="https://docs.frax.finance/frax-ether/overview">Frax Ether</a> which can be described as a liquid ETH staking derivative as well as a stablecoin system created to uniquely leverage the Frax ecosystem. In other words, Frax Ether is designed to maximize staking rewards and smooth out <a href="https://ethereum.org/">ETH</a> staking, allowing users to earn interest on Ethereum in an easier and safer way.<figure class="image"><img src="https://storage.googleapis.com/notum-platform/blog/frax-liquid-st.png"></figure><h6 style="text-align:center;">Source: <a href="https://docs.frax.finance/frax-ether/overview">Frax Finance</a></h6><h2>Frax Stablecoins</h2><ul><li>FRAX. <a href="https://app.frax.finance/">The Frax</a> is the platform’s own stablecoin pegged to the US dollar. This on-chain currency has pretty high scalability and is an excellent investment asset. The supply of the FRAX coin is constantly changing in order to maintain the price of FRAX at $1 due to its fractional-algorithmic monetary policy. FRAX stablecoin can be used for swaps, staking, lending and other DeFi activities.</li><li>FPI. <a href="https://app.frax.finance/fpifpis/fpi">Frax Price Index</a> or FPI is another cryptocurrency of the platform, which is the first stablecoin “pegged to a basket of consumer goods (CPI) creating its own unit of account separate from any nation state denominated money” - <a href="https://app.frax.finance/fpifpis/fpi">Frax Finance</a>. Thus, Frax Price Index is fully backed by cryptocurrency and can also be used in various DeFi operations.</li><li>frxETH. The third cryptocurrency of the platform is <a href="https://app.frax.finance/frxeth/mint">Frax Ether</a>, which is a stablecoin pegged to <a href="https://ethereum.org/ru">Ethereum</a> and LST system. The main use cases of frxETH are replacing <a href="https://coinmarketcap.com/currencies/weth/">WETH</a> in smart contracts and using the coin in the Frax ecosystem. As with FPI, frxETH is fully backed by cryptocurrency and can be used in all platform activities.</li></ul><figure class="image"><img src="https://storage.googleapis.com/notum-platform/blog/-20240124-00.55.16.png"></figure><h6 style="text-align:center;">Source: <a href="https://frax.finance/">Frax Finance</a></h6><h2>Why Invest in Liquid Staking with Frax?</h2><a href="https://frax.finance/">Frax Finance</a> is an innovative platform offering users a huge number of opportunities in the field of decentralized finance. Buying and using FRAX for liquid staking also has several advantages that are important to pay attention to before you start investing.<ul><li>Algorithmic stability. Since the platform maintains FRAX stability using an algorithmic model, there is no direct peg to a single collateral asset. This is what contributes to the adaptive maintenance of price stability and protects FRAX holders from losing money.</li><li>Additional rewards. By using liquid staking with Frax Finance, users can maximize their earnings as the additional tokens provided for depositing assets to the liquidity pool can also be used in the crypto space for generating income.</li><li>Platform’s decentralization. Since Frax Finance works on decentralized blockchain networks, any financial operations on the platform are censorship-resistant and do not require a central authority’s involvement.</li><li>Governance. FRAX token holders can participate in the governance of the protocol and influence changes and updates regarding Frax Finance and its future.</li><li>Relatively low risks. Since Frax Finance uses several risk mitigation mechanisms, such as collateralization of its stablecoins, users receive some assurance that Frax's native currency will not lose its value.</li></ul><h2>Investment Strategies on Frax</h2>As known, <a href="https://frax.finance/">Frax Finance</a> offers users a wide range of different financial instruments, from swaps to staking. Today we'll look at two popular investment strategies on Frax that allow users to earn rewards for investing their assets in liquidity pools.FXS-FRAX on EthereumFXS-FRAX on <a href="https://defillama.com/yields/pool/9923e857-30b0-4799-95c1-1ae8821b83fe">Ethereum</a> Total APY – 7.82%, TVL – $40,9mThis investment strategy allows users to deposit their FXS and FRAX tokens into the liquidity pool on <a href="https://ethereum.org/ru">Ethereum</a> to earn rewards. Often the APY for providing liquidity ranges from 7 to 8%, while the pool's TVL exceeds 40 million. Thus, Total Value Locked for this pool indicates excellent performance and low risk, which will be an advantage for novice investors who want to receive a stable income.<figure class="image"><img src="https://storage.googleapis.com/notum-platform/blog/frax1.png"></figure><h6 style="text-align:center;">Source: <a href="https://app.notum.ai/investments/0x03B59Bd1c8B9F6C265bA0c3421923B93f15036Fa?protocol=Frax&amp;chainId=1">Notum</a></h6>FRAX-WETH on Ethereum&nbsp;FRAX-WETH on <a href="https://defillama.com/yields/pool/72619740-add8-4325-bab7-a8467d6e2f73">Ethereum</a>&nbsp; Total APY – 4.01%, TVL – $4,21mAnother popular investment strategy on France Finance is the FRAX-WETH liquidity pool on the <a href="https://ethereum.org/ru">Ethereum</a> network. By investing their FRAX and WETH assets, users earn from 3.5% to 4.5% APY. <a href="https://app.notum.ai/investments/0x31351Bf3fba544863FBff44DDC27bA880916A199?protocol=Frax&amp;chainId=1">FRAX-WETH</a> pool also has a fairly large TVL, which makes it relatively safe for investment. However, before depositing assets into this pool, users should pay attention to its risks, such as impermanent loss.<figure class="image"><img src="https://storage.googleapis.com/notum-platform/blog/frax2.png"></figure><h6 style="text-align:center;">Source: <a href="https://app.notum.ai/investments/0x31351Bf3fba544863FBff44DDC27bA880916A199?protocol=Frax&amp;chainId=1">Notum</a></h6><h2>Frax Finance: Risks and Disadvantages</h2>Like any other decentralized finance platform, Frax Finance has its own risks. Despite the fact that from 2020 to 2023 the platform has undergone a large number of <a href="https://docs.frax.finance/other/audits">audits</a>, the last of which was <a href="https://github.com/trailofbits/publications/blob/master/reviews/2023-05-fraxgov-securityreview.pdf">Trail of Bits</a>, it is important to pay attention to some points before using it:<ul><li>Market volatility. As is known, the cryptocurrency market is subject to fluctuations in asset prices, which can affect not only he value of investments, but also the interest received from depositing funds.</li><li>Risk of smart contracts. Any DeFi platform, including Frax Finance, operating on smart contracts is subject to certain risks. Since smart contracts may have bugs or vulnerabilities, this can lead to potential financial losses.</li><li>Platform’s complexity. Since Frax Finance is an entire ecosystem with multiple protocols and a large number of financial opportunities, this platform can be quite difficult for inexperienced crypto users. Lack of a clear understanding of how the system works can lead to choosing the wrong strategy and potentially losing money.</li></ul><h2>Notum’s Verdict</h2>Frax Finance is a fairly large innovative ecosystem with sub-protocols using the project’s native cryptocurrency. The Frax's infrastructure includes a large number of features, such as Fraxswap, Fraxferry, and Fraxlend, which allow users to perform various financial operations. The project's naive cryptocurrency, FRAX, is a stablecoin pegged to the dollar, whose price is supported by a fractional-algorithmic monetary policy.The platform invites users to deposit their assets into liquidity pools to receive passive rewards without actively involved in the process. For example, the FXS-FRAX liquidity pool, which consists entirely of Frax Finance cryptocurrencies, has an average APY of over 6.5%. However, before investing with Frax, it is important to pay attention to the risks associated with liquid staking, such as smart contract risk and market volatility.<h2>Follow Us on Socials</h2><a href="https://notum.ai/">Website</a>&nbsp;|&nbsp;<a href="https://go.notum.ai/U3l8tq">DApp</a>&nbsp;|&nbsp;<a href="https://twitter.com/NotumDefi">Twitter</a>&nbsp;|&nbsp;<a href="https://discord.gg/notum">Discord</a>&nbsp;|&nbsp;<a href="https://t.me/notumDefi">Telegram</a>&nbsp;|&nbsp;<a href="https://mirror.xyz/notum.eth">Mirror</a>&nbsp;|&nbsp;<a href="https://debank.com/official-account/111578/">DeBank</a>Disclaimer: Notum does not provide any investment, tax, legal, or accounting advice. This article is written for informational purposes only. Cryptocurrency is subject to market risk. Please do your own research and trade with caution.

In today's article from Notum, we will take a detailed look at the Frax Finance platform and its distinctive features, and also pay attention to investment strategies that will bring you a stable income from liquid staking.

Frax Finance: Reviewed by Notum

<h2>Intro</h2>In 2024, the cryptocurrency market offers users a huge number of investment strategies to generate passive income. <a href="https://notum.ai/blog/how-why-invest-in-liquidity-pool-provision-notum-x-virtuswap">Liquidity pool provision</a> is one of the options that has literally brought trading and borrowing in the DeFi space to a new level.A <a href="https://notum.ai/glossary/liquidity%20pool">liquidity pool</a> is a collection of crypto assets invested in smart contracts. They are available for various purposes in the DeFi field, such as lending, trading, financing and others.Thus, pools combine user deposits and provide liquidity to various <a href="https://notum.ai/glossary/dex">DEXs</a>. Instead of actual market makers, DeFi platforms use automated market makers (<a href="https://notum.ai/glossary/algorithmic%20money%20market%20(amm)">AMMs</a>), which operate on liquidity pools, allowing users to safely and freely trade crypto assets.The advantage of liquidity pools is that they allow users to make swaps without trading partners.Now users do not need to buy tokens from investors at fairly high prices. Instead, cryptocurrency can be purchased on DeFi platforms with an automatically set price equivalent to the market rate.Today's article from <a href="https://go.notum.ai/PxEDLc">Notum</a> will tell you about the popular platform for liquidity pool provision - <a href="https://www.sushi.com/">SushiSwap</a>. We will pay attention to its main characteristics, advantages, risks, and also consider profitable liquidity pools for investment in 2024.<h2>SushiSwap Platform: The Essentials</h2><ul><li>TVL:&nbsp;$381,140,000</li><li>Risk Level:&nbsp;Medium</li><li>Average APY: 9.06%</li><li>Blockchains:&nbsp;Ethereum, Arbitrum One, Base, Polygon, Polygon zkEVM, Scroll, Optimism, Linea, Core Blockchain, Filecoin, BNB Smart Chain, ThunderCore, Gnosis, Avalanche, Fantom, Arbitrum Nova, Harmony, BitTorrent Chain, Kava, Metis Andromeda, Boba Eth, Boba BNB, Celo, Fuse, Huobi ECO Chain, Moonbeam, Moonriver, OKXChain, Palm, Telos EVM, Haqq Network</li><li>Foundation Date: Aug, 2020</li></ul>Initially, <a href="https://www.sushi.com/">Sushi.Swap</a> was based on <a href="https://uniswap.org/">Uniswap</a> - a decentralized exchange that was aimed at providing users with access to cryptocurrency without intermediaries. Uniswap is not controlled by a singular entity and uses AMMs to facilitate trading and purchasing.The key point of <a href="https://uniswap.org/">Uniswap</a> is that it is open source, which means anyone can use it to create their own decentralized exchange. This is exactly how SushiSwap came into being.<a href="https://www.sushi.com/">SushiSwap</a> is a platform based on Uniswap, which was originally created to contribute to the development of decentralization. The platform offered fairly large rewards to liquidity providers and began to gain popularity.Subsequently, SushiSwap turned into a full-fledged DEX AMM with numerous use cases, including cross-chain swaps, liquidity pool provision, staking, SushiPay, Onsen Farms, BentoBox and other functions.<figure class="image"><img src="https://storage.googleapis.com/notum-platform/blog/whatcanyoudoonsushiswap.jpg"></figure><h6 style="text-align:center;">Source: <a href="https://www.techopedia.com/">Technopedia</a></h6>SushiSwap app now provides users with the ability to seamlessly sell and buy cryptocurrencies. The platform supports trading of more than 400 tokens without going through the registration process. However, to use SushiSwap, the user needs to connect one of the following wallets - <a href="https://metamask.io/">MetaMask</a>, <a href="https://walletconnect.com/">WalletConnect</a>, <a href="https://www.coinbase.com/wallet">Coinbase Wallet</a> or <a href="https://safe.global/">Gnosis Safe</a>.The advantage of <a href="https://www.sushi.com/">SushiSwap</a> is that it has a huge number of supported blockchains, which expands the user experience. The platform also has its own <a href="https://www.sushi.com/academy">Sushi Academy</a> with educational materials, tutorials, documentation and more to facilitate the user experience.<a href="https://www.sushi.com/">SushiSwap</a> also has its own currency - <a href="https://coinmarketcap.com/currencies/sushiswap/">SUSHI crypto</a>, which is used for protocol’s governance. Also, SUSHI tokens can be utilized for staking, yield farming and liquidity pool provision. As of January 2024, Sushiswap’s coin price is $1.08Speaking of liquidity pool provision, SushiSwap offers users fairly high rewards and a convenient intuitive interface. Currently the platform has 4177 pools with various fees and APRs. In addition, SushiSwap recently presented users with the option of smart pools.<blockquote>«Smart pools optimize liquidity allocation within custom price ranges, enhancing trading efficiency by providing deeper liquidity around the current price, increasing Liquidity Providers (LP) fee earnings» - <a href="https://www.sushi.com/pool/smart-pool?farmsOnly=false&amp;smartPoolsOnly=false">SushiSwap</a>.</blockquote><figure class="image"><img src="https://storage.googleapis.com/notum-platform/blog/sushiswap2.png"></figure><h6 style="text-align:center;">Source: <a href="https://www.sushi.com/">SushiSwap</a></h6><h2>Why Invest in SushiSwap?</h2>Liquidity pools that allow users to make swaps are undoubtedly an important part of the DeFi sector. However, in addition to this, liquidity pool provision is a strategy that allows users to earn pretty high rewards.By providing liquidity to platforms like SushiSwap and earning percentage, users also receive LP tokens that can be used to generate additional income.Thus, many users choose to invest in liquidity pools as it gives them double rewards and the ability to use their tokens. This strategy is good for both experienced users and beginners, as it has a fairly large number of advantages:<ul><li>Fairly high rewards. Liquidity pool participants who contribute their crypto assets to pools on SushiSwap earn a portion of the trading commissions that occur in the pool. Thus, providing liquidity on the platform generates passive rewards for them. Moreover, APRs on the platform can be quite high. For example, when investing in smart pools on SushiSwap, APRs can reach 509.19%.</li><li>Additional income. As already mentioned, by depositing assets into the pool, users receive additional LP tokens representing their share in the pool. Thus, while the main asset brings passive income for the investor, LP tokens can be used for exchange between users, as well as additional income, for example from staking or yield farming.</li><li>Variety of investment opportunities. As you know, SushiSwap not only supports a huge number of blockchains but also offers users more than 4,000 pools to provide liquidity. Thus, each user can choose the most suitable one based on interest rates, assets provided and the desired level of risk.</li><li>Smart pools. Recently the platform released a new feature called smart pools, which is designed to optimize liquidity allocation, which is a big advantage for beginners struggling with understanding pool mechanisms.</li></ul>In addition, by providing liquidity to the pools on SushiSwap, users contribute to the strengthening of the decentralized finance system and its development.<h2>SushiSwap V1 | V2 | V3</h2>During its existence, the platform underwent several updates - SushiSwap V1 in August 2020, SushiSwap V2 in September 2020 and SushiSwap V3 in 2022.<ul><li>SushiSwap V1. The very first version of SushiSwap was built on the Ethereum blockchain and implemented Automated Market Making (AMM), which allowed users to trade ERC-20 tokens without order books. The main functions of SushiSwap V1 were yield farming and liquidity provision, encouraging investors to stake assets and earn SUSHI tokens.</li><li>SushiSwap V2. The updated version of the platform offered increased security, scalability and overall functionality. In addition, SushiSwap V2 introduced a more modular code architecture and included new features to attract liquidity providers. V2 also features BentoBox, offering users innovative income management strategies, and Kashi, a lending and borrowing platform.</li><li>SushiSwap V3. The latest SushiSwap update launched new concentrated liquidity pools, providing investors with larger trading volumes and liquidity, while at the same time reducing financial risks. The developers have also implemented Tines in version V3, which offers users the cheapest swaps with maximum capital inefficiency. To improve the user experience, Sushi's v3 introduced step-by-step UX guidance, light and dark themes, and routing for cost-effective swaps.</li></ul><figure class="image"><img src="https://storage.googleapis.com/notum-platform/blog/tweet.png"></figure><h6 style="text-align:center;">Source: <a href="https://twitter.com/SushiSwap?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Eauthor">SushiSwap Twitter</a></h6><h2>Investment Strategies on SushiSwap</h2>As said, <a href="https://www.sushi.com/">Sushi exchange</a> offers a huge number of investment opportunities, which allows almost every investor to choose a suitable investment strategy for themselves. However, among the variety of options, it can be quite difficult to find a suitable pool to provide liquidity. Today we will look at two popular investment strategies on SushiSwap that allow users to receive rewards.<a href="https://defillama.com/yields/pool/3a6574a9-7675-41d5-b9de-2c78086d57cd">MATIC / WETH</a> on Polygon (V2)&nbsp; Total APY – 5.16%, TVL – $3,53mThis liquidity pool on the <a href="https://polygon.technology/">Polygon network</a> invites users to deposit MATIC and WETH assets on SushiSwap V2 to receive rewards. By investing in this liquidity pool, users earn between 5.00% and 5.50% APY. MATIC / WETH has a fee of 0.3% and has a fairly large total value locked of more than $3.5 million, which indicates good performance and a high level of pool’s security.<figure class="image"><img src="https://storage.googleapis.com/notum-platform/blog/matic-weth.png"></figure><h6 style="text-align:center;">Source: <a href="https://www.sushi.com/pool/137:0xc4e595acdd7d12fec385e5da5d43160e8a0bac0e">SushiSwap</a></h6><a href="https://defillama.com/yields/pool/721c17e7-d8e9-4288-8436-16c27ad264df">WBTC/ ETH</a> on Ethereum (V2)&nbsp; Total APY – 1.14%, TVL – $25,35mWBTC/ETH is a popular liquidity pool on <a href="https://ethereum.org/">Ethereum</a> that has a huge TVL compared to other pools on the platform. The total value locked of WBTC/ETH exceeds $25 million, which shows the excellent performance and security of this investment strategy. Rewards for providing assets to this highly liquid pool can vary and often range from 1% to 1.50% APY, while the SushiSwap pool’s fee is 0.3%.<figure class="image"><img src="https://storage.googleapis.com/notum-platform/blog/wbtc-eth.png"></figure><h6 style="text-align:center;">Source: <a href="https://www.sushi.com/pool/1:0xceff51756c56ceffca006cd410b03ffc46dd3a58">SushiSwap</a></h6>If you need to make swaps to deposit assets into SushiSwap pools, you can use the <a href="https://app.notum.ai/swap">Notum App</a> with its handy and intuitive interface. This platform allows users to make swaps in one click.<figure class="image"><img src="https://storage.googleapis.com/notum-platform/blog/notum-swap.png"></figure><h6 style="text-align:center;">Source: <a href="https://app.notum.ai/swap">Notum</a></h6><h2>SushiSwap: Risks and Disadvantages</h2>Despite the many advantages of SushiSwap, the platform also has a number of risks that should be considered before providing liquidity. Below you can see the main ones:<ul><li>Smart Contract Risks. Since SushiSwap operates on smart contracts, any errors or vulnerabilities in the code can lead to hacking and potential loss of funds.</li><li>Impermanent Loss. If the value of the assets in the liquidity pool differs significantly from the initial deposit, liquidity providers may face an impermanent loss. As a result, this may result in the investor receiving a lower return than if he simply owned the crypto asset.</li><li>Market volatility. As known, the crypto market is quite unstable, which means the value of assets on SushiSwap can also be subject to price fluctuations and lead to potential losses.</li><li>Platform’s complexity. Despite the fact that SushiSwap itself has a fairly simple and intuitive interface, the variety of financial opportunities may be incomprehensible to inexperienced users. By choosing the wrong investment strategy, users may also face potential financial losses.</li></ul>It is important to note that to ensure the proper level of security, SushiSwap exchange has passed several audits. The main ones include Trail of Bits, PeckShield and Quantstamp. However, although audits indicate security, they do not provide an absolute guarantee, which is why it is important to conduct your own research before using the platform.<h2>Notum’s Verdict</h2>SushiSwap is a popular DEX and AMM that allows users to perform a large number of crypto operations, from swaps and trading to liquidity pool provision. The platform supports multiple blockchains and has a huge number of investment strategies, allowing investors to choose an option that suits their desired rewards and risk level. With an average APY of 9.06%, SushiSwap offers fairly high rewards and low fees, making it an excellent choice for both beginners and experienced investors.Despite the fact that the platform has undergone several serious audits, its use still includes some risks associated with smart contracts, market volatility and impermanent loss. However, high TVL, good profits and a user-friendly interface make SushiSwap an excellent platform for liquidity pool provision in 2024.<h2>Follow Us on Socials</h2><a href="https://notum.ai/">Website</a>&nbsp;|&nbsp;<a href="https://go.notum.ai/U3l8tq">DApp</a>&nbsp;|&nbsp;<a href="https://twitter.com/NotumDefi">Twitter</a>&nbsp;|&nbsp;<a href="https://discord.gg/notum">Discord</a>&nbsp;|&nbsp;<a href="https://t.me/notumDefi">Telegram</a>&nbsp;|&nbsp;<a href="https://mirror.xyz/notum.eth">Mirror</a>&nbsp;|&nbsp;<a href="https://debank.com/official-account/111578/">DeBank</a>Disclaimer: Notum does not provide any investment, tax, legal, or accounting advice. This article is written for informational purposes only. Cryptocurrency is subject to market risk. Please do your own research and trade with caution.

Today's article from Notum will tell you about the popular platform for liquidity pool provision - SushiSwap. We will pay attention to its main characteristics, advantages, risks, and also consider profitable liquidity pools for investment in 2024.

SushiSwap: Decoded by Notum

<h2>Intro</h2>Crypto investment strategies have been a popular way to earn passive income for several years now. Now the market is bigger than ever, so both new and experienced investors can choose the right option for themselves. Among all the variety that exists in 2024, liquidity management is one of the most popular investment strategies.Liquidity manager protocols use smart contracts and algorithms necessary to manage liquidity in DeFi protocols, <a href="https://notum.ai/glossary/dex">DEXs</a> and <a href="https://notum.ai/glossary/liquidity%20pool">liquidity pools</a>.In this way, liquidity managers not only optimize the efficiency and stability of <a href="https://notum.ai/blog/how-why-invest-in-liquidity-pool-provision-notum-x-virtuswap">liquidity provision</a> on these platforms, but also generate users rewards for providing assets. Now there are a huge number of protocols that manage the investment assets of users, bringing them maximum profit. Deposited funds are being moved between different pools, which are currently capable of generating higher returns.By depositing their cryptocurrency into liquidity manager protocols, investors receive a share of the fees or interest generated by their assets.Today's article from <a href="https://go.notum.ai/vnGDGV">Notum</a> will introduce you to such a liquidity manager protocol as <a href="https://www.arrakis.finance/">Arrakis</a> Finance. We will look at its main properties, advantages, risks, and also pay attention to Arrakis' popular investment strategies in 2024.<h2>Arrakis Finance: The Essentials</h2><ul><li>TVL: $170,650,000</li><li>Average APY: 5.20%</li><li>Risk Level: Low-Medium</li><li>Blockchains: <a href="https://ethereum.org/">Ethereum</a>, <a href="https://polygon.technology/">Polygon</a>, <a href="https://arbitrum.io/">Arbitrum</a>, <a href="https://www.optimism.io/">Optimism</a></li><li>Foundation Date: 2021</li></ul><a href="https://www.arrakis.finance/">Arrakis Finance</a> is a decentralized platform and a liquidity management protocol that allows users to run complex algorithmic strategies on <a href="https://blog.uniswap.org/uniswap-v3">Uniswap V3</a>. The uniqueness of the platform lies in its ability to implement market-making strategies due to concentrated Liquidity <a href="https://notum.ai/glossary/algorithmic%20money%20market%20(amm)">AMMs</a>, that were previously available only on centralized exchanges.The advantage of the platform is <a href="https://resources.arrakis.fi/arrakis-v2-protocol/vaults">Arrakis Vaults</a>, which are used by investors to automatically and efficiently manage their liquidity.However, these efficiency improvements, significantly superior to the old AMMs, have had a negative impact on liquidity providers. An attempt to fully utilize the potential of concentrated liquidity led to investors facing overhead and other major difficulties. This is how the idea of creating a protocol with a reliable AMM structure and strategies came about.<a href="https://www.arrakis.finance/">Arrakis</a> can now be used by liquidity providers to create crypto asset markets that are superior to centralized exchanges in efficiency, without active involvement in the process.Subsequently, Arrakis, which started as part of the <a href="https://www.gelato.network/">Gelato Network</a>, began to receive significant support from the crypto community, and in particular from several web3 protocols with similar aspirations. Thanks to this, the project was able to separate and work completely and independently, which continues to this day.<blockquote>«In December 2022, Arrakis Finance raised USD 4 million in seed funding from Accel, Polygon Ventures, Robot Ventures, and Uniswap Labs Ventures»&nbsp;</blockquote>Arrakis Finance itself describes its mission as creating a robust infrastructure and market making strategies on <a href="https://blog.uniswap.org/uniswap-v3">Uniswap V3</a>. Its main goals are to democratize market making, so that subsequently decentralized exchanges can be used as platforms for trading all kinds of assets, and not just cryptocurrencies.Interesting fact: the name of the project is inspired by Frank Herbert’s Dune Universe, where Arrakis is a dangerous desert planet full of riches.&nbsp; The creators of the platform identify the planet Arrakis with the equally harsh, but profitable and full of potential crypto world.<h2>Arrakis Finance V1/V2</h2>During its existence, the project had two versions - <a href="https://docs.arrakis.fi/other/arrakis-v1-docs-old">Arrakis V1</a> and <a href="https://docs.arrakis.fi/arrakis-v2-core/arrakisv2">Arrakis V2</a>, each of which had its own distinctive features:<ul><li>Arrakis V1. The first version of the protocol used Arrakis LP Vaults V1 technology, which made liquidity management possible. The benefit of these vaults was the ability to automatically manage liquidity on DEXs with concentrated liquidity.&nbsp;V1 Vaults included a large number of features such as ERC20 wrapper for Uniswap V3 LPs, deployment of vaults with any price caps on any Uniswap V3 pair, and much more. In other words, V1 opened up a large number of new opportunities from cross-AMM positions to cross-chain strategies.<figure class="media"><div data-oembed-url="https://www.youtube.com/watch?v=1ERJmwSoNbo"><div style="position: relative; padding-bottom: 100%; height: 0; padding-bottom: 56.2493%;"><iframe src="https://www.youtube.com/embed/1ERJmwSoNbo" style="position: absolute; width: 100%; height: 100%; top: 0; left: 0;" frameborder="0" allow="autoplay; encrypted-media" allowfullscreen=""></iframe></div></div></figure></li><li>Arrakis V2. The updated version provided users with new functions such as creating and automatically executing complex trading strategies on Uniswap V3. Among other distinctive features of Arrakis V2 are multiple concentrated liquidity positions, liquidity provision in different fee tiered pools, cross protocol rebalancing and much more.&nbsp;In addition, Arrakis V2 is highly composable, allowing it to easily integrate new vaults into DeFi.</li></ul><h2>Why Invest in Liquidity Management with Arrakis?</h2>Liquidity management is an investment strategy with many advantages, since automated processes implemented using smart contracts allow liquidity to be placed between the most profitable liquidity pools. Arrakis, in turn, is a platform that makes this process the most comfortable and has a number of unique features:<ul><li>Liquidity management options. As known, Arrakis allows users to utilize actively managed concentrated liquidity on Uniswap v3 and offers to choose exactly how liquidity will be stored. Liquidity providers can use managed vaults managed by professional market makers using complex strategies; or self managed vaults, used by single entities and suitable only for advanced LPs. The third option is trustless vaults, using smart contracts with a specific strategy as a manager, “which enables LPs to have trustless, autonomously managed on-chain strategies, similar to a Curve v2 like model” - <a href="https://resources.arrakis.fi/introduction/solution">Arrakis</a>.</li><li>Simple withdrawals. Arrakis Finance gives users complete control over their funds on Uniswap v3. Thus, regardless of the chosen option of liquidity management, investors can withdraw their assets at any time.</li><li>Risk management. As an automated liquidity manager, Arrakis moves assets from one liquidity pool to another, uses automated execution and minimizes impermanent loss, which in turn leads to a significant reduction in risks.</li><li>Automated decision-making. Arrakis liquidity manager with automated execution processes large volumes of data in real time. Thus, the platform uses various systems to make informed decisions on liquidity management, taking into account factors affecting the market.</li><li>Trust of leading DeFi protocols. Arrakis has earned a fairly good and solid reputation in the crypto space and is already used by many leading DeFi protocols as a protocol’s automated liquidity management system. The most popular of them include <a href="https://makerdao.com/">MarkerDAO</a>, <a href="https://indexcoop.com/">IndexCoop</a>, <a href="https://www.optimism.io/">Optimism.io</a>, <a href="https://frax.finance/">FraxFinance</a>, <a href="https://stargateprotocol.gitbook.io/stargate/">Stargate</a>, <a href="https://lido.fi/">Lido Finance</a>, <a href="https://uniswap.org/">Uniswap</a> and others.</li></ul>Other distinctive features of Arrakis Finance include DeFi composability, multiple liquidity positions in a single Uniswap V3 pool and liquidity provision across multiple fee tiers under one position.<h2>Investment Strategies | Arrakis Finance &amp; Notum</h2>Currently, Arrakis Finance offers liquidity providers a large number of different liquidity pools on four different networks - <a href="https://ethereum.org/">Ethereum</a>, <a href="https://polygon.technology/">Polygon</a>, <a href="https://arbitrum.io/">Arbitrum</a> and <a href="https://www.optimism.io/">Optimism</a>Tip: To enter any suitable strategy, you can use <a href="https://app.notum.ai/?mtm_campaign=chcqiorw&amp;mtm_cid=hfkoglob&amp;mtm_source=landing&amp;mtm_medium=button">Notum App</a> to easily swap tokens in one click.<figure class="image"><img style="aspect-ratio:2588/1034;" src="https://storage.googleapis.com/notum-platform/blog/-20240203-04.08.30-1.png" width="2588" height="1034"></figure><h6 style="text-align:center;">Source: <a href="https://app.notum.ai/?mtm_campaign=chcqiorw&amp;mtm_cid=hfkoglob&amp;mtm_source=landing&amp;mtm_medium=button">Notum</a></h6>Today we will look at two popular strategies that allow users to receive rewards from liquidity management using <a href="https://www.arrakis.finance/">Arrakis Finace</a>:&nbsp;wstETH / WETH on <a href="https://app.arrakis.fi/v2-vaults/0x99cac5a58be2e2d2ebe064cd978451573cc08cb5?name=wsteth&amp;sortDirection=desc&amp;sort=tvl">Optimism</a> APR – 8.00%, TVL – $132.11KThis investment strategy on Optimism allows users to deposit their wETH and wstETH into Arrakis V2 Vaults to receive rewards. If you own one of these assets and want to earn passive income, then wstETH / WETH will bring you from 7.5 to 8.5% APR on average.<figure class="image"><img style="aspect-ratio:2008/206;" src="https://storage.googleapis.com/notum-platform/blog/-20240209-01.02.07.png" width="2008" height="206"></figure><h6 style="text-align:center;">Source: <a href="https://app.arrakis.fi/v2-vaults/0xd44ea8b0bef5b56c24c7dd83d33415ed04bb7274?name=wsteth&amp;sortDirection=desc&amp;sort=tvl">Arrakis App</a></h6>wstETH / USDC on <a href="https://app.arrakis.fi/v2-vaults/0xd44ea8b0bef5b56c24c7dd83d33415ed04bb7274?name=wsteth&amp;sortDirection=desc&amp;sort=tvl">Ethereum</a> APR – $189.86K, TVL – 118.43%If you are looking for one of the most profitable strategies on Arrakis Finance, then wstETH / USDC on Ethereum network is what you need. By investing assets in this liquidity pool, users have the opportunity to receive rewards from 116 to 120% APR. This strategy uses limit orders and algorithmic rebalancing, making it a good choice for investors seeking for passive income.<figure class="image"><img style="aspect-ratio:2008/206;" src="https://storage.googleapis.com/notum-platform/blog/-20240209-01.01.20-1.png" width="2008" height="206"></figure><h6 style="text-align:center;">Source: <a href="https://app.arrakis.fi/v2-vaults/0xd44ea8b0bef5b56c24c7dd83d33415ed04bb7274?name=wsteth&amp;sortDirection=desc&amp;sort=tvl">Arrakis App</a></h6><h2>Arrakis Finance: Risks and Disadvantages</h2>While liquidity manages play an important role in the world of decentralized finance by increasing the efficiency and liquidity of DEXs and other DeFi platforms, they are still not without risks that are worth paying attention to. Arrakis Finance, despite its popularity, still has some problems:<ul><li>Smart contract risks. Since Arrakis Finance operates on smart contracts, it also takes on the main risks associated with them. They include code vulnerabilities, bugs and inaccuracies that can lead to financial losses.</li><li>Market volatility. As is known, cryptocurrency is a fairly volatile asset, which entails risks associated with changes in its value. Despite the fact that liquidity management platforms often mix assets into different pools to maximize profitability, they still cannot influence the volatility of the crypto market and protect the user from potential losses.</li><li>Impermanent loss. Due to dynamic changes in asset prices in the liquidity pool, users can also experience permanent loss. Because asset prices deviate from the original ratio when providing liquidity, management platforms can result in lower returns than simply holding assets.</li></ul>It is important to note that despite the potential risks, Arrakis V2 smart contracts have been verified by several major auditors - Watchpug, Statesmind, and Sherlock, which indicates the proper level of&nbsp; platform’s security.<h2>Notum’s Verdict</h2>Arrakis Finance is one of the most popular liquidity management platforms, used by many popular protocols such as Uniswap, MarkerDAO, IndexCoop and many others. It has a low-to-medium risk level and does not require active user involvement, which can be an advantage for novice investors.By depositing assets into the platform's vaults, users earn passive rewards from commissions and fees equivalent to their deposit. The advantage of Arrakis Finance is that the protocol independently moves investors’ assets to more profitable pools to obtain maximum rewards. Other advantages of the platform include various liquidity management options, multiple concentrated liquidity positions, cross protocol rebalancing and much more.Despite the potential risks associated with market volatility and smart contract vulnerabilities, Arrakis Finance is a reliable liquidity manager that makes a major contribution to the development of the DeFi ecosystem.<h2>Follow Us on Socials</h2><a href="https://notum.ai/">Website</a>&nbsp;|&nbsp;<a href="https://go.notum.ai/U3l8tq">DApp</a>&nbsp;|&nbsp;<a href="https://twitter.com/NotumDefi">Twitter</a>&nbsp;|&nbsp;<a href="https://discord.gg/notum">Discord</a>&nbsp;|&nbsp;<a href="https://t.me/notumDefi">Telegram</a>&nbsp;|&nbsp;<a href="https://mirror.xyz/notum.eth">Mirror</a>&nbsp;|&nbsp;<a href="https://debank.com/official-account/111578/">DeBank</a>Disclaimer: Notum does not provide any investment, tax, legal, or accounting advice. This article is written for informational purposes only. Cryptocurrency is subject to market risk. Please do your own research and trade with caution.

Meet Arrakis Finance, a market-making protocol built on Uniswap V3 that runs automated liquidity strategies for crypto investors.

Arrakis Finance: Decoded by Notum

The world of decentralized finance has been a real breakthrough, as it has provided a huge amount of freedom and new opportunities for users and investors. While<a href="https://notum.ai/glossary/fiat%20money">&nbsp;fiat currencies</a> are government-controlled, often require third-party involvement, and are dependent on central authorities, crypto assets offer a decent level of decentralization and freedom.Crypto<a href="https://notum.ai/invest/defi-lending">&nbsp;lending</a> and borrowing has also attracted attention as this investment type allows to receive much higher rewards compared to interest rates from banks. In simple words,<a href="https://notum.ai/invest/defi-lending">&nbsp;DeFi lending</a> is the provision of loans on decentralized platforms, where investors can lend their assets and receive a profit for it, while users can borrow crypto against their collateral assets.&nbsp;DeFi lending, unlike traditional lending, has the proper level of transparency and security thanks to<a href="https://notum.ai/glossary/dapp">&nbsp;decentralized applications</a>, open source code and minimum eligibility criteria. These advantages have led to great demand for lending platforms that allow smooth lending and borrowing of crypto assets.Today<a href="https://go.notum.ai/ek2wUJ">&nbsp;Notum</a> guides you through the Sturdy<a href="https://sturdy.finance/"> Finance</a> lending protocol, studying its advantages, distinctive features and disadvantages. We will also help you figure out whether it is worth investing in lending on this platform and what risks should be taken into account before providing liquidity.<h2>Sturdy Finance: Essentials</h2><ul><li>TVL: $49,62M</li><li>Risk Level: Medium</li><li>Blockchains:&nbsp;<a href="https://ethereum.org/en">Ethereum</a>,<a href="https://www.mode.network/">&nbsp;Mode</a></li><li>Foundation Date: 2020</li></ul><div class="raw-html-embed"><iframe width="640px" height="360px" src="https://defillama.com/chart/protocol/sturdy?mcap=false&amp;events=false&amp;medianApy=true&amp;theme=dark" title="DefiLlama" frameborder="0"></iframe></div>Today, users seeking passive yields by lending in DeFi have two options. On one end are permissioned pooled lending protocols (like Aave) that enshrine collateral assets at the protocol level and offer all users a single risk-reward profile. These protocols use governance processes to onboard new assets, forcing them to be conservative, given that all users are exposed to every collateral asset. On the other end of the spectrum are isolated lending protocols. Isolated lending offers permissionlessness and sovereign risk management at the risk of liquidity fragmentation and reduced lender UX.Sturdy V2 uses a novel architecture to offer users the best of both worlds: no more choosing between permissionlessness and deep liquidity. Sturdy is composed of two layers, with siloed lending pairs at the base layer and aggregators on top to unify liquidity.Sturdy’s siloed lending pairs operate as mini-lending markets, with a single lending asset and a single collateral asset, while aggregators deploy deposited funds to whitelisted siloes. Aggregators are Yearn V3 yield optimizers that autonomously reshuffle deposited funds. Aggregators use Sturdy’s Bittensor subnet to determine the optimal allocation according to current yields in a completely transparent and decentralized fashion. Both siloed lending pairs and aggregators are permissionless to create and immutable.&nbsp;This design is especially conducive to projects seeking to create their own lending markets. Currently, projects that want money markets for their assets must choose between drawn-out, requirement-laden governance processes and isolated lending with liquidity fragmentation. Sturdy enables anyone to create a money market in hours that’s liquid from Day 1 thanks to aggregators.Sturdy pays great attention to its<a href="https://docs.sturdy.finance/overview/security-and-audits">&nbsp;security</a>, which is why both<a href="https://v1-docs.sturdy.finance/">&nbsp;V1</a> and<a href="https://docs.sturdy.finance/">&nbsp;V2</a> versions have passed numerous audits from leading security firms such as<a href="https://github.com/Zellic/publications/blob/master/Sturdy%20-%20Zellic%20Audit%20Report.pdf">&nbsp;Zellic</a>,<a href="https://chainsecurity.com/security-audit/sturdy-aggregator-smart-contracts/">&nbsp;ChainSecurity</a>,<a href="https://www.certik.com/projects/sturdy"> Spearbit,&nbsp;Certik</a>,<a href="https://certificate.quantstamp.com/full/sturdy">&nbsp;Quantstamp</a>, and Spearbit. In addition, the protocol has a running bug bounty program that rewards users for identifying vulnerabilities on Sturdy.<h2>Sturdy: Operating Principles</h2>A unique feature of Sturdy is that it allows users to create a liquid money market for any token. To isolate risks between crypto assets, the protocol uses a special<a href="https://docs.sturdy.finance/">&nbsp;two-tier architecture</a> that allows bypassing liquidity fragmentation.Sturdy's innovative two-tier architecture works as follows:<ul><li>Layer 1</li></ul>The first tier of the architecture consists of risk-isolated lending pools and siloed lending pairs, each of which serves as a small lending market. Such pairs consist of a single lending asset and a single collateral asset.<blockquote>«Each siloed lending pair is isolated, meaning a user who lends to silo X has no exposure to silo Y. They’re simplistic, immutable, permissionless to create, and technically similar to Fraxlend» -<a href="https://docs.sturdy.finance/">&nbsp;Sturdy</a>.</blockquote>The main distinctive feature of Sturdy V2 is the intonation option to prevent liquidity fragmentation, where tier 2 aggregators appear.<ul><li>Layer 2</li></ul>The second tier of protocol’s V2 contains aggregators, which are responsible for moving assets between siloed lending pairs from layer 1. Thus, investors provide one asset to a<a href="https://yearn.fi/v3">&nbsp;Yearn V3</a> lending optimizer, which, in turn, allocates them to whitelisted siloed lending pairs to obtain maximum rewards.<img src="https://lh7-us.googleusercontent.com/DMdDk7Fg3aTCYcBft0MB_zj9TB4lP4173ThOu1r4TCuvs7nPZyarfEEkme4O412UoFE1yEqVPXlU1p5DUeIPVyorYn6EXBEOP1P_zkU1M5EM-oZpMxgRjWn-igaQNM4QJmE-B5vnMJNwMUvs2vu7Nxw" width="433" height="297"><h6 style="text-align:center;">Source:<a href="https://docs.sturdy.finance/">&nbsp;Sturdy Docs</a></h6><h2>Why Invest in Lending with Sturdy Finance?</h2>Sturdy is a fairly popular lending protocol with a TVL of over $49 million, which has undergone numerous audits to ensure its security. However, in addition to this, it offers several unique features that distinguish it from its competitors in the DeFi market:<ul><li>Innovative architecture. The protocol has a new two-level architecture consisting of risk-isolated pools, siloed lending pairs, and aggregators, allowing investors to maximize their rewards.</li><li>Low-risk yields. By providing liquidity to the protocol, investors earn high and stable rewards with the proper level of platform security.</li><li>Adaptability. The protocol allows users to seamlessly deploy a lending market for different asset pairs, while other lending platforms most often must go through DAO governance to get support.</li><li>Preventing liquidity fragmentation. Due to the aggregators existing in the Sturdy V2 architecture, the protocol solves the problem of liquidity fragmentation. Users can now easily create initial liquidity for a new vault by whitelisting it in an existing aggregator.</li><li>Proper risk management. Using Sturdy, users can select specific aggregators that fit their requirements, such as risk and reward levels. Moreover, if they do not find a suitable option, they can create an aggregator themselves.</li></ul><h2>Sturdy: Lending &amp; Borrowing Opportunities</h2>To use Sturdy, users must enter its app and connect their<a href="https://notum.ai/glossary/wallet">&nbsp;crypto wallet</a>. The protocol offers popular wallet options such as<a href="https://metamask.io/">&nbsp;MetaMask</a>,<a href="https://www.coinbase.com/wallet">&nbsp;CoinBase Wallet</a>,<a href="https://walletconnect.com/">&nbsp;WalletConnect,</a> and<a href="https://safecryptowallet.io/">&nbsp;Safe</a>. Next, the user gets access to the<a href="https://v2.sturdy.finance/aggregators">&nbsp;Aggregators</a> and<a href="https://v2.sturdy.finance/silos">&nbsp;Silos</a> pages.<img src="https://lh7-us.googleusercontent.com/pM_cBd5sMc8I5LXd-lQBYNHnZ49Ww0246cSEH9VxNDmrWyaSkb1NrYH7dfcRT7ncZY-KpsaISXpZwZ22dLOB1CBfXttcn8Bavm60T7qH1BCDhusIdal0P1T745yBauxa9UvCo0nm7zbc2EoDqb9fKG0" width="602" height="197"><ol><li>Aggregators. On the<a href="https://v2.sturdy.finance/aggregators">&nbsp;Aggregators Markets tab</a>, users can place their assets into an aggregator to maximize returns. Sturdy offers a convenient search for assets and two chain choices (Ethereum or Mode Networks). After choosing a crypto the investor will see lending APY and TVL of the chosen aggregator. Sturdy also encourages users to explore the quick navigation page to use the platform easily.</li><li>Silos. This tab offers users<a href="https://v2.sturdy.finance/silos">&nbsp;Silos Markets</a> or storage vaults for asset lending. Each Silo operates as a mini-lending market and combines a single lending asset with a single collateral asset. Users can independently choose the comfortable Silo in one of two networks.</li></ol>A convenient<a href="https://v2.sturdy.finance/dashboard">&nbsp;Dashboard tab</a> shows the user their portfolio, namely total deposited and total borrowed assets, estimated rewards, and aggregators. This way, the user can track all of their Sturdy activities in one place.<h2>Sturdy Finance: Risks &amp; Disadvantages</h2>Sturdy, as a lending protocol, offers users a significant number of benefits in favor of using it, but it also comes with some risks. Make sure you are aware of them before investing in this protocol.<ul><li>Smart contract risks. Like any DeFi platform built on smart contracts, Sturdy has risks associated with them. Thus, potential vulnerabilities and exploits may result in loss of funds.</li><li>Only two blockchains. While some DeFi lending protocols operate on multiple blockchains, Sturdy only supports Ethereum and Mode.</li><li>Market volatility. The cryptocurrency that is used as collateral or lending assets is often volatile, which can also lead to the partial loss of funds and rewards received from lending.</li><li>Aggregator fees. Although the protocol itself does not have any fees, aggregator managers can set management or performance fees for their aggregator.</li></ul><h2>Notum’s Verdict</h2>Sturdy is a lending protocol with a fairly large TVL of $49.62M, a medium risk level and fairly high rewards. A distinctive feature of the protocol that made it popular is&nbsp;the two-tiered architecture that enables sovereign risk management without causing liquidity fragmentation. By unifying liquidity at the aggregator level, Sturdy provides the liquidity of pooled lending with the risk management of isolated lending.&nbsp;Sturdy's innovative two-layer architecture allows the protocol to prevent liquidity fragmentation thanks to aggregators, which sets the platform apart from its competitors and gives more freedom to its users.Protocol pays special attention to its security, so both of its versions have passed numerous audits and have a bug bounty program to avoid possible Sturdy Finance hacks.&nbsp;However, investors still need to pay attention to the underlying risks associated with smart contracts, market volatility and aggregator fees before providing liquidity. All in all, if you are looking for a lending protocol with low-risk options to maximize your yields, then Sturdy can be a good option in 2024.Disclaimer: Notum does not provide any investment, tax, legal, or accounting advice. This article is written for informational purposes only. Cryptocurrency is subject to market risk. Please do your own research and trade with caution.

Today Notum guides you through the Sturdy Finance lending protocol, studying its pros, cons, and distinctive features.

Kate

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