The integration of BRZ into Beefy Finance promises to facilitate access for Brazilians to the decentralized finance (DeFi) market. BRZ, a token pegged to the Brazilian real, can be used in specific “vaults” (digital safes), allowing investors to reduce exposure to market volatility and have more predictable returns.
Beefy Finance operates as an automated crypto-asset investment mechanism. In other words, it’s like an automated crypto savings account that invests digital assets in a single, efficient strategy regarding the best return at that moment, including performing LP (to provide liquidity in the exchange between two currencies), landing, and staking.
By identifying the best return opportunities and applying funds efficiently, and without the need for active management by the user, Beefy Finance functions as an intelligent assistant, which chooses the best DI (Certificate of Interbank Deposit) in the crypto world and lets the money yield in it, without needing to change strategies afterward.
The service operates on different blockchains, accessing multiple yield protocols to optimize gains. Thus, investors can allocate their resources in a simplified manner and obtain returns without needing to change strategies manually.
The creation of these vaults can attract users seeking stable yield options and companies that tokenize assets in BRZ and wish to allocate them strategically. Furthermore, the initiative can strengthen the presence of solutions aimed at the Latin American ecosystem within DeFi, expanding the technology’s reach in the Brazilian market.
LP, Landing, and Staking
In decentralized finance (DeFi), a Liquidity Provider (LP), such as Beefy Finance, deposits token pairs into liquidity pools on decentralized exchanges (DEXs), such as Uniswap, Aerodrome, and Pharaoh. These platforms operate without a traditional order book (like stock exchanges). Instead, Automated Market Makers (AMMs) are used, which facilitate trades between users.
LPs provide liquidity to the protocol and, in return, receive a portion of the transaction fees generated by swaps (exchanges between assets) within the pool. This allows efficient exchanges between different currencies without the need for a direct counterparty, increasing the financial and technological security of the crypto market.
Lending
These are collateralized loans without financial intermediaries. Unlike the traditional system, which follows rules like those of Basel (which require minimum reserves to avoid credit inflation), these protocols operate with overcollateralization (guarantees above the loan value).
This means that to take out a loan, the user needs to deposit a value greater than the desired amount as collateral. Thus, the risk of default is practically eliminated, making the system safer and more resilient to financial crises.
Staking
Staking involves locking tokens in a protocol to ensure network security or participate in its governance, receiving rewards in return. In many cases, these rewards function like stock dividends, making them a source of passive income.
Unlike lending, where collateral can be liquidated in case of price variation, staking generally only requires a fund lock-up period to ensure the network or protocol’s operation.
There are different types of staking:
- Governance staking: Positioning tokens like stETH (Lido), stBRZ (https://www.stakease.io), cvxCRV (Convex), or xSUSHI (SushiSwap) allows the user to earn rewards directly from the protocol.
- Network security staking: In Proof-of-Stake (PoS) blockchains like Ethereum, validators lock their ETH to validate transactions and keep the network operating, receiving rewards proportional to their participation.
- Reward pool staking: Some protocols offer additional rewards to encourage staking, making it more attractive to long-term investors.
DeFi Advantages
The decentralized finance (DeFi) segment allows users to conduct financial transactions without intermediaries, using smart contracts on blockchains. Thus, anyone, anywhere in the world, can compete in a truly open market, simply having a better idea or implementation than competitors.
Michael Egorov, a Russian physicist with a passion for mathematics and decentralization, for example, built Curve Finance almost single-handedly, motivated by a simple problem: how to exchange stablecoins with the least possible loss.
Without giant teams or millions in initial investment, he used his technical knowledge to create one of the most efficient DeFi exchanges in the world. Egorov’s journey shows that a single person can revolutionize the financial market with clear vision, dedication, and skill.
Therefore, Decentralized finance offers greater autonomy, transparency, and efficiency to investors. Among the main DeFi applications are lending platforms, decentralized exchanges (DEXs), and Yield protocols like Beefy Finance and its various possibilities. Some of them are listed below:
Single Asset Vaults
Users can invest in a single type of token in a Beefy vault. The platform automatically allocates these tokens to external platforms that generate interest, and the returns obtained are reinvested periodically, allowing automatic compounding of gains without the need for manual intervention.
Liquidity Pools
By providing token pairs in liquidity pools, users can deposit their LP (Liquidity Provider) tokens in Beefy’s vaults. The platform optimizes returns by harvesting rewards and reinvesting them automatically, increasing user participation in the pool and maximizing gains over time.
Launchpools
Beefy Finance collaborates with emerging projects, offering launch pools that promote new blockchain initiatives. These pools allow users to obtain initial yields by investing in partner projects, taking advantage of unique opportunities in the DeFi market.
Automated Strategies
The platform employs smart contracts that execute specific yield farming strategies and interact with various DeFi protocols, where rewards are harvested regularly, converted into the original asset, and reinvested, optimizing return on investment (ROI).
Wrapped Tokens
Beefy Finance offers tokenized versions of assets locked in other protocols, such as beFTM (Beefy Escrowed Fantom) and binSPIRIT (wrapped inSPIRIT). These tokens allow users to participate in compound yield strategies without typical lock-up restrictions, providing greater flexibility and profit potential. For each wrapped token in circulation, there must be another original token locked in a specific wallet.
Beefy Finance’s examples show that, unlike the traditional financial system, where banks and other institutions control transactions and investments, DeFi solutions allow anyone to access financial services without third-party approval. This democratizes access to credit, savings, and other financial tools, reducing barriers and costs for users around the world.
Thus, with the expansion of DeFi solutions, new investment and profitability models emerge, allowing investors to diversify their applications and protect their assets against inflationary risks and economic instabilities, as this Guide produced by PanoramaCrypto explains in detail.
