Lorenzo Schoenleber (Collegio Carlo Alberto)
27 June 2022 @ 12:00 - 13:00
- Past event
Manoeuvring and Investing in Yield Farms
Abstract. This paper is about Yield Farming which denotes a DeFi strategy of seeking rewards in the form of transaction fees by depositing tokens into a decentralized application. We demystify the investment process and quantify transaction costs, returns, and risks using historical data from a major DEX. We reveal the economic mechanisms providing a mathematical (optimization) framework which resembles the yield farming investment process including the direct modeling of returns, transaction costs, and sources of risk.