Leveraged Yield Farming On Fantom
Tarot enables liquidity providers to leverage their Fantom LP tokens for enhanced yields and staking rewards.
Do you control your own destiny, or is your path predetermined? We all have the desire to command our fortunes, but the degree to which we are able often depends on external factors.
What Is Leveraged Yield Farming?
Tarot isn’t an ordinary DeFi lending protocol. Tarot is a protocol for leveraging liquidity provider (LP) tokens that allows users to take 5–10x loans, or even greater leverage, on the value of their LP tokens. The ultimate goal is to enable borrowers to leverage their LP tokens for enhanced yield farming and staking rewards.
Most other DeFi lending protocols require 150% to 750% overcollateralization to ensure repayment in case of liquidation, so how can Tarot offer undercollateralized loans?
First, while other DeFi protocols allow borrowers to use their borrowed funds however they choose, Tarot puts leveraged LP tokens to work, automatically farming yield and earning staking rewards for the borrower. This process is ensured by smart contract so a borrower on Tarot can’t trade or send away their LP tokens without deleveraging their position first.
Additionally, all lending pools on Tarot are isolated. This means that lending for one LP token pair won’t impact the stability of other LP token pairs. This feature also allows the lenders, who supply individual tokens to borrowers, to earn yield on single tokens and ensures lenders will not suffer from impermanent loss.
Of course, with any loan, there’s risk of liquidation. This risk is easily quantified and managed in the Tarot Protocol. Borrowers can monitor the up-to-date liquidation price ranges for their LP tokens and choose the risk level they’re comfortable with.
With Tarot, you have the choice to assume more risk via leveraged LP tokens, or earn a passive return by providing single-sided token liquidity to the lending pools, helping to create a more vibrant Fantom Opera.