The Definitive Folks Finance Guide
The Definitive Folks Finance Guide
You asked for it, so we created the definitive guide to upgrade your Folks game!
Welcome back to the Club, gov!
We know you’ve heard the whispers around the Club. In fact, you might’ve been the one saying it yourself. It seems like you can’t go anywhere these days without hearing it…
“wen folks finance definitive guide?”
Well, you asked for it – so we made it!
In this definitive guide, we’ll review how to lend, borrow, farm, commit to Governance, and navigate analytics features on Folks Finance.
To make this guide easier to navigate, we’ve included the table of contents below:
Folks Finance Overview
How to Use Folks Finance
Markets Guide
Deposit Guide
Farm Deposit Guide
Borrow Guide
Rewards Aggregator Guide
Liquid Governance Guide
Dashboard Guide
Miscellaneous
Gov Tip: You can search these keywords to quickly jump between sections.
With Folks skyrocketing to the 2nd position in TVL, you don’t want to miss this one, so let’s dive in.
Folks Finance Overview
Folks Finance is a crypto lending market that allows users to lend, borrow, and farm ALGO, ASAs, Liquidity Pool (LP) tokens, and stablecoins through a user-friendly UI. What sets it apart is its unique incentive system that rewards good actors when they repay their loan or provide liquidity through the Lock & Earn feature.
Users who perform either action will receive rewards tokens called frTokens (i.e. frALGOs) that they can trade back to the protocol for additional ALGO rewards. Users can also leverage the Lock & Earn feature on Folk to lock their assets for a fixed period of time (i.e., 2 months) to receive a higher APR on their farms.
Gov Tip: Learn more about Lock & Earn here.
Folks Finance has two more distinct features: the Rewards Aggregator and Liquid Governance. The Rewards Aggregator is the redemption mechanism for frTokens in which users can choose to redeem their frTokens instantly or vest them for extra time to earn more rewards.
Gov Tip: You can learn more about the Rewards Aggregator and frTokens here.
With Liquid Governance, Folks Finance introduced the first ALGO liquid staking Governance program. Governors who commit their ALGOs to Governance through Folks Finance will receive a new asset named “gALGO” – which is pegged to the value of ALGO – in a 1:1 ratio. gALGO can be deposited, leveraged as collateral, or taken off the platform to participate in other DeFi protocols.
Naturally, this feature serves a similar function to both Algofi’s Vault and the GARD Protocol; however, gALGO doesn’t require users to take a collateralized position against their Governance stake. Instead they can begin earning instantly in the DeFi ecosystem with their gALGO directly or by swapping it for ALGO.
At the end of the Governance period, governors will burn their gALGO to redeem their committed ALGO and Governance rewards.
How to Use Folks Finance
Folks Finance is a robust protocol that provides lending, borrowing, farming, Governance, and analytics features. You can use the table of contents below to easily navigate this section:
Markets Guide
Deposit Guide
Farm Deposit Guide
Borrow Guide
Rewards Aggregator Guide
Liquid Governance Guide
Dashboard Guide
Miscellaneous
Markets Guide
You can review the stats for assets from the Markets tab of Folks Finance. Use this screen to gain a better understanding of the total amount deposited and borrowed of each asset as well as the APRs for both depositing and borrowing.
To begin, navigate to Folks Finance and connect your wallet using the button in the upper right:
You can sort the markets by “All”, “Stablecoins”, Liquidity Pools (“LP”), and “Favorites” by selecting the corresponding tabs:
You can favorite assets by selecting the star icon next to an asset. You can quickly view your favorited assets in the “Favorites” tab:
Now that you have a lay of the land, let’s review how to deposit assets next.
Deposit Guide
You can lend assets to Folks Finance’s market on the “Deposit” tab. Assets lent to Folks Finance will accrue interest and can be used for yield farming or as collateral for borrowing.
When you deposit an asset you receive a corresponding Folks Finance Deposit Token (fToken). A fToken (i.e., fALGO) represents asset ownership and is designed to keep track and calculate the interest accrued on your position. fTokens can be withdrawn or used as collateral to obtain a loan on Folks.
Gov Tip: You can send fTokens to other addresses to transfer the right to withdraw / collateralize your position to them.
Navigate to the ”Deposit” tab and select an asset you want to lend to Folks to begin:
Gov Tip: The assets you favorite on the “Markets” tab don’t carry over to each tab. You will need to favorite assets within “Deposit” again.
Input the amount you want to deposit of the asset, select “Continue”, and opt-into the fToken:
Once you’ve opted-in, select “Deposit” and confirm the transaction by signing it with your wallet.
You can now view your deposit and its stat within the “My Deposit Information” and “My Deposit” sections:
With collateral deposited, you have two options available to you: farming and borrowing. Let’s review farming first.
Farm Deposit Guide
You can increase the yield you receive on your collateral by farming the fToken you’ve received on the “Farm Deposit” tab. This tab also includes the Lock & Earn feature mentioned above.
To begin this process, navigate to “Farm Deposit” and select the fToken you want to farm:
Input the amount of the fToken you want to farm, select “Continue”, and finalize the transaction by selecting “Stake” and signing it with your wallet:
View your farms and their stats (including pending rewards) within the “My Farm Deposit Information” and “My Staked Deposits” sections:
To unstake your fToken, select them from the “My Staked Deposits” section:
Input the amount you want to unstake, select “Unstake”, and finalize the transaction by signing it with your wallet:
Gov Tip: Farmed fTokens are not available as collateral. You must unstake them if you wish to borrow against them.
If you have assets you’re willing to lock for a period of time, you can take advantage of the Lock & Earn feature by selecting an asset:
Select the period you want to lock the asset for and input the amount:
Gov Tip: Only USDC and USDt are available for Lock & Earn at this time.
Borrow Guide
You can take a loan, add/reduce collateral, or repay a loan from the “Borrow” tab.
Navigate to the “Borrow” and select the asset you want to borrow:
Input the amount you want to borrow and select “Continue”.
Gov Tip: You can view your Liquidation Margin and the risk of the loan before selecting “Continue”.
You’ll be prompted to create an escrow account which will hold your collateral. Select “Add Escrow” to continue:
Select “Borrow” and sign the transaction with your wallet to finalize it.
If needed, change your collateral by using the drop down and selecting a different asset from the menu:
After borrowing an asset, you can view your borrows and their information under “My Borrow Information” and “My Borrows” on the right-hand side:
To repay or rebalance your loan, select an asset pair under “My Borrows”:
To rebalance your loan, you can increase your borrow or add/reduce your collateral. You can select from these options by using the drop down menu.
To repay your loan select the asset pair under the “My Borrows”, input the amount you want to repay, and select “Continue”:
Opt-in to the frAsset, select “Repay”, and finalize the transaction by finalizing it.
Now that you have a frAsset, let’s see what you can do with it next.
Rewards Aggregator Guide
The Rewards Aggregator is the redemption mechanism for frTokens. You can choose to redeem your frTokens instantly or vest them for extra time to earn more rewards.
To begin this process, navigate to the “Rewards Aggregator” tab and select the asset you want to redeem for rewards:
Choose to redeem your rewards instantly or vest them and confirm your selection on the next screen:
Then finalize the transaction by signing it with your wallet.
Yes, it’s that easy, gov!
Gov Tip: If you choose to vest your rewards, you can keep track of how much you’ve earned in the “My Vested Rewards” section on the right side of the “Rewards Aggregator” tab.
Liquid Governance Guide
Liquid Governance is an ALGO liquid staking Governance program. Governors who commit their ALGOs to Governance through Folks Finance will receive a new asset named “gALGO” – which is pegged to the value of ALGO – in a 1:1 ratio. gALGO can be deposited, leveraged as collateral, or taken off the platform to participate in other DeFi protocols.
If you want to commit to Governance through Folks Finance, navigate to Liquid Governance and select “Mint” to begin.
Input the amount of ALGO you want to commit to Governance, opt-in to gALGO, and sign the transactions with your wallet to finalize the process:
Once you’ve minted your gALGO, you can view your gALGO balance, total ALGO committed, and your estimated rewards under “My gALGO”:
Gov Tip: You can vote on both Algorand and Folks Finance Governance measures within the “Voting” section once both are live.
To claim your rewards after the period ends, select “Claim Rewards”:
Select “Claim Rewards” once again and sign the transaction with your wallet to finalize it:
Gov Tip: This period you can claim your rewards early in gALGO. This feature is not yet live.
Now that you’ve committed to Governance through Folks, you can begin using your gALGO across the DeFi ecosystem or collateralize your gALGO position if you prefer.
If you want to learn more about Liquid Governance, including how to collateralize your gALGO, check out our Liquid Governance Guide from last period.
Dashboard Guide
Folks Finance’s “Dashboard” tab is your interactive hub to view all your deposit and borrow information. And you can even deposit, borrow, withdraw, or farm from it.
Make use of your dashboard to streamline your actions across Folks.
Miscellaneous
You can keep track of the protocol’s revenue on the Community treasury page which provides users with a view into the total reserve and how it is distributed.
Gov Tip: Folks makes money from liquidations, Liquid Governance fees, and interest repayments.
To personalize your settings, select the gear icon in the upper right of the screen:
You can change the default language and currency, switch your node, and select between dark and light modes.
And that’s it, gov! You’re now a Folks Finance pro. If you want more information on how to use the protocol, we recommend you start with their official manual.
Be on the lookout for our Folks Finance Strategy Guide releasing later this week for alpha on how you can begin earning on Folks immediately.
See you around the Club!
Disclaimer: This isn’t financial advice! As we say in crypto, don’t trust – VERIFY! Do your own research to determine if Folks Finance is right for you and don’t ever invest more than you’re willing to lose.
Like any DeFi project, Folks Finance comes with risks:
Borrow Rate Increases: The Borrow APR for ALGO could increase to the point that it is higher than the Governance APR. This has the potential to make the use of the Liquid Governance unprofitable depending on the strategy users take (i.e. DeFi Beginner strategy above).
Liquidation: If users borrow assets other than ALGO against their gALGOs, they introduce the risk of being liquidated. You can learn more about Folks Finance’s liquidation methodology here.
Smart contract failure: By interacting with the protocol, users expose themselves to the risk of smart contract failures / hacks. Despite dApps undergoing rigorous audits, there is always a chance of this in DeFi.
Oracle Risk: In addition to smart contract failures, there is the risk the oracles used by the protocol provide incorrect or stale data.
Not Self-Sovereign: By committing ALGOs to Governance through Liquid Governance, users forfeit self-sovereignty of their ALGOs. Users forfeit the right to vote, avoid liquidation and regain control over their ALGOs without having to pay the protocol off first (if a loan is taken).
This is not unique to Folks Finance and is true with any DeFi dApp you lend, stake, farm, or provide liquidity on. When you take these actions, you forfeit your self-sovereign rights over your assets.