One strategy for earning passive income from your cryptoassets is to lend them to pools of liquidity, earning interest and other rewards from doing so. The idea is similar to that of traditional investments, in which the value is locked up for a certain period, and the investor earns financial gains from it.
Several platforms allow this passive income to be earned. And one strategy to boost investment is to use investment optimizers (Yield Optimizer), such as the Tulip.garden protocol, the first yield aggregation platform built on Solana, with automatic compounding vault strategies.
Optimizers use algorithms that automate the compounding process (which users would need to do manually) and maximize yield. In the case of the Tulip protocol, there are three types of yield products, “Vaults”, “Lending”, and “Leveraged Farming”. According to the developer, their solutions do not require active management and offer lower gas rates.
However, the documentation itself warns that there are risks because “the code is new and experimental”.
How to use tulip.garden?
- – Go to https://tulip.garden/vaults/
- – Connect your Solana portfolio by clicking the “Connect” link in the upper right field of the page.
- – Choose an available farm from the list. Add liquidity and purchase your LP tokens by clicking on the link next to your chosen option.
- – Deposit your tokens in the vault after completing this step.
- – After approving the transaction, the yield will be compounded automatically by the yield aggregator.
What are the advantages of using Tulip.garden?
The Tulip aggregator makes an automatic composition of investments according to its algorithms, which improves profitability. Its strategy allows, for example, to raise yields on farms with Raydium or Orca by exchanging token issues for more liquidity-providing (LP) tokens. Here’s how it works:
- The user deposits Raydium LPs at Tulip.
- With the deposit, he receives RAY tokens at every block (every 5 seconds).
- Tulip Protocol collects the tokens every ten minutes, deducting fees.
- Tulip itself exchanges the RAY rewards for more LPs.