Bitbns’s new DeFi platform rewards users with BNSD tokens when they stake Uniswap LP Tokens on the platform. In this article we see how to start “farming” these BNSD tokens.
If you did not understand what the above sentences mean, don’t worry. Until last Friday, even I had no clue. It was after some research over the weekend on DeFi and then farming tokens myself on bns.finance, that I learnt what it actually is. Since then I wrote about my experiences and made a video on how to farm these tokens, but a lot of our community still have questions around this, so we decided to write down step by step instructions on farming BNSD tokens and answer some common questions asked by people.
But a major disclaimer before we begin: Cryptocurrencies are highly volatile digital assets and can also lead to a complete loss of principal investment. So please be careful about the risk you take.
What is Yield Farming?
To put it simply, farming means being rewarded by new crypto assets for lending or staking your crypto assets. When you put your money in bank, you get interest. In cryptocurrency world, when you stake your assets, you may receive interest or fees as reward. This depends from project to project.
When a protocol gives you high amounts of newly generated cryptocurrencies in return for your staking, this is known as yield farming. These tokens can rapidly appreciate in value and make the early investors rich.
So imagine someone asks you to deposit Rupees and Dollars with them, in return they will give you thousands of little coins every few minutes as reward. Maybe these little coins have no value in the beginning, but if someone starts accepting it, thereby creating a usecase for them, these little coins can make you very wealthy and your original rupee and dollar is safe in a smart contract that you can extract anytime you want.
What is BNS Finance and BNSD?
Bitbns announced its DeFi protocol bns.finance on Sep 4, 2020. The new DeFi protocol is focused on yield farming and also towards improving the ecosystem for bitbns as an exchange, BNS – the exchange’s native token and BNSD – the DeFi protocol token.
Users can essentially stake some of their cryptocurrencies like ETH, USDT, USDC, BNS, BNSD, YFI, SUSHI and earn BNSD token as reward based on the interest rate and amount staked. This is the simplest form of explanation. As we learn how to do it, we will understand several steps in the process, platforms like uniswap and how to get the most out of your reward tokens.
The most important thing to remember is that every transaction is done on Ethereum network and using a smart contract. The smart contract is built in such a way that with every Ethereum block, it creates new BNSD tokens and then distributes them to the addresses that have staked their tokens on bns.finance.
What do you need to start Farming BNSD tokens?
Before we get into how to do it, it is important that you have all the tools to get started. On bns.finance, you can stake tokens in any of the eight pools below.
Note that the staking reward on BNS/USDT, ETH/BNS and BNSD/ETH is significantly higher than the other pairs. We will discuss this further in the article.
You need both tokens to get started in the pool. If you decide to invest in the BNS/ETH pool (we will use this for the article), you need both ETH and BNS in your wallet.
Here’s the list of requirements before you get started with bns.finance:
- Have both tokens that are required in the pool. Keep the tokens in the price ratio. If 1 ETH = 5000 BNS, and you want to invest 4 ETH, keep 2 ETH and 10000 BNS tokens to start.
- Install Metamask extension on your Chrome or Brave browser and import/create an ETH wallet. Deposit the above tokens in this address.
- Have around 0.1 ETH to pay in fees for the transactions required.
How to start farming BNSD tokens?
Before we learn to farm BNSD, a fair warning that ETH network is highly clogged and the transactions can be very expensive. The fees can go upto 0.1 ETH to start farming. So I personally advise against farming if you plan to invest less than 0.5 ETH total.
Step 1: Connect and Setup Metamask with Uniswap
bns.finance requires users to stake LP tokens. These LP (Liquidity provider) tokens are generated when user add the pool tokens (the two tokens required for the pool) to the Liquidity.
Liquidity Pools: Uniswap Liquidity pools are automatic market makers for traders who wish to exchange tokens using the decentralised exchange. If a user wants to swap ETH for USDT, the market is provided by other users who add ETH and USDT to the pool. In return for adding liquidity to these pools, users receive trading fees as reward.
- Go to Uniswap.org and click on Launch app.
- On the top right corner, click on connect to a wallet. Choose Metamask.
- The metamask window will open. Choose the wallet to connect and click next. Then click connect.
- On Uniswap, click on Pool and then add liquidity.
- Choose the two tokens for adding liquidity. For our example, we want ETH and BNS.
If you are accessing Uniswap for the first time, it may ask you to "Choose a list", select "Uniswap Default list". BNS might not be available in the list, so enter the contract address in the search bar - 0x695106Ad73f506f9D0A9650a78019A93149AE07C
The next step is to add liquidity to the pool. Make sure you have enough tokens in your Metamask wallet.
Step 2: Add Liquidity for ETH and BNS (or any two tokens required)
When user adds two tokens to a pool, they receive Liquidity Provider tokens in return. These tokens will then have to be staked on bns.finance in Step 3.
- Enter the amount of tokens/coins to deposit to pool. Enter one and the other one will be autocalculated, based on exchange rate and pool ratio.
- If this is the first time the token is added by the user, Uniswap asks to approve the token. A new metamask window pops up to complete the transaction.
- Once approved, user must click on “Confirm Supply” to add the tokens to the pool. We can see the quantity of LP tokens we will receive for adding our tokens to the pool.
Note: All transactions are created and pushed via Metamask wallet. Be mindful of the fees in the transactions via Metamask.
The benefit of adding your tokens to the Liquidity pool is that you will receive a share of all trading fees paid by traders on this swap. For this example, it is ETH/BNS, so anyone swapping ETH with BNS or vice versa pays 0.3% trading fee which is distributed among the liquidity providers. Since in this example, the share of the pool is 0.0843%, we will receive 0.0834% of all fees.
But, to farm BNSD tokens, we have to stake these LP tokens to bns.finance. Since Uniswap adds these fees to the reserve pool, when a liquidity provider burns their pool tokens to reclaim their stake of the total reserve, they receive a proportionally distributed amount of the total fees accumulated while they were staking.
Hence staking on BNS has no impact on your Uniswap LP tokens’ value at all.
Step 3: Stake the Liquidity Provider Tokens on bns.finance
In this step, we will move away from Uniswap and go to bns.finance to stake our newly received LP tokens.
- For the first timer, bns.finance will automatically try to connect with the metamask wallet. Choose the address to connect and click next and connect.
If you wish to directly buy BNSD token, you can do that from Bitbns exchange or Uniswap (click on buy on the page)
- Once connected, Click on “Farm” and notice the various available options and their reward rate in APY – Annual Percentage Yield. Since we have LP tokens of ETH/BNS pool, click on it.
Note on APY and Farming: The BNSD smart contract is written in such a way that the rewards are halved at fixed intervals, it can be seen here. The reward rate currently is also 4x on two pools, 2x on one pool and 0.5x on other 5. Hence the various rates. It may look profitable to stake in ETH/BNS and ETH/BNSD pool, hence do remember that the risk doubles as both coins are prone to market volatility. While the USDT or stable coin pools have only single risk of volatility with the other token.
- Click on Approve button under the LP token value. This will be a permission transaction for staking. Complete the transaction from Metamask.
- Once the approval transaction is confirmed on the ETH blockchain, click on “Stake” under the token and complete the transaction on Metamask.
Now, you’re all set. You can see the rewarded BNSD tokens accumulating on the same page. Once they are significant enough and you wish to sell, you can click on claim and get them in your metamask wallet.
Users can also unstake the tokens, one unstaked, users will stop receiving any more BNSD rewards. To convert the LP tokens back to the original, users must use Uniswap to remove tokens from the liquidity pool.
Claiming the Rewarded BNSD tokens
Open the pool on bns.finance and click on Claim. Once the Metamask transaction is confirmed, user will receive the claimed BNSD tokens.
These tokens can then be sold or transferred to any ETH wallet. Currently they can be sold on Bitbns for INR and uniswap for ETH. BNSD will be listing on Hotbit exchange as well.
The BNSD balance in the wallet is also reflected on the bns.finance homepage
Note: If you wish to unstake the LP tokens and also claim the BNSD farmed tokens, do not do two transactions. If you directly unstake the tokens, the BNSD will be transferred to your wallet. Similarly when staking more LP tokens, the unclaimed BNSD will be automatically transferred to your wallet.
Unstake the LP tokens on bns.finance
You can unstake the LP tokens on bns.finance by simply opening the pool and clickingon the button below staked quantity. A pop up will open asking the quantity to unstake, you can partially unstake as well. Max quantity will be entered by default.
Once you enter the quantity and click ok, a metamask transaction is created, once it is confirmed, the LP tokens will be back in your Metamask wallet.
Once again, be mindful of the fees on ETH network. Each transaction can cost 7-10 USD.
Once the tokens are unstaked, they can also be converted back to original tokens or coins added to the pool on Uniswap.
Removing Liquidity from Uniswap
Now that the LP tokens are in your wallet, you can remove your tokens from the liquidity pool using Uniswap.
- Open Uniswap.org and launch app. Connect Metamask wallet if not connected.
- Click on pool. User will see the pools where their tokens are added. However, if not visible, click on import pools.
- Enter the tokens for the pool, if asked to select a list choose “Uniswap default list”. If token is not visible, enter the smart contract.
- Click on the pool to remove liquidity from.
- Click on “Remove”.
- Choose the quantity of the tokens to be removed.
- Approve the transaction and then click on “Remove” again. Both transactions will be processed from Metamask.
Once the liquidity is removed, the tokens are sent to your wallet. The final amount will include the trading fees from the reserve pool as well.
I made a video for the entire process as well. You can check it out if you want to follow instructions screen by screen.
Few Generic Questions asked by Community
Over the time since I uploaded the video, I get bombarded with a lot of generic questions regarding BNSD Farming. So let me try and answer them all here.
How Profitable is farming BNSD?
Honestly, no one can tell you. Say the value of ETH and BNS total put in the pool is $10000, but the market dumps for them both, then your total value of tokens will fall.
However, in the meanwhile, if you farmed enough BNSD to cover these losses, then it will be good for you. But these cannot be truly said or determined.
What is the use case of BNSD?
Bitbns is slowly adding use cases for BNSD, one of them will be to participate in the exchange’s pool sales where you can buy BTC at 50% discount. For the pool sale, user must stake BNSD and hence the value can keep going up if there is scarcity in supply.
Another use case is ofcourse trading and staking. You can add the farmed BNSD tokens to Uniswap pool and stake the LP tokens again.
Can I buy BNSD token add it to liquidity pools on Uniswap?
Yes you can, you can buy it on Bitbns and transfer it too. In the video, I swapped the ETH token with BNS on uniswap instead of buying it from Bitbns. However, for this article I transferred BNS tokens to my metamask wallet.
Can I still earn fees from Uniswap for the liquidity pool?
Yes you can. Since Uniswap adds these fees to the reserve pool, when a liquidity provider burns their pool tokens to reclaim their stake of the total reserve, they receive a proportionally distributed amount of the total fees accumulated while they were staking.
I can no longer see my Pool on Uniswap
Click on “import pools”, and select the tokens, then you will be able to see. If clicking on import pool or “select token” asks you to choose a list, choose Uniswap default list and then continue.
How are the BNSD Rewards created?
New BNSD tokens are generated per block of Ethereum and distributed among farmers. However the amount of BNSD generated halves periodically, and this will continue for four halvings.
On day 1, BNS generated per block were 1000. Now it is 500. From Sunday it will be 250.
1000 -> 500 after 1 day from genesis block
500 -> 250 after 7 days
250 -> 125 after 30 days
125 -> 100 after 90 days
What is the total number of BNSD tokens?
There is no cap on BNSD tokens. However, after 90 days, only 100 BNSD tokens will be generated and distributed per ethereum block.
You can read more here – https://bns.finance/#about
Is it risky?
DeFi, crypto, stocks, every investment is risky. DeFi and Crypto carry a very high risk, so please do not spend more than you can afford to lose.
Are you getting paid by Bitbns?
First of all, I missed out on a 30000 USD profit using BNSD because I sold too early. So begrudgingly I wanted people like me who are new to this to know the risks with DeFi. Hence I wrote two articles and made a video. This was not paid by Bitbns. It is a good learning experience for me and I noticed that people were unaware of how to go about DeFi so I made it on my own.
However, when the community asked us a lot of questions, we decided to write this article. But writing an article is costly, and doing the demo again, would cost me a lot of fees in ETH.
So we asked Bitbns to pay for the cost that will incure like ETH transaction fees, Trading fees, writer fees, etc. We do it often for many of our clients. Bitbns has no editorial say in this, they are simply paying a fee for the amount of effort that goes into writing this article. You can learn more about how coincrunch works here.
Should I invest 50000 INR in farming?
Whether it is 5 INR or 500k INR, it is your choice. You need to manage your risk well. No one can tell you what to do and what not.
If you have any questions, feel free to join our telegram group and ask us.
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