Earn ALGO with Algorand’s Latest Incentive Program (Part 2)
Learn how to navigate Algofi like a pro to redeem free ALGOs!
Disclaimer: This isn’t financial advice! As we say in crypto, don’t trust – VERIFY! Do your own research and don’t ever invest more than you’re willing to lose. Like any DeFi project, Algofi comes with risks. The project can fail, smart contracts can be hacked, assets could be compromised, users can be liquidated, oracles may provide inaccurate information, etc. You can learn more about the risks associated with using Algofi here.
Be safe out there and make sure you do enough research before you decide if Algofi is right for you.
Welcome back to the club, gov!
If you read Part 1 of this guide, you already know the deal so please feel free to skip to the section titled ‘What is Algofi and what is their incentive program’. If you haven’t read Part 1 yet, the below context will likely be helpful to you.
In our never-ending pursuit of earning ALGO as passively as possible, we’ve come across an incentive program directly from the Algorand Foundation - the Aeneas Liquidity Program. Long story short, this program rewards early-adopters of the Algorand DeFi ecosystem with cold, hard ALGO!
The rewards will be distributed through incentive programs from three key Algorand partners:
Algomint: In order to participate with Algomint’s incentive program, governors will need to mint BTC and/or ETH and keep their assets ‘locked’ until the end of Q1 2022.
Algofi: In order to participate in Algofi’s incentive program, users will need to borrow and lend ALGO, STBL, USDC, goBTC, and goETH. The full details (including rewards schedule and the commitment period) have yet to be revealed, but that news should be coming soon.
Tinyman: An incentive program on Tinyman hasn’t been announced yet, but we’ll keep you posted if one is!
In Part 2 of 2 of this guide, we will explain the Aeneas Liquidity Program, Algofi & their incentive program, and how to navigate Algofi like a pro to secure your rewards. After you read this guide, feel free to check out Part 1 in which we review the Algomint platform.
What is the Aeneas Liquidity Program?
The Algorand Foundation announced the launch of the Aeneas Liquidity Program, which is the second phase of its $300 million Viridis Fund, back in December 2021. Aeneas is the Foundation’s first official liquidity incentive program in which users are provided with rewards for simply engaging with Algorand’s DeFi ecosystem.
Aenas is centered on the “three pillars” of DeFi and its goal is to bootstrap all three pillars at the same time through key partners:
Robust bridges for newcomers and dedicated Algorand users (Algomint)
Automated Market Maker DEXs for aspiring traders and merchants (Tinyman)
An established borrowing & lending platform (Algofi)
What is Algofi and what is their incentive program?
Put simply, Algofi is a crypto lending market that allows users to lend and borrow their assets. In addition to these services, they created the first native Algorand stablecoin called Algostable (STBL).
In terms of future plans for the protocol, Algofi has discussed releasing a few more exciting features such as savings accounts, credit cards, a fiat on-ramp, and a governance token (called BANK) to allow users to vote on how they would like the platform to evolve. However, without a formal roadmap (release TBD 2022) it’s hard to say which of these features will truly see the light of day especially in such a fast paced and growing ecosystem like Algorand.
Through their partnership with the Algorand Foundation and the Aeneas Liquidity Program, Algofi has been awarded 2 million ALGO to distribute in Q1 2022. While Algofi’s rewards program was supposed to begin this month, the Tinyman hack has delayed the launch of it. Once Algofi gives the greenlight on the rewards program, users will earn ALGO rewards when they borrow and lend ALGO, STBL, USDC, goBTC, and goETH. Once there are more details on the distribution timeline and rewards distribution, we will be sure to update you!
While the program isn’t live yet, that doesn’t mean you can’t get a headstart on learning the Algofi platform and engaging with it under the rewards parameters. There is a possibility early-adopters will be grandfathered into the rewards program the same way Algomint’s early-adopters were, but don’t hold us to it, gov.
What are the risks associated with Algofi?
Before we dive into the guide, we want to review the key risks involved with using a protocol like Algofi by reviewing what their team laid out directly from their official documentation:
Smart contract failure - Despite undergoing a full audit and rigorous internal quality assurance, there is a chance of smart contract failure.
Liquidity Risk - Users who fail to maintain their collateral must be liquidated.
Oracle Risk - There is the risk that the oracles used by the Algofi protocol provide incorrect or stale data.
If you’re still interested in participating in this program (after assessing your risk tolerance), please proceed with our guide below.
How to Lend on Algofi
Step One: Connect Wallet
First you need to connect your wallet by clicking the button highlighted from the menu bar:
Step 2: Select Asset to Lend
Once connected, scroll down to the ‘Asset’ section on the home screen and select which asset you’d like to supply:
If you minted goETH during Part 1 of this guide, you can supply it here for a 0.10% APR.
Reminder to our goBTC squad from Part 1: at the time of this writing the goBTC pool on Algofi is full so you won’t be able to supply it, and you’ll likely will get the following error message:
Instead, you can supply USDC, STBL, or ALGO depending on what you have available to you. For the purposes of this guide we will show you how to stake ALGO, but note the steps are transferable no matter the asset.
Step 3: Supply Asset
We think this is one of the smoothest UIs in the ecosystem, so this should be fairly intuitive to navigate! From this screen you can enter the amount you’d like to supply in the aptly titled, “Amount to supply” bar. Then you simply click ‘Supply ALGO’ to continue:
Disclaimer: When you supply ALGO on platforms like Algofi, please remember that the asset will be removed from your wallet. This is important for governors who don’t have a separate DeFi wallet from the wallet they used to sign-up for Governance. You can put yourself at risk of being ineligible for Governance rewards if you lend ALGOs you already committed to governance!
Pro tip: your available balance is displayed below the ‘Supply ALGO’ bar in case you need a reminder without having to leave this screen.
If you did everything correctly, you should see this screen to confirm the transaction has been approved:
And the assets you’ve lent and the amount you’ve lent will be displayed at the top of this home page:
How to Borrow on Algofi
Step One: Select Asset to Borrow
This process is super similar to lending assets. You first choose the asset you’d like to borrow, and then click ‘Borrow’ to switch from ‘Supply’:
‘Borrow Limit’ at the top of the menu will display the max you’re allowed to borrow (based on the amount you have lent). Under ‘Borrow ALGO’ you can also see how much you’ve borrowed thus far and the max additional amount you’re allowed to borrow.
Step 2: Borrow Asset
From here, just enter the amount you’d like to borrow and that amount will be sent to your wallet after a quick confirmation through your wallet.
That’s it! How easy is that, gov?
How to Stake and View Analytics on Algofi
Step One: Select Staking to Continue
Although staking is not listed under the eligible actions users can take to be a part of Algofi’s incentive program at this time, we figured we would show you how this process works while you’re here.
To navigate to the staking pools, you need to select ‘Staking’ from the menu.
Step 2: Select Pool You’d Like to Stake In
Once you’re at the Staking menu, you can choose which pool you’d like to participate in. Please note the STBL-USCB Liquidity Pool (LP) was reopened yesterday after being shut down temporarily due to the Tinyman hack. If you choose to participate in any LPs, proceed with caution in the first week or so of Tinyman’s relaunch as pools will be more unstable than usual.
With that being said, we plan to release a Tinyman guide in the next week or so to show you how to do swaps and join liquidity pools!
Step 3: Stake!
To stake in a pool, click the arrow on the pool you’d like to stake in:
Then you can enter the amount you’d like to stake in the ‘Amount’ bar and click ‘Stake’:
This is the same process you’d go through if you wanted to claim or unstake your rewards as well.
Step 4: Select Analytics
Users can select ‘Analytics’ from the menu bar. Here you can keep track of the total amount lent and borrowed by asset (ALGO, USDC, goBTC, goETH, and STBL) as well as the rates:
Although tabs exist for both Rewards and Governance on the menu bar, they are both still under construction, so there’s unfortunately nothing to see there. Once those are live, we’ll be sure to update this guide!
If you want more information on how to use Algofi, we highly recommend their official guide which is a wealth of information even if it can be a bit dense at times. The video guides in particular are a great resource if you find yourself stuck!
As always, please feel free to leave us a comment below or on Twitter to let us know if you have any additional questions and what other guides you’d like to see in the future!