Beefy finance is a Yield optimizer protocol on mulitple EVM-compatible blockchains. Beefy is one of the oldest yield aggregators and it has maintained a total value locked (TVL) of at least $400m since May 2021.
Beefy offers two main kinds of vaults, LP vaults and Single token vaults.
The user deposits the LP token in these vaults and the protocol automatically harvests the rewards (most likely liquidity mining incentives), sells them to buy more of the tokens of the liquidity position and increases the LP position with them, finally redepositing the newly received LP tokens back into the vault. This process is called auto-compounding.
Single token vaults
These vaults accept deposits of a single token and can either just farm and auto-compound the reward from a yield farm or, more frequently, use the following money market strategy:
- Deposit token A into the lending side of the money market, earn interest in same token and eventual liquidity mining rewards (which will be auto-compounded)
- Borrow token A with a safe LTV (note that there's no liquidation risk since it's the same token on both sides)
- Deposit the borrowed tokens into the lending side, earning even more interest
- Back at no.2, until the strategy can't be looped again
By depositing into a vault the user receives mooTOKENs, a claim on their shares of the vault.
There are no deposit or withdrawal fees on Beefy (unless explicitly shown), but there's a performance fee of 4.5% that is already taken into account on the APY of the pools. This means that the APY shown is the actual interest the final user earns. Of the 4.5% fee, 3% is used to buyback BIFI tokens and redistribute them to the stakers, 0.5% is allocated to the treasury, 0.5% is for the strategist that developed the vault and 0.5% for the one calling the harvest function.
The BIFI token is the protocol's governance token and revenue share. It has a capped supply of 80,000 with 72,000 distributed to the community and 8.000 to the core team. All the tokens will be in circulation by 2022-07-06 and users can earn BIFI tokens in 2 ways:
- Staking the native blockchain token in the BIFI pools
- Staking BIFI in the BIFI maxi pool