Asset allocation is the single biggest factor that will determine your investment success — more so when it comes to a crypto farming portfolio. It is a fine balancing act of game theory, economics and finance with the rewards being far greater than most (if not all) other asset classes.
With the state of the current crypto market, CCF aims to take as much of a healthy risk-reward approach to farming as possible. We look for farming projects that have been audited, have a good team behind them and show innovation in their approach to farming.
We deployed most of our funds between 30th November and 2nd December 2021 into farms which we deemed to be prudent investments given their standing in the relevant ecosystem alongside key metrics which we believe are important in evaluating the robustness of a protocol. These metrics can be split into quantitative and qualitative criteria:
(as of 27th December 2021)
To date, we have deployed $152,000 across the below farms.
Despite sub-optimal market conditions we have managed to create a 32% return on our initial allocation thanks to a mixture of good initial entry prices, underlying asset value appreciation during the month and of course, the APR/APY on offer from the farming protocols.
These profits will be redistributed into our current farms to compound our positions alongside the potential future yields.
Going forward, a portion of this monthly return will be redistributed back to CCF holders in BNB by way of a snapshot. Further details of this will be shared closer to the time.
In the initial months, our goal was to accumulate as much capital as possible from the farming wallet and deploy them into high yielding protocols. We then harvest these yields and reinvest them into the same or other farms to compound our positions.
Once we have a sizeable position in the farms, we will look to then distribute a portion of the profits to CCF holders as a monthly dividend in BNB. We now believe we have achieved our initial goal of bolstering our capital allocation in each farm and as such, we will be looking to distribute monthly dividends from the farming returns to CCF holders.
This is an update to the current position taken on farming as outlined in our litepaper as we felt this would make CCF more attractive to new investors over the long term. Please note that these monthly dividends would be on top of the CCF reflections holders currently receive on every buy and sell of CCF.
We will look to begin this dividend distribution from the end of February 2022 onwards. More details will be shared closer to the time while we spend the remainder of the time this year and early 2022 finalizing D3 protocol.
The longer-term strategy will focus on redistributing some of these rewards and eventually have an equal position of our capital allocated between the Low Risk/Volatility and Medium Risk/Volatility baskets with only a small fraction of capital being deployed onto higher risk farming protocols.
All current and future farming allocations will fall into one of the following risk/volatility baskets:
1. Low risk/volatility
Capital allocation goal: 40%
This is typically associated with stable coin farming on platforms like CRV, ANC, AAVE etc. Farms such as these offer a low but stable APY ranging from 2% to 30%.
At present, there is no allocation into this basket but the plan is to deploy onto Curve, Anchor and AAVE as mentioned above using a portion of the upcoming farming allocation from CCF buy/sell tax and also a portion of the yields from the other farms.
2. Medium risk/volatility
Capital allocation goal: 40%
Farms which fall into this basket typically involve single sided staking of various crypto assets or providing pairing crypto assets to provide liquidity for liquidity pool and being rewarded for doing so. It is worth noting that providing liquidity into these liquidity pools does open up the risk of impermanent loss. In the most laymen terms, impermanent loss is the amount of money lost due to the change in price when you deposit tokens into a liquidity pool.
The APYs associated with these farms can be relatively high ranging from 100% to 100,000%. Below, we have outlined 2 of our major positions in this basket.
- Fantom — Tomb ($TOMB)
We, along with many others, believe Fantom (FTM) is one of the most undervalued ecosystems at present and is set for exponential growth in the future. Their flagship DeFi platform, TOMB.finance, offers options to provide liquidity (via SpookySwap) and stake those LP tokens in the “Cemetery” to earn TSHAREs, which are the governance token of FTM. We can either then choose to sell these TSHAREs to either:
- Convert them into FTM/TOMB to further bolster our LP position
- Convert half to FTM and add to the TSHARE/FTM LP
- Stake TSHAREs for TOMB in the Masonry
- Sell the TSHAREs for stablecoin for other operations
Given the upside associated with FTM and TOMB, we have allocated 33% of our initial capital allocation to the FTM/TOMB LP and will continue to add to this. Not only will we be receiving a yield for doing so, but as the price of the underlying asset increases, so too will our initial capital allocation.
- Avalanche — Wonderland ($TIME)
Wonderland is the first decentralized reserve currency protocol available on the Avalanche Network based on the TIME token. Each TIME token is backed by a basket of assets (e.g., MIM, TIME-AVAX LP Tokens etc.) in the Wonderland treasury, giving it an intrinsic value that it cannot fall below. Wonderland also introduces economic and game-theoretic dynamics into the market through staking and minting.
Given the strength of the team behind Wonderland, the TVL, APY and other community factors, we felt this was also a prudent investment to allocate capital to and so this represents 33% of the initial capital allocation.
- Polygon — Klima DAO ($KLIMA)
We have also allocated 23% of capital to KLIMA.
Klima DAO gives Web3 builders and users the opportunity to participate in the carbon market through the KLIMA token. Therefore, the DAO serves the role of “de-central” bank, governing the monetary policy of this new carbon-backed currency, just as a central bank governs the monetary policy of a fiat currency. Over time, KLIMA will build an economy around KLIMA by driving adoption and unlocking growth of the crypto-carbon economy.
We felt that the innovative thinking behind KLIMA alongside the environmentalist nature of the project offered a compelling narrative and we have high hopes for KLIMA over the long term.
3. High risk/volatility
Capital allocation goal — 20%
Riskier projects have to potential to garner greater reward as well as loss! To that affect, only a small portion of the portfolio will be allocated to the riskier farms and we will be looking to diversify this overall 20% allocation as much as possible amongst projects that match our qualitative and quantitative criteria.
- Binance Smart Chain — Jade Protocol ($JADE)
Jade Protocol is a decentralized reserve currency platform on Binance Smart Chain. Unlike DAI or USDC, which are pegged to the value of the U.S. dollar, JADE’s reserves are crypto assets held by the Jade Protocol Treasury.
JADE is a free-floating currency backed by our treasury supply of the stablecoin BUSD. JADE tokens can’t be minted or burned by anyone except the protocol. The protocol only does so in response to price. Each JADE is backed by at least 1 BUSD. If JADE ever trades below 1 BUSD, the protocol buys back and burns JADE, pushing the price back up to 1 BUSD. There is no upper limit imposed by the protocol to the potential trading price of JADE.
Jade has had less than ideal price action over the last few weeks. However, we managed to cut any losses early and so came out unscathed. The fundamentals of the project and the overall goal
have not changed — it was down to unrealistic expectations from initial investors who bought at the peak. As such, we took a position in JADE recently near the bottom as it looks to offer a very good risk/reward ratio.
- Ethereum — Redacted Cartel ($BTRFLY)
Redacted Cartel are doing something very interesting and there is a lot of background around their protocol — far too much to put into an investment report so I would encourage you to read this great thread by @hufhaus9 to get a better understanding:
We have taken a position in this protocol and will continue to add on any significant dips where possible.
We are happy with a 32% return on the month given the current market conditions. We believe that in the instance the market trends in a more positive manner, these returns would be significantly greater.
We are also confident in the protocols which we have chosen and will continue to add to our positions over time.
One of the additional benefits of holding CCF now is that it will qualify investors for the monthly BNB dividend airdrop from the end of February 2022. We believe this will help the price action associated with the CCF token alongside the D3 protocol launch.
We continue to build from both a developmental and partnership perspective and thank all our investors for their continued support.
[188.8.131.52] is the team behind D3 Protocol ($DEFI) and Cross Chain Farming ($CCF). Our mission is to offer a complete suite of affordable and secure DeFi 3.0 tools available to all. [184.108.40.206] references our innovative tokenomics model applied across D3 and CCF, and is also an angel number representing completeness, prosperity, and success (👼, 👼).
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