TRON has started the SUN project and the genesis mining on 2nd Sept. In Justin Sun's open letter, SUN is positioned as the Bitcoin on TRON, which has no ICO, pre-mining and dev team reserve. I regard this as a good attempt to promote TRON's Defi ecology.
LP and yield farming
What is yield farming?
Everyone needs to know yield farming, as it's the hottest word during the recent months. The simplest explanation to yield farming is: invest and get the interest. The investment should be popular token assets, and the interests usually are the governance tokens of the projects(e.g. Comp of Compound, Lend of Aave and of course, SUN of SUN).
The value of the governance tokens depends on the public recognition of the project. This is exactly the reason I'm optimistic about the SUN project. There are already many similar projects on Ethereum, however on TRON, SUN is one of a kind.
What is LP?
LP is liquidity provider token. Think of LP as the proof of your adding liquidity, and it represents your share of the entire liquidity pool.
Adding liquidity to Justswap is the prerequisite of any LP yield farming on SUN. Either Justswap or SUN is a part of TRON Defi ecology, and several projects will get benefits from your farming(e.g. farming on JST/TRX pair, three projects: SUN, Just and Justswap are involved, they all get promoted at the same time), this is its greatest significance of yield farming.
How to farm on SUN?
Use your Tronlink, link it to Justswap and SUN.io, add liquidity to specific pairs on Justswap, then select a pool on SUN.io, input the amounts of staking and click approve, done. Simple!
Till now there are six pools available to farm, including four LP farming pools. I was surprised to see HT on that page, and I guess this can be a signal, that traditional exchanges are expressing their recognition to Defi projects. This can be a great promotion to TRON's Defi ecology.
How can I earn more from farming?
Assuming you got a fixed amount of money, it's a good idea to choose the pool with the highest APY, and remember to join the pool as early as possible.
Normally the pool includes the governance token(i.e. SUN) has the best rate of return. Let more people hold the token is always the first step of a great project.
Any risks?
Any investment has risks, and of course yield farming. The risks are from two aspects:
Smart contract
A project with a set of unknown code may steal your money. There are two ways for investors to ensure if a Defi project is safe to join in: open source and code audit.
SUN.io has its audit report on the top of the page.
Impermanent loss
Impermanent loss exists in all AMM(automated marked maker) based projects. You don't have to know the details of the calculation of the loss, only remember you will suffer from it if the price between the two assets is different from the price you added your liquidity, and the extent of the loss is based on the magnitude of the price change.
Usually, the profit you earn from providing liquidity can not cover the impermanent loss you suffer. With yield farming, your loss is mitigated by the SUN you get from the farming, it's also the charm of it.
What else?
With more pools created in SUN.io, more projects, even traditional CEXs are attracted to TRON's Defi ecosystem. You will never know what kind of star project will be on SUN.io, so it's never too late to join SUN. Let's rock!