This is a guide on how to yield farm on BSC and an overview of DeFi on BSC. BSC, or Binance Smart Contract Chain is a new blockchain from Binance that is smart contract enabled and is compatible with EVM among other things, making it easier for Ethereum app developers to move to. It has seen a dramatic rise in usage and popularity among crypto users of late.
A lot of this interest is due to the fact that Ethereum gas prices have become really high.
A simple borrow from AAVE could set you back by $200 or more even if you are willing to wait for several hours for the transactions to complete. This is not sustainable for the small users. Even if you have a million dollar portfolio, and assuming you invest 1% of your portfolio i.e. 10,000 USD into a position, getting in and out and harvesting your yield farming assets could easily eat up 2-5% of the position size, a significant amount.
Unsurprisingly, users are looking for an easy way out of this. DeFi seems to be the first to make the move in a big way. DeFi on BSC has been increasing at an exponential rate, along with the price of BNB over the last week.
As an amazing milestone, it seems that Pancakeswap on BSC overtook Uniswap on ETH volumes. Some volume could be manipulated, but this is still a mind blowing milestone that most people in crypto would never have imagined even a month ago.
Obviously, the DeFi on BSC ecosystem is not as mature and well developed as Ethereum, but lots of users are moving to BSC in search of low fees and alpha.
BSC vs. ETH – Pros and Cons
Let’s be very clear – most current DeFi on BSC projects are copycats of similar projects on Ethereum. However, most of the “food farming” on ETH were also copies of others. For example, once Sushiswap came out with SUSHI there was a whole host of other food farms that were simply copy-paste. So we should not dismiss BSC outright.
As with most things, this will likely drive innovation forward in the entire crypto space. Hopefully the ETH projects can learn from some of the successes of projects on BSC.
Our take right now is simple – gas on ETH is making it unusable for a subset of users who are moving to BSC. However, projects need to prove themselves beyond simple yield farming on BSC by innovating. The jury is still out.
Pros of BSC
- Cheap gas. Transactions currently cost around $0.10 or 10 cents for yield farming, which about 100-1000 times less than on ETH.
- Faster confirmations. BSC users proof of authority/proof of stake so transactions get confirmed faster than ETH.
- More potential upside for yield farming. Newer projects with lower marketcap means the degenerate yield farmers have more fun and higher potential returns while the music plays.
Cons of BSC
- BSC is centralized. Pretty much all nodes that can build on the blockchain are whitelisted by Binance.
- BSC lacks the robust ecosystem of Ethereum.
- Most projects currently are copy-paste from Ethereum projects.
With that out of the way, let’s dive into how you can yield farm on BSC and explore the DeFi on BSC worlds.
How to Yield Farm on BSC (DeFi on BSC)
We’ve outlined a 5-step procedure below on how to yield farm on BSC with the emerging DeFi on BSC. This assumes you are already familiar with yield farming and DeFi on Ethereum. If not, we wrote a guide for Bitcoiners on DeFi.
This is not totally a beginners guide, so if you’re stuck at any stage, leave a comment below and we’ll try to help.
Note that BSC users BEP20 token standard similar to Ethereum’s ERC20 standard for fungible tokens.
Step-1: Set up your environment
Install MetaMask on Chrome/Brave. If you already have MetaMask you can use the same address on BSC (although we suggest creating a new one for privacy reasons). You will need to configure your MetaMask for BSC.
To do this, click on MetaMask > Networks (center top) > Custom RPC. Then enter the following values:
RPC URL: https://bsc-dataseed.binance.org/
Chain ID: 0x38, 56 in decimal
Block Explorer: https://bscscan.com
Here’s the complete guide if you’re stuck.
Step-2: Buy some BNB from Binance
Register an account with Binance and buy BNB using any other crypto or fiat. You can withdraw up to 2 BTC worth of BNB without KYC but make sure you’re not logging in from US (use a VPN if you’re in US).
Easiest way is to buy BNB using BTC but if you have ETH, you can easily swap ETH to BTC and then to BNB. Alternately, Binance has a simple ‘Swap’ functionality like Uniswap these days but the fees will be higher.
Step-3: Transfer BNB into your MetaMask on BSC chain
Once you’ve purchased BNB, withdraw it to your MetaMask account. You can confirm the withdrawal via BSC Scan. This should also show you any other BEP20 tokens you hold.
Step-4: Find out the yield farming projects on BSC
This of course is where the real alpha is. These are the resources that we currently use:
You can get into specific Discord and Telegram channels to try to get ahead of the game.
Step-5: Start yield farming and sell your harvests
Since the transaction fees on BSC are low and a lot of projects are currently in the “fly by night” mode, you would be wise to yield farm and sell your harvest frequently. This is especially true if you are yield farming in pool 2 or death pool.
Also, always remember to check 1inch for the best price. This is because similar to Uniswap/Sushiswap dynamic and others like Bancor and 0x on Ethereum can split liquidity, the same is happening on BSC as well. Therefore, the best way to buy BEP20 tokens is via 1inch. Since the gas is so low on BSC, the higher transaction fees that 1inch generally has is not a concern on BSC.
Here is an example of how 1inch can route a trade on the BSC network. This is to convert from BUSD, the stablecoin on BSC, to BNB token.
Useful protocols and resources for DeFi on BSC
Pancakeswap to sell your harvest. Similar to Uniswap or Sushiswap
Venus to borrow BNB or other BEP20 tokens like stablecoins, similar to AAVE or Compound.
Sign up to Binance to buy BNB and other BEP20 tokens quickly and cheaply.
Buy BEP20 tokens on 1inch.