AVAX-DEX IndexFarm

Estimated returns: 82.01% as of Oct 2021

Investing Approach

With this strategy, half of the investor’s funds are invested in the top 3 decentralized exchange (DEX) tokens on the Avalanche blockchain and the other half in AVAX trade pairs. These top 3 tokens include

Trader Joe($JOE), Lydia Finance($LYD) and Pangolin Exchange($PNG). Each of these DEX tokens is paired with AVAX to form an LP token that can be staked into farms and earn rewards.

Allocations

• JOE 22.5% (AVAX-JOE pair)

• PNG 22.5% (AVAX-PNG pair)

• LYD 5% (AVAX-LYD pair)

• AVAX 50%

The smart contract will sell these rewards to buy more LP tokens and then stake back the LP tokens bought into the farms again to earn more. The process will be rinsed and repeated (also known as auto-compounding) and earn more money for the investor. It is important to note that each pair has its proportion and this is based on the liquidity available for each pool. With our strategy, we rebalance it with new funds for investment and achieve a “buy-low” entry and risk mitigation.

The DEXes will support their native tokens by emphasizing their native pools and giving more weight to rewards distribution. So we can expect a higher returns from the DEXes this way.

Portfolio Growth

The incentives a user earns from yield farming these pairs would be compounded automatically by DAOventures smart contracts. This would ensure that the portfolio is rebalanced so that the strategy can reset back to its standard allocations as shown above. This will maintain a balanced allocation as a result.

Risks

A standard risk when it comes to providing liquidity on decentralized exchanges is Impermanent loss. To know more about impermanent loss, you can check this article, made by Binance Academy.

Fees

Besides the standard 0.5%-1% deposit fees and 20% profit sharing fees (see here for more details), there is a 10% fee on the yield farmed which is used to pay the gas fees associated with harvesting rewards and depositing LPs.