How Yield Aggregators Work

In the last article, we explained what yield farming is. Today, we’ll explain what Clip.Finance does, and what value yield aggregators bring to the table. First, we’ll give you a visual context.

Here’s what you do as a user when you’re yield farming:

And here’s what yield aggregator does:

Yield aggregators simplify and automate yield farming. If you’re farming yield by yourself, you usually go through a process that’s similar to the following steps:

• Research & learn how to farm
• Decide which farms and strategies to use considering your risk appetite and “yield goals”
• Swap token (to obtain a token you can farm)
• Bridge token, if you want to farm on an alternative L1 blockchain (smaller fees and better yields)
• Deposit token into a liquidity pool
• Stake for extra incentive tokens yield
• Harvest and sell rewards (repetitive action with transaction costs)
• Repeat or bridge back to ETH mainnet, etc.

These steps are time-consuming and also expensive due to the gas fees you’re going to pay along the way. Yield aggregators optimize gas fee spending by pooling user funds, maximize returns by using different strategies and auto compounding, collect your rewards, and overall create a lot better user experience.

Hunting Yield

Returns vary greatly between different protocols. As a result, there’s an opportunity to chase higher yields all the time. But it’s not exactly an enjoyable process as described above. It’s a pretty tedious job if you’re doing it manually.

Considering the gas cost and the time investment, it’s not surprising that yield aggregators like Clip Finance attract users.

Yield aggregators use a variety of different strategies and any single strategy is designed based on available market possibilities, which includes tens of different protocols with different business models and hundreds of farms and vaults. Although perhaps you don’t need to know how your funds are used to generate yield, we think transparency is important. For that reason, Clip’s dApp shows exactly how big portions of your funds are deposited into which farms and how much fees you’re paying.

The goal of Clip Finance is to take away all the complexity from earning yield in Defi. In the future, we plan to add built-in insurance to cover your deposits. So it’s not only more convenient but also safer to use Clip than manually hunt yield.

Getting Started With Clip Finance

We’ve taken away the barrier of entry to farming yield. Whether you’re new to crypto or a degen, there’s value for both. Head over to clip.finance, choose your stablecoin of choice and use the one-click deposit to start farming.

Earn better yields, spend less on transaction fees, and enjoy the best user experience in crypto.