Auto-compound Your Yields
Introduction
Factor Studio enables yield farmers to amplify their yield rewards while reducing their liquidity management overheads through automated strategy vaults. Yield farmers just need to deposit once into a yield strategy vault and watch their yields auto-compound. Yield strategy vaults periodically reinvests any accrued liquidity incentives through conveniently batching the following steps for each harvest event:
Harvest (i.e. claim) farming rewards accrued to the position
Swap reward tokens to pool tokens
Provide pool tokens as additional liquidity
Stake additional liquidity to earn compounded rewards
Note that a higher harvest frequency amplifies the effects of compounding while minimizing the depositor's exposure to reward tokens.
Yield Strategy Explainers
Please refer to the Yield Strategy Explainer if you would like to understand the yield auto-compounding process and how Factor streamlines the management of liquidity positions.
Auto-compound Your Yields
Step 1: Select A Yield Farming Strategy
Navigate to Studio Discover where you will be able to sort and filter through a myriad of Yield curated strategies. This includes yield protocols, strategy types, projected APYs, vault protocol rewards, and much more.
Take advantage of Factor Boost (đ) and Factor Scale (âī¸) incentivized vaults to get even more profits!
Once you have identified your preferred strategy, select the "Deposit" button to get started on your automated yield farming journey.
Step 2: Add liquidity to the underlying protocol
Factor yield strategies take advantage of DeFi's modularity to automate liquidity management for underlying liquidity protocols. As such, liquidity must first be deposited into the underlying protocol's contract.
The Factor dApp enables convenient access to the relevant pool via the link at the bottom right of the deposit interface. This will open the corresponding protocol dApp in a new tab whereupon you can follow the protocol specific instructions for depositing liquidity into the target pool.
Once liquidity has been successfully added into the underlying protocol, you should be able to see the LP token (i.e. token representing the protocol's liquidity) balance on the Factor interface.
Step 3: Approve yield strategy vault
You will then be required to approve a spending amount for the yield strategy contract. This enables the yield contract to debit the recently acquired LP token from your wallet so that it can manage your yield harvests. This is an on-chain transaction which requires a signature from the connected web3 wallet.
Step 4: Deposit into the yield strategy
Once approval has been given, you can then start to auto-compound your yields by adding liquidity to the yield strategy vault!
By selecting the "Deposit" button and signing the transaction request, Factor deposits your LP tokens into the strategy vault which then makes it eligible to be included in the next harvesting cycle (as outlined in the Introduction).
Step 5: View your active position
Upon deposit confirmation, you can view your updated yield vault balance on the Factor dApp.
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