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Autofarm Network Review: DeFi Yield Platform

What is Autofarm?

Autofarm is a DeFi yield farming optimizer. It aggregates other yield farming sites on its own platform, letting you farm/stake on those platforms while Autofarm’s smart contracts automatically harvest yields at optimal times to increase your APY.

I personally use Autofarm to stake BTC, ETH, and BNB through BeltFinance. As of Aug 2021, the APYs are:

  • BNB: 17.6%
  • BTC: 10.43%
  • ETH: 7.88%

The total APY is comprised of the Farm APY and AUTO APY.

Farm APY is the interest you earn from the coin you’ve staked in the vault (ie. BNB, BTC, ETH, etc.) and is automatically added to your vault when harvested. So if you’ve staked 10 BNB to start, every day you’ll notice that stack grows a little.

AUTO APY is the interest on top of the Farm APY you earn for using the Autofarm platform. AUTO is Autofarm’s native token that can only be mined through platform’s vaults. More on the AUTO token later.

How Much Interest Can You Earn on Autofarm?

Autofarm’s single asset vaults offer some of the highest yields out there for BTC, ETH, BNB, and other coins currently.

If you check out Belt Finance’s vaults, here’s how much yield you can currently earn from staking BTC, ETH, and BNB.

As we can see, belt.fi provides the following rates: 7.3% APR on BTC, 4.09% APR on ETH, and 11.86% APR on BNB right now.

In comparison, here’s how much yield you can earn on Autofarm, which uses the same Belt Finance vaults above.

That’s 9.86% APY on BTC, 7.62% APY on ETH, and 17.15% APY on BNB.

Belt FinanceAutofarm
BTC6.92% APR9.86% APY
ETH3.96% APR7.62% APY
BNB11.58% APR17.15% APY

As shown, we can earn a much higher yield through Autofarm because of the platform’s auto compounding of interest, as well as from the AUTO tokens received.

Note the difference between APY (annual percentage yield) and APR (annual percentage rate). APY is the compounded interest you earn while APR is the simple interest rate.

Since Autofarm automatically harvests and reinvests your earnings, it makes sense that Autofarm’s APY would be higher than Belt Finance’s APR. That’s before you even receive any AUTO tokens!

DeFi vs CeFi Yields

You can also see that DeFi platforms offer much higher yields than CeFi platforms like BlockFi do. BlockFi’s interest rates are tiered and they currently only offer 1.5% APY on up to 5 BTC and 0.25% afterwards, and 1.5% on up to 50 ETH and 0.25% afterwards.

I still recommend BlockFi as a starting point, especially for people new to crypto, but you can start to see why DeFi is so attractive now.

Is Autofarm Safe?

While there are hundreds of DeFi platforms out there today, Autofarm stands out as one of the safest and most trustworthy platforms currently. It’s been audited extensively, has insurance protocols in place if users opt in, and has a live bounty program that pays out up to $100,000.

Along with these measures, you want to evaluate a DeFi platform’s team, their partners, TVL (total value locked – the higher the better), and daily transaction volume when deciding how safe a platform is.

Autofarm is routinely in the top three DeFi platforms on Binance Smart Chain and Polygon in terms of number of active users and TVL, which are additional positive factors.

Smart Contract Audits

The biggest risk when using DeFi platforms is smart contract vulnerabilities. If there are bugs or loopholes in the contracts, hackers – or even the team itself – can drain funds from the platform’s vaults into their own wallets.

Auditing a platform’s smart contracts before using it is therefore crucially important. While I can’t say I’m an expert myself, because of the importance of this step I’d recommend learning the basics so that you can generally understand how they function.

Thankfully, there are also third party smart contract auditors who conduct extensive analyses of a platform’s code. To date, Autofarm has been audited four times by four different companies. All of the audits have found low to no risks identified, and any issues raised were immediately addressed and fixed by the Autofarm team.

One of the audits completed was by leading blockchain security company Anchain.AI. Their audit showed that Autofarm received the maximum score level of 100 indicating the lowest threat level, outperforming 50,000 other smart contract with similar code the company has reviewed.

Autofarm Insurance

In addition to the full audits of Autofarm’s smart contracts, Autofarm created the AutoSAFU Protocol Insurance in the event there ever is an exploit or loss of funds. The team pledged their rewards from their participation in Binance’s MVB Accelerator Programme to this insurance fund.

Right now, there is about 732 BNB or $300,000 USD allocated. This isn’t much in the grand scheme of things, but it is another signal the team is committed to establishing safeguards.

Along with Autofarm’s own insurance fund, users can buy personalized insurance for their own funds through third party DeFi insurance providers. Autofarm is currently partnered with Helmet.insure, Soteria Mutual, CertiKShield, and Cover Protocol to allow its users to protect themselves against potential theft or lost funds.

These insurance protocols work the same way regular insurance does – you pay an upfront or monthly premium for the service, and if you do suffer loss of funds the insurance provider will reimburse you.

Personally, I feel comfortable using Autofarm without having insurance, but your risk tolerance may be different. Just be aware that paying for insurance will obviously diminish the net yields you’ll earn.

Bug Bounty Program

Autofarm has a bug bounty program with rewards up to $100,000 through Immunefi, a bug bounty platform for smart contracts.

Having a live bug bounty program is a big indicator of the team’s trustworthiness. It shows the team is open to feedback and willing to open source their code for everyone to poke holes through. There are lots of really talented devs in crypto, so being able to leverage the community is a big plus for DeFi projects.

What is the Autofarm Token Used For?

AUTO is Autofarm’s native token. The token had one of the most fair distributions possible with no pre-farm or pre-sale (Are you beginning to see why I think Autofarm is so great?).

Only 80,000 AUTO will ever be minted, with the last mint happening on approximately October 2021. Other than 12% distributed to the team and 13% in reserves for future incentives, the remaining 75% of AUTO is available to the public. The only way to earn AUTO other than buying it is by staking through Autofarm’s vaults.

During the early days of any DeFi project, the tokenomics will be inflationary as the coin gets minted at rapid rates. Over time, as more users transact on the platform, the tokenomics will become more and more deflationary.

In the case of AUTO, vault fees (1.5-3.0%) earned from vault users’ profits are used to buy back AUTO and burned.

Source: Autofarm

In terms of the token’s utility, Autofarm lists three uses cases:

  1. Receive fees from cross-chain vaults
  2. Receive fees from DEX aggregator
  3. Governance

These use cases are still in early stages. Right now, only the governance aspect is built out and even that is in its infancy.

Autofarm’s first governance proposal just went live on July 8, 2021, allowing AUTO stakers to vote on the percentage allocation of AUTO burns versus revenue directed to stakers. Votes are weighted based on the amount of AUTO you have staked in the vault, incentivizing users to hold more AUTO to direct governance.

So the overall use case for the token is still early, but as Autofarm continues building and growing, more and more use cases should materialize.

So what should you do with the AUTO tokens you receive from staking? If you believe in the project, you can stake them in the AUTO vault for 20%+ APY. Or you can treat the coins like a bonus and trade them for more BTC, ETH, stablecoin, or any other coin you’d prefer.

AUTO Token Price

Like every DeFi token, AUTO’s price is largely determined by three factors:

  1. Bitcoin price
  2. Total Value Locked on platform
  3. Circulating supply of AUTO tokens

Essentially that means AUTO’s price is tied to how well the overall crypto market is doing, how much usage there is on Autofarm’s platform, and the tokenomics.

If you look at the AUTO price chart, you might think the token’s crashed and has never recovered. What you have to keep in mind is the token was extremely inflationary at the start, as is every DeFi token that has to get minted from nothing to jumpstart platform usage.

That inflation decreases over time until Oct 2021, when the last AUTO token is minted, at which point the tokenomics will be deflationary.

If #1 and #2 (bitcoin price and TVL) decrease, the token’s value will also decrease as more tokens are minted.

Autofarm Roadmap

Autofarm started out as just a yield aggregator platform, but they’ve since expanded new use cases through development and acquisitions.

AutoSwap is their decentralized exchange (DEX) aggregator that allows you to instantly swap between coins. It does this by splitting your trade across various other DEXes to get you the best price with minimal slippage.

In March 2021, Autofarm acquired farmfol.io, a DeFi portfolio tracker for BSC and Polygon. The app lets users easily track their holdings across Autofarm and other farms seamlessly in one location.

You can view Autofarm’s complete roadmap to see what else lies ahead. Some things that stand out include Polkadot and AVAX vaults, DAO formation, and AutoPortfolio, a crypto social networking platform.

As more use cases go live, the AUTO token’s utility will increase, theoretically leading to more adoption (fewer coins being sold) and fees accrued to token holders (direct revenue from holding).

Conclusion

Autofarm is one of the best DeFi platforms out there for those willing to take on some additional risk to earn high yields.

I keep a good amount of crypto on Autofarm to stake BTC, ETH, and BNB. All three of these coins are staples of my cryptocurrency portfolio and being able to earn yield on them aligns well with my long-term strategy.

Make sure to do your own due diligence and understand the risks you’re taking. One way to mitigate risk is to keep your funds diversified across various CeFi and DeFi platforms so you don’t lose everything in case of a hack. I keep crypto on BlockFi, Ledn, and other platforms for that reason.

For more information about Autofarm, be sure to check out their wiki where you can read more and check out their Discord channel to interact directly with the team.

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