The leading leveraged yield farm on Binance Smart Chain is looking to appeal to institutional investors as decentralised finance goes more mainstream.
Alpaca Finance, which has attracted US$1.5 billion in total value locked on its platform since launching four months ago, added a head of institutional growth last month in an attempt to attract inflows from small to medium cap hedge funds and both traditional and crypto fund managers.
“That’s what I’m here to do, put a face to Alpaca, talk to these people, get these institutions aware of what we’re doing, ” Ontario-based Pete Woodard told Stockhead.
“Most inflows over the DeFi summer (in 2020) was retail,” Woodard said. “But there’s a lot of money sitting on the sidelines, with negative interest rates, low interest rates, (people are asking), how can we get these yields?”
For customers comfortable with decentralised finance, leverage and crypto, Alpaca is offering yield in spades.
Using its leveraged yield farms, customers can get anything from a return of around 11 per cent for providing liquidity for swaps between stablecoins USDC and Tether to triple-digit returns for providing liquidity for more exotic cryptocurrency pairs.
(For those new to defi, decentralised exchanges such as Uniswap, Pancakeswap and Sushi operate not via traditional order books, but by “liquidity providers” binding asset pairs in smart contracts so users can trade exchange one asset in the pool for the other. In return, those liquidity providers get liquidity pool tokens that entitle them to a fraction on trading fees.)
For example, for a 2.5x leveraged position in the WaultSwap (WEX) – Tether pool, Alpaca was yesterday offering 703.25 per cent returns – that’s 1.93 per cent daily.
“A lot of the APYs you see that are very very big are often supplemented by the protocol, and the incentive design of it all,” Woodard explained.
“Most protocols will bootstrap, so that they have a reward period of super high APYs that are denominated in their base token or their native token.
“And the idea is that people stick around when the APYs slide down a bit and they roll out new products.”
Chainlink integration and expansion plans
Alpaca also integrated last month Chainlink’s Price Feeds into its platform, which are supplying high-quality price data in a decentralised fashion that’s resistant to manipulation from attack vectors such as flash crashes. (That’s especially important for any users taking advantage of Alpaca’s leveraged products, who risk having their positions liquidated in the event of big price swing.)
“It’s just better, more accurate pricing,” Woodard said of the Chainlink integration.
Woodard said Alpaca also plans to “mushroom out of leveraged yield farming, and go onto a much broader and larger play”, likely by the end of the year.
“And the idea is to build out solutions and products for institutional inflows, and I think a lot of what will be fairly bespoke in terms of what it looks like.”
Woodard said he expected Alpaca would also be on at least one other blockchain by year-end, although no decision on which had been made.
“I know that the industry’s moving cross-chain, that’s 100 per cent on our radar, whether it’s Polygon, or Solana or XYZ,” Woodard said.
At 34, Woodard said he believes he’s the oldest person on the project. The core team consists of just six or seven people, although with community moderators there’s maybe 30 or 40.
The newest addition, Woodard said one of the things that attracted him to Alpaca is that such a young-ish team was not just sitting on its hands having built a billion-dollar project and was instead looking to expand and grow.