Guide to Yield Farming with Aave on Polygon (Matic Network)

Polygon is offering $40 million in rewards to lenders and borrowers on Aave’s Polygon market as Aave scales on Polygon.

About Aave

Aave is a decentralized lending and borrowing protocol and it currently has more than US$1.6B locked in its Polygon market as of this article.

MATIC liquidity mining rewards on Aave

The yield farming program is a liquidity mining program for MATIC rewards, and it is used to attract deposits into Aave.

Depositors can lend out their crypto assets while borrowers who are looking to borrow these assets can do so as well.

Polygon is giving out MATIC rewards in two phases: 0.5% of the total supply from today until June 14th, and another 0.5% between June 14th and April 13th, 2022.

The supported markets are AAVE, DAI, ETH, MATIC, USDC, USDT, and WBTC.

To start yield farming, you need to head over to Aave and connect to its Polygon market. You can learn how to setup Metamask for Polygon in a previous guide.

Then, connect your wallet by clicking on the connect button and make sure you’re on the Polygon Mainnet.

Connect to the Polygon Mainnet

If you don’t already have your assets bridged onto Polygon, you can refer to this guide to bridge your assets from Ethereum onto Polygon using the Zapper Bridge.

Interacting with Aave on Polygon

Choose your deposit asset — in this case, if I have bridged USDC onto Polygon, I can deposit it into the USDC market.

Stablecoins on Aave (Polygon)

Clicking into the USDC market will bring up the market information — for example, total borrowed and total supply, alongside key stats like utilisation ratio.

You can also find the maximum LTV (loan-to-value) which represent the maximum borrowing power for that collateral asset.

To deposit USDC that has been successfully bridged onto Polygon into Aave, use the deposit functionality on the right.

Borrow against your assets as collateral

Aave allows you to use your crypto assets and borrow against them as collateral.

Borrowing against my collateral

Using the maximum LTV (loan-to-value) as a guide, you can borrow against your deposited assets from the Aave protocol and pay a small interest on the loan.

For example, in the below screenshot, you can see that I am participating in yield farming on BTC, where I deposited BTC and borrowed against my deposited BTC to farm MATIC rewards on both the Deposit side and the Borrowing side.

Yield Farming MATIC on BTC

Should you be liquidated because the value of your collateral falls below the liquidation threshold, you will have to pay a liquidation penalty (~5%).

As of this article’s writing, borrowing against your collateral is also incentivised with MATIC rewards, hence Aave and Matic is actually paying you to borrow.

Once again, Aave liquidity mining is now live with Polygon MATIC rewards.

Polygon Resources

Get MATIC on Binance (10% rebate)

Setup Metamask for Polygon

Bridging tokens to Polygon

Bridge tokens from Ethereum mainnet to Polygon using Zapper Bridge or Matic Bridge

Bridge stablecoins from BSC to Polygon using xPollinate

Bridge BTC, DOGE and FIL to Polygon using RenBridge

USDC bridging to Polygon using AscenDEX

Guide to Polygon withdrawals with OKEx

Yield Farming on Polygon

Yield Farming on Aave on Polygon

Yield Farming on Curve on Polygon

Yield Farming on Pickle Finance on Polygon

Yield Farming on Balancer on Polygon

Source : Polygon Medium

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