Let’s take a look at a relatively new opportunity from Binance – Launchpool. Sometimes in publications, talking about Launchpool or similar products, they use the terms “farming”, “yield farming” – they are synonyms, denoting the same thing.
Let’s understand in more detail what they are and how you can earn BNB by participating in Launchpools.
Launchpool appeared on Binance in early September 2020. The product is similar to staking, with the difference being that users put a specific type of cryptocurrency into the stake and get rewarded in tokens of other cryptocurrencies.
The first projects whose tokens participated in Launchpool were Bella Protocol (BEL) and Wing (WING). Cryptocurrencies participating in Launchpool are most often young projects that are about to enter the exchange.
Each Launchpool is characterized by the fact that it is always possible to stake BUSD and BNB – the exchange’s own token and coin. Additionally, each time the exchange offers to stake another cryptocurrency.
Most often Binance Coin (BNB) is used. Many believe in the prospects of this coin, so they keep some amount in their crypto portfolio. And so they do not lie “idle” only in the expectation of growth of the exchange value, participate in launchpools with them.
Description and formulas
The exchange does not take any commissions for deposit/withdrawal of funds to the pool. You can withdraw funds at any time with all accumulated bonuses saved. After depositing to the pool, the funds are no longer displayed in the “Main Account” tab of the wallet, and they can be seen in the “Wallet>Earn>Launchpool”.
Accrual and distribution of rewards occurs every hour. The Annual Percentage Yield (APY) is a variable that changes in real time. The history of accrual and withdrawal of all remunerations can be viewed by pressing the “Claim history” button:
Rewards are accumulated in a special account and at any time they can be withdrawn to the spot account, i.e. to the wallet. Accumulated but not withdrawn rewards are displayed in the line “Unclaimed Rewards”. Withdrawal is carried out by pressing the button “Claim Rewards”, the total amount of the withdrawn reward is displayed in the line “Total rewards received”:
Even if you forget to withdraw a reward, it will be transferred to the wallet automatically after the end of the campaign.
For those who like to get to the bottom of things, below are the formulas to calculate the accrued income and APY.
The formula for calculating the number of coins received in a period:
How many coins do we get during the period = Total BNB Pool Rewards / Total BNB Staked * BNB Staked
The formula is valid if the total number of coins earned does not change, but it does change in real time. Since there is a tendency that their number is constantly growing, the actual result is larger than the calculated one. The formula can be used to understand the principle of calculation.
The formula for calculating the number of coins received per day:
How many coins do we get during the period = Today`s UNFI Pool Rewards / Total BNB Staked * BNB Staked
I compared the check (5 250 / 17 538 814.5699 * 2.9922 = 0.000896) with the actual income paid on 07.12.2020, the result coincided with the 5th decimal place. Since the number of coins in staking during the day does not change much, the formula can be used for a preliminary calculation.
The formula for APY calculation:
Annual percentage yield = Price of the coin * Today`s UNFI Pool Rewards / Total BNB Staked * 100 * 365
Since the components of APY change in real time, there is a difference of a few hundredths in the real values.
Participating in Launchpool with a cryptocurrency like BNB is easy and profitable. It is a promising coin, you can store and at the same time get additional income in coins of the new cryptocurrency.
But the rush to buy a new crypto in the first days of trading just because it is “poured” on Binance is not worth – it can show strong growth, but rollback can be even stronger. Therefore, it makes sense for a cautious investor to wait a bit and study the project.