Marginswap Strategies

Published on: 12.10.2021

Yield Yak now offers one-click farming strategies for Marginswap’s Avalanche markets. These strategies optimize your single-asset deposits, automatically compound your incentives, and save you time. Marginswap strategies are available now on Yield Yak for YAK, USDT, WETH, PNG.

Earn Yield. Explore Marginswap farms on Yield Yak.
Good Bridging. It’s easy to move funds from Ethereum to Avalanche using the Avalanche-Ethereum Bridge.

Incentives for Lending

Marginswap is a trading protocol that uses lending and borrowing to support traders with up to 5X leverage. Marginswap uses a cross-margin account to enable its leveraged trading features, which drives natural demand for borrowed tokens. Traders pay lenders an interest rate. Lenders are paid additional incentives through the protocol’s governance token, MFI.

Interest rates automatically adjust as assets are borrowed and lent. In high-demand times, the interest rates increase and in low-demand times, the interest rates decrease.

Yield Yak’s strategies lend tokens using Marginswap’s Bond Lending feature to earn yield, compound the platform’s lending incentives and grow your single-asset deposits.

“Thanks to this integration, lenders on Yield Yak can easily supply tokens to traders on Marginswap for leverage trading, while MFI reward and interest on supplied tokens gets seamlessly compounded by YY, increasing lenders’ overall yield.
— Dronoms, founder of Marginswap”

Lending Risks

Marginswap generates sustainable interest from leverage traders. However, the cross-margin account means that if any of the supported assets lose their value, the entire pool will be contaminated from the toxic asset. Additionally, in times of a very high demand, withdraws on certain assets may be unavailable until the liquidity reserves are replenished.

Marginswap mitigates risks using listing criteria and variable lending rates which are frequently updated in response to market condition

Bonus: How to use YAK as Collateral

Marginswap added support for the YAK token shortly after its launch, representing one of the first Avalanche-native assets to be added and the first lending platform for YAK.

This means YAK can be deposited to earn yield for taking a simple position. Yield Yak’s auto-compounding strategy does this on your behalf.

If you prefer to manage a more advanced leveraged position, you can also use YAK as collateral to borrow a different yield-generating asset. For example:

Deposit YAK to your margin account
Borrow PNG from your margin account (pay variable interest)
Withdraw PNG from your margin account
Deposit PNG to a Yield Yak farm (earn variable interest)

The difference between the interest paid in Step 2 and earned in Step 4 will be your profit (or loss) earned from using YAK as collateral on Marginswap.

About Marginswap

Marginswap is a decentralized trading protocol that natively supports spot and cross margin swapping of assets on AMMs like Uniswap, SushiSwap, and Pangolin.