In our yield farming guide, we looked at several DeFi apps where you can mine liquidity and earn on transaction fees from different pools. This article will concentrate on Celo yield farming on Ubeswap. That is liquidity mining on pools around the Celo blockchain.
The reason for this particular focus is the high APR that you can get currently on Ubeswap when you provide liquidity to pairs that include Celo.
I will take this article step by step to explain Celo, Ube, and how to yield farm with Celo assets in pools on Ubeswap.
What is Celo?
Celo (CGLD) is the mobile-first proof of stake blockchain focused on emerging markets, mobile payments, and financial inclusion. It is a cryptocurrency that acts as a governance token for the Celo platform. Celo is open-source and designed to support stable coins.
What is UBE/Ubeswap?
Ubeswap is a mobile compatible fork of Uniswap that runs on the Celo blockchain. If you read our yield farming guide, you will see that we mentioned Uniswap as one of the top DeFi platforms for yield farming. Ubeswap is coming up pretty fast too.
Ubeswap is a protocol for liquidity provision and decentralized exchange on Celo. Its mission is to increase the adoption of Celo through providing liquidity so that Celo users can trade on-chain at a cheaper rate.
UBE are the tokens of Ubeswap.
Yield Farming on Ubeswap
Yield farming on Ubeswap is a sweet and easy way to grow your cryptocurrency portfolio. On Ubeswap, you can provide liquidity to trading pairs, and by doing so, Ubeswap rewards you with UBE tokens.
Several other trusted liquidity mining platforms are already well-known; they have passed the early adopters stage, so you can’t expect a lot in rewards. That is one advantage of jumping on Ubeswap right now; it’s still early and the APR high. You will see more on this when I show you the rewards in the next section.
Providing Liquidity to Celo Pairs on Ubeswap
Providing liquidity on Ubeswap is straightforward. In general, the pools on Ubeswap earn a 0.3% fee on all trades. As a liquidity provider, you get a share of that 0.3% in proportion to your share of the pool.
That means, if your provided coins are worth 10% of the entire pool, you get 10% of the 0.3% in trading fees.
Also, by providing liquidity, you earn UBE. That can make your APR go as high as hundreds or even thousands. When providing liquidity for Celo pairs started initially, we saw APRs of 2000+%. As of the time of this writing, some pools had an APR of 700+%.
With more people (money) coming into a pool, that percentage reduces, but it’s still above the market rate of more famous pairs, where 50% -100% is high.
Impermanent Loss and Stable Coins
We explained impermanent loss as well in the yield farming guide. It happens when the market price of one of the assets in your pair shifts.
Suppose you deposit 1ETH and 100UNI into a pool that has 10ETH and 1000UNI. Remember that the pairs must be of equivalent value. So, if ETH becomes 200UNI, automated market makers will try to make up for that to ensure the liquidity stays at a constant 10000.
That will lower the amount of ETH in the pool and increase the amount of UNI. If the change is a lot, you can end up with a lower value when you withdraw your liquidity.
However, trading fees make up for that in some cases. If what you earn in trading fees along with the token makes up for and exceeds what you lose, that’s great. But that doesn’t always happen.
Nevertheless, like every investment, there are risks like this. If you’re concerned with that, you can start liquidity mining with stable coins or wrapped versions of stable coins. As the value of those does not dip or rise quickly and usually stay contained due to being pegged to fiats, there is a much smaller risk of impermanent loss.
Stable Coins on Ubeswap
On Ubeswap, there is mcUSD and mcEUR, which are versions of the cUSD and cEUR staked on Moola.market. They earn interest from lending to borrowers on Moola, and you’re much safer there. However, you’ll get way less APR. As of mid-may 2021, that pair has a 51% APR whereas the UBE-Celo pair has an APR of 728%.
What you Need to do Liquidity Mining on Ubeswap
To provide liquidity on Ubeswap, you will need the following:
Like you use your bank application to control and interact with your bank account, a Celo wallet is an application that lets you control your Celo account. That includes transitions, connecting to applications, and so on. Ubeswap supports some Celo wallets, including Valora and Ledger Nano X or Nano S.
The Celo browser extension wallet connects your Ubeswap with your Celo Wallet. You can download and install it on your Chrome by clicking here.
How to do Celo Yield Farming on Ubeswap Step-by-step
First, you need Celo. You can purchase some on Valora with your card or through a cryptocurrency exchange like Binance and Coinbase.
Then, launch the Ubeswap app. Ensure that the browser extension is installed, then connect your Celo wallet with Ubeswap. It’s pretty intuitive to do that.
You can take a look at the pools by clicking on “farm” in the top left area of the menu section to see the APR and pools available. When you have decided on the pair you will provide liquidity, click on “swap” on the menu.
That will take you to the above interface. Select “Celo” or the coin that has a balance in the “from” section and select the other coin in the pair in the “to” section so you can have enough to join a pool.
You can click on “MAX” to swap all your Celo, but that would not go through because you need some to cover gas fees. So, ensure you leave some Celo when swapping to cover gas fees and click on “swap”.
When done, click on “Pool” in the menu section to add liquidity to that pair.
Select the pair and input the amount you want to add to the pool. It will automatically calculate what’s needed for the other token to even out the ratio. Go through with adding liquidity then you can farm.
To farm, click on “farm” in the menu section and select your pair by clicking on the “deposit” button.
Add UBE-LP tokens by clicking on the button that says exactly that 🙂 and that’s it!
You can now watch your yield farming effort produce UBE tokens and withdraw them when you wish to. To do that, go to the pool you provided liquidity and click on “Claim” to withdraw your UBE. You can pull those tokens back into the pool or swap them for Celo into your wallet. You can also deposit more liquidity by clicking on “Deposit” or withdraw your entire investment by clicking on “Withdraw”.
That’s it for celo yield farming on Ubeswap. If you have any questions or comments, reach out in the comment section. Don’t forget to subscribe to our blog using the form below to get updates on promising, new, and high-value opportunities in crypto.