DeFi Lending platform bZx is the latest firm to join the new digital liquidity yield farming bandwagon. The highly lucrative liquidity farming craze is attracting new players and investors by the day.
The decentralized Ethereum-based lending and margin platform bZx announced the news twitter. The firm made two new proposals to update its BZRX tokenomics governance token. The platform follows on the heels of Balancer Pools and Compound Finance. The two had an unbeaten run in the past week. The first proposal is a fee-sharing mechanism. The second one involves a distribution program where protocol users will be awarded tokens. The firm tweeted in the official blog post stating:
“We have been working to continuously improve and refine the protocol and its governance. Over the years, the $BZRX token model has evolved along with the industry, presenting fresh new ideas in the process.”
Successful Distribution of COMP Tokens
The proposal by bZx explains the working of a fee-sharing incentive that breaks down the three fees the firm collects. The protocol then disperses them into Balancer pools and creates incentives for users to stake their BZRX tokens. The current fee structure involves a 0.09% originating fee, a 0.15% trading fee, and a 10% interest. According to bZx co-founder Kyle J. Kistner:
“This means that anyone who executes a trade, opens a loan, or keeps a loan open, will begin to accrue ownership of the protocol.”
Anyone who’s been on twitter lately has seen yield farming represented as a meme. It depicts users putting their capital to work to earn returns on an endless number of different DeFi protocols. The concept is best catalyzed by Compound and their successful distribution of COMP tokens. Qualified who borrow or supply capital become eligible to receive a pro-rata distribution of the 2,880 COMP allocated daily.
The concept led to an excess of $1 billion in fresh capital that flowed into the platform. Erstwhile unknown tokens like BAT experienced upwards of 20,000% increases in demand as new farmers thronged to farm COMP. Combined with the ability to multiply COMP by using Flash Loans, Compound’s token distribution has created a DeFi bull market.
DeFi Bull Market
According to DeFi Pulse, bZx is currently on position 24 in the DeFi rankings. The platform has close to one million dollars in TVL. The platform expects to experience a surge from the liquidity framing initiative and draw back collateral into the protocol. The move is evidence that DeFi is on fire and that yield farming is becoming a buzzword. The firm’s newsletter sums it thus:
“As yield farming keeps getting traction, we get ready for a new cycle in the evolution of the Ethereum network. More protocols will seek to increase liquidity and activity on their systems by leveraging money legos and creating incentive mechanisms.”