Berachain & Boyco Farming - is it worth it?
Diving into Berachain's pre-mainnet farming campaign
One of the many things we get to enjoy during bull markets is the ability to earn high yields on our “hard crypto assets”; BTC, ETH, Stablecoins.
These opportunities tend to arise from two key sources:
a high demand for leverage which leads to a structural shortage of dollars inside the cryptoeconomy and consequently high stablecoin interest rates
the emergence of new projects with new tokens which trade richly and the tendency for these new projects to hand out those new shiny overvalued tokens in the form of “incentives” to liquidity providers
The Boyco opportunity falls firmly into the second camp.
Boyco is a combination of external vaults and Berachain-curated vaults which allow capital to flow into Berachain before the mainnet launches. Why would capital do that you might ask? Because a whole host of incentives, points, multipliers and airdrops are being touted as a carrot on a end of a stick to seed initial Berachain liquidity.
These deposits will find themselves locked into native Berachain applications (almost exclusively DeFi-related: DEXs, money markets etc.) for 3 months post mainnet at which point the deposits will unlock and become liquid, and the associated rewards/incentives will be distributed too.
With Boyco drawing to a close on February 3rd, the most optimistic case for deposit unlocks and rewards distribution would be May 3rd. This assumes Berachain mainnet launches immediately post Boyco which is unlikely given this team’s propensity for slow deployment speeds.
So with 3 days left to deposit into Boyco, the pertinent question is whether the opportunity cost of locking up capital in this regime is worth it?
I am making a sweeping statement here but I would say that on average the External Vaults are not worth it but that the Boyco marketplace vaults are more interesting.
Roughly 92% ($2.3b/$2.5b) of the capital in Boyco is locked in External Vaults but they will only receive 55% of the BERA rewards.
Meanwhile, 8% of the capital in Boyco is locked into the Boyco marketplace vaults which will receive 45% of BERA rewards.
Yes, it is true that these rewards are time weighted and the External Vaults have been live for longer (late December vs late January for Boyco marketplace vaults), but I do not believe this will make up for the divergence in BERA rewards.
I also don’t like the lack of transparency about the additional rewards associated to these External Vaults. While the BERA side of the equation is clear and given a calculator, a BERA FDV assumption and some assumptions around timing I can make my own APR assumptions, the additional incentives are less clear.
Take for example this “uniBTC” vault being offered by Bedrock. I am being told I will be rewarded by 9 different projects but each has a different points/airdrop program with different rules, many of which have not released any information about said points program or the correlation it will have with an eventual token or airdrop. In some cases the points themselves are subject to change.
Farmers farming incentives or projects farming farmers? “The rewards will be insane, trust me bro”.
This is not an attack on the protocols offering these external vaults, it’s a free market and a ton of liquidity has flowed into them. I am simply stating my position that in exchange for locking up my capital for a minimum of 3 months, I would need significantly more assurance about the expected APR in order to ascertain whether it surpasses my hurdle rate.
So this brings us to the Boyco marketplace vaults, which from where I’m sitting look a lot more attractive (8% of TVL with 45% of BERA allocation, now I am listening).
It’s important to note that there is a layering of risk here:
Asset risk
Boyco mainnet deposit contracts
Berachain bridge
Berachain chain
Berachain protocol/strategy risk (the destination of the pre-deposits post mainnet)
For this reason, the opportunities which are most attractive to me are the most simple ones which given the multiple layers of risk, minimise the risks which are under our control from an asset and protocol/strategy selection perspective.
In practice, this would lead me to look for opportunities which only involve majors and protocols which are simple forks of bluechip DeFi protocols (i.e. no new lending protocols), the truth is that this combination is pretty hard to find.
One opportunity which could fit this criteria would be THJ/Set and Forgetti - USDC Vault, Henlo Boyco which involves:
When USDC is supplied to the market, it is bridged to a vault on Berachain mainnet
It is supplied to the USDC-HONEY liquidity pool on Beraswap and deposited into the Set&Forgetti Stable Farm to earn Proof of Liquidity rewards, which are autoharvested and compounded into HENLO. At expiry, users can withdraw their stable deposit plus the accrued HENLO tokens.
For 40% APR as per Boyco which assumes a $2bn FDV for BERA.
Similar protocol/strategy combinations tend to involve a few extra steps which add additional layers of risk, for example a WBTC-WETH LP position (Infrared x Kodiak, WBTC-WETH LP) involves:
Deposit WBTC-WETH Uniswap V2 LP token(s) on Ethereum Mainnet and bridge the assets to Berachain
On Berachain, provide liquidity in the WBTC-WETH Kodiak Island, an automated liquidity management vault that tokenizes a range Uniswap V3 style liquidity position
Finally, stake the Island receipt token in the respective Infrared iBGT-compatible Vault
Layers upon layers of risk for 145% APR as per Boyco.
For me, there is no *outstanding* opportunity which offers a good enough risk/reward to justify the 3 month+ illiquidity. Browse boyco.berachain.com to see for yourself!
If you enjoyed and want to see more content like this, feel free to check out the Humble Farmer Army premium discord here.
You’ll get access to:
Weekly Premium Content
An Exclusive Community
DeFi Yield Strategies
Degen Farms & New Launches
DeFi Education & Analysis
And Real-Time DeFi Alerts
Humble Farmers Rejoice!