Using Binance Smart Chain for Yield Farming (BSC)
Yield farming is still a popular strategy for making money from long-term holdings, as demonstrated by DeFi's continued success and parabolic rise since the summer of 2020. For those who don't know, yield farming is the simple process of staking your assets on a platform to generate returns, often expressed in the form of staked assets or governance tokens.
Yield growers are constantly looking for the best yields as new platforms are regularly added to the ecosystem. This is comparable to investing at the bank that offers the highest interest rate, but with far more startling numbers.
Even for simple transactions, gas prices have increased dramatically due to the recent congestion on the Ethereum network. Many users have been forced to abandon the Ethereum blockchain due to rising gas prices, making it financially unviable. Larger whales that hold hundreds of thousands of dollars and can pay their transaction fees quickly are becoming the main participants in DeFi activity on Ethereum.
The fair distribution of rewards has always been a fundamental aspect of yield farming, except in cases where excessive incentives are not available. However, current barriers to access have become prohibitive for those with fewer assets.
On alternative networks like Binance Smart Chain (BSC), where transactions can cost anywhere from a few cents to a few dollars, this dilemma has led to a rise in yield farming groups. Whales can still move to BSC and receive their dividends, but beginners and developers can now participate economically due to decreasing transaction costs.
There are multiple ways available to add funds to Binance Smart Chain. Here we go through the two main methods. Using the Binance Bridge to transfer funds from Binance to Binance Smart Chain.
Binance users have the option to withdraw funds directly from Binance to their BSC wallet. Make sure the funds are compatible and available on BSC and that the network you want to withdraw the funds from is the right one.
Note how different the tariffs are for the different networks. Withdrawals via the BSC network only cost around 20 cents, while withdrawals via the Ethereum and Bitcoin networks cost around $15 and $25, respectively.
BSC addresses start with “0x”, similar to Ethereum addresses, and you can link your Metamask wallet directly to BSC. If this is your first time using BSC, you may need to develop a custom RPC.
Alternatively, you can move funds from the Ethereum, TRX or Binance Smart Chain network using the Binance Bridge. Note that each network only supports a limited number of assets and there is a limit to the amount you are allowed to transfer to BSC daily.
It is important to remember that Binance Smart Chain is not gas-free for either approach. BSC pays gas fees using its native currency Binance Coin (BNB), just as Ethereum uses Ether to pay transaction fees. Therefore, before you start increasing your earnings, you should also transfer some BNB to your BSC wallet.
Decentralized exchanges (DEXs) are arguably the most popular venues for yield farming as they allow users to provide liquidity to the platform in exchange for tokens from liquidity providers (LPs). Then, in order to generate transaction fees and more tokens, these LP tokens can be further staked into multiple pools.
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