4.2 Moonfarm Vaults
Vaults are ideal investment vehicles for those looking to earn compound interest. In a vault, users can earn more of the asset they initially stake in it. For example, when a user stakes CAKE in the CAKE vault, the system uses the CAKE staked to farm in the best APR farm such as CAKE-BNB (APR 70%), and CAKE Pool (APR 140%). They will continue to earn more CAKE over time, effectively growing their share in the vault and thus allowing for more and more rewards over time. Each vault can either refer to a single token in a pair invested in liquidity pools, or a single token invested in lending platforms or single stake reward pools.
In the future, the system will allow MFO holders in the community to build a new vault and submit the proposal to governance for voting.
In summarizing, MoonFarm Vaults can:
- Efficiently execute yield farming strategies.
- Compound rewards into the initially deposited token amount.
- Use any asset as liquidity.
- Put any asset to work to generate a yield.
- Reinvest earned profits.
In MoonFarm Vaults, users deposit single assets to different vaults to start earning. This is different from most liquidity mining/farming applications in DeFi where a pair of assets (with equivalent value) are needed for deposits. The benefits of depositing single assets are to reduce the risk of impermanent loss and to remove entry barriers for CeFi (and DeFi) users as they do not provide half of their assets in another token in order to join farming.
MoonFarm will have vaults for most assets such as BNB Vault, Cake Vault, BUSD Vault, MDX Vault. Once funds are deposited, YOS will utilize the assets in the multiple vaults, following the Vault yield optimization algorithm implemented in YOS to achieve the highest returns (APR & APY).
MoonFarm Vault will be integrated with other DeFi platforms across multiple blockchains and the user's funds will be automatically deposited in and deployed for yield farming, without the need for the user to do cross-chain bridging.
The user either can choose a favorite farm to join (manual mode) or choose the MFO farm (auto-mode).
Manual mode: Users stake single assets and receive token rewards daily in proportion to the users’ share in the MoonFarm Vaults. For instance, user Chad stakes 10 BNB into BNB Vault which has 100 BNB. At the end of the day, Chad will receive 10% of the rewards generated by the BNB Vault.
Auto mode: In this mode the asset for farming is MFO and this Vault will be the highest APY among all. The MFO Farming Pool will be the most productive in MoonFarm since the user only spends MFO tokens and can get passive income from many vaults. A portion of all other vaults rewards will be distributed to the MFO Farm. The benefit of this approach is that the more vaults MoonFarm implements, the more sources of passive income for MFO holders.
The distribution process is implemented in the smart contracts so that it is accurate, transparent and auditable to all users. Each vault rewards distribution has its own smart contract to ensure they are as transparent as possible.