Lending & Leveraged Yield Farming

Xfactory offers a decentralized lending protocol where users can participate as lenders or borrowers in isolated lending pools.

Each lending pool represents a pair of 2 tokens of a DEX.

  • Lenders can supply tokens to any lending pool to earn passive yield without impermanent loss.

  • Borrowers can deposit LP tokens in a lending pool to borrow tokens of the token pair.

  • This enables borrowers to leverage their LP tokens and get even more LP tokens, allowing for leveraged yield farming and enhanced LP rewards.

Xfactory makes yield farming simpler and safer

With Xfactory, investors can start earning yield from liquidity provided on DEXes with a single token deposit. It eliminates the risk of impermanent loss removing one of the biggest negatives of liquidity providing.

How does this work? Instead of depositing funds directly into DEX contracts, the funds are supplied to borrowers who use them to increase farming earnings through leverage. These increased earnings are shared with the lender in the form of interest. This is called Indirect Liquidity Providing. Borrowers carry all the impermanent loss risk on behalf of the Indirect Liquidity Providers.

This is a great benefit for people who want to earn DEX yields with less risk, but it’s also a benefit for DEXes since it helps more risk-averse users safely participate in liquidity providing.

Xfactory lets you borrow to multiply your yield using leverage

If you are more comfortable with risk, Xfactory also lets you borrow to increase your farming position. You can take LP tokens and use them as collateral to borrow more of the same token. Then you earn a yield on both your original amount and the borrowed amount. This is called Leveraged Yield Farming.

You share a portion of these extra earnings with the lender and keep the rest as profit. You can de-leverage and pay back the borrowed tokens at any time.

What’s the liquidation risk? If there’s a sudden change in collateral value, the borrowed funds may be liquidated to pay back the lender. Liquidation fees are limited to 4% of your borrowed amount.

Xfactory creates new earning opportunities

The ability to choose higher and lower risk/reward positions for DEX farming creates many new earning opportunities that haven’t been available before. The ability to borrow against LP tokens and use the funds for other investing activities removes a big opportunity cost to liquidity providers.

Last updated