Learn how to build a DeFi application that rewards with your own ERC20 based on Chainlink decentralized oracles.
DeFi, yield farming, staking, and governance tokens are all topics receiving a lot more attention due to the massive growth of DeFi. They are relatively simple to spin up as well, and this blog will show you how to build a DeFi yield farming dApp in 10 minutes using our DeFi-Chainlink repo as a starting point.
This project was inspired by Gregory from Dapp University, refer to the following links if you want to check out his project repo and video tutorial.
What is Yield Farming?
Yield farming (or liquidity mining) is when a user supplies liquidity to a protocol in order to gain passive income on their capital in the form of fees, interest, and/or incentives. For example, providing liquidity to a decentralized lending protocol (e.g. Aave) or Automated Market Maker-based decentralized exchange (e.g. Uniswap) in exchange for potential rewards. Yield farming aims to solve the chicken and egg problem around new platforms not having liquidity because there are no users and not having users because there is no liquidity, by creating financial incentives for early liquidity providers.
Protocols incentivize users to provide liquidity by offering them interest on their staked capital, similar to a savings account, and/or allowing them to earn a portion of the platform’s fees. More recently, it’s become popular for platforms to launch their own native governance tokens and use those tokens to fund an initial incentive period where extra rewards are distributed to early liquidity providers. Again, we could liken this to savings accounts, where banks offer cash rewards to new users simply for signing up and depositing funds. This form of yield farming is relatively new and its lasting utility/benefit is still being debated. We don’t aim to solve that debate today, rather present a guide on...