To understand how it works one must first learn what the roles of each user is on the platform.
There are two roles when it comes to our Leveraged Yield Farming platform, lenders and borrowers.
Let's learn about both options:
🙋♂️ Lenders
Lenders are the users that provide BNB or BUSD to the bank.
How does one become a lender and what are iBNB and iBUSD?
When a lender provides assets to the bank, they receive a proportional amount of iBNB or iBUSD tokens, which is a tradable and interest-bearing asset that represents their shares of assets in the bank.
What are the advantages of becoming a lender and why should one provide BNB or BUSD?
By providing assets to the bank to be lent to yield farmers (borrwers), the user is paid interest by them - the yield farmers - proportionate to the amount of assets lent.
👨🌾 Borrowers - Yield Farmers
Yield Farmers are the users that borrow assets from the bank.
Why would one borrow BNB or BUSD from the bank?
By borrowing assets from the bank the yield farmers are able to increase their positions, therefore increasing the returns of the yield farming process up to x6.5 the APY.
What does one have to provide in order to borrow assets from the bank?
In order to borrow assets from the bank one has to provide the token of the pair he wants to farm and/or BNB/BUSD. The user doesn't necessarily have to buy one or the other.
What does Kalmy App's Leveraged Yield Farming platform do, besides borrowing from the BNB or BUSD bank?
Along with borrowing BNB or BUSD from the bank based on the amount of leverage the user picked, the smart contract also reinvests the returns received from the yield farming process, along with the trading fees for more LP, therefore constantly increasing the position of the yield farmer.
Example:
User X has 100 BNB and wants to farm CAKE by using PancakeSwap's CAKE/BNB Farm.
Normally, User X would split 100 BNB in 50 BNB worth of CAKE and 50 BNB, provide liquidity, and farm CAKE with the 200% APR PancakeSwap provides.
But User X wants to get higher rewards, so he or she uses Kalmy App's Yield Farming platform to borrow another 150 BNB from the bank, and uses leverage to yield farm PancakeSwap's CAKE/BNB Farm with a total of 250 BNB, which gives the user the ability to more than double the yield they would farm compared to their initial capital.
It is good to keep in mind that User X also has to pay the borrowing interested on the borrowed amount, as well as making sure his position value doesn't drop below the minimum threshold, in which case his position will be liquidated.
