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CryptoEconomic Research

Alpha Homora: Leveraged Yield Farming

Alpha Homora is a protocol for leveraging your farming strategy, a "dYdX" of yield farming.
by Ivan BakracJanuary 20, 2022
defi protocol profile alpha homora

Essentially, Alpha Homora it enables you to provide liquidity to Uniswap with up to 2.5x your initial portfolio size and you can earn more trading fees from the swaps going through the pool. Additionally, your provided liquidity is going to generate more rewards. But, leverage has its own risks.

How does it work?

DeFi farming with leverage via Alpha Homora means you’re at risk of being liquidated. If the token or ETH price drops significantly then this could result in the loss of all your assets. Essentially, it is like margin trading but for yield farming so will require much more monitoring than usual. However, if you’re bullish on an asset such as LINK then you could stand to earn more trading fees by borrowing ETH. Below is an example of how it would work.

Additionally, Alpha Homora adds functionalities to help increase your capital efficiency much like a vault product. For example, you can use the platform to provide liquidity to Uniswap with just one asset without needing the equal amount of ETH. The platform will automatically convert/swap the required amount to ETH so that you can supply the liquidity. Or you can start with ETH and it will automatically buy the amount of tokens required. Furthermore, you can access these features without needing to take any leverage

You could earn interest on ETH holdings in Alpha Homora. It could be implemented through an interest-bearing position. Furthermore, the user has to deposit ETH to Alpha Homora Bank and in return receive the ibETH token.

The Need For Increased Liquidity And ROI Opportunities For NFTs
Source: https://academy.moralis.io/blog/what-is-alpha-homora-and-the-alpha-toke

Tokenomics

ALPHA is the governance token for both Alpha Homora and the suite of DeFi applications. ALPHA is a utility and governance token. It is created by Alpha Finance Lab and powered by an ERC-20 ALPHA token. ALPHA token allows the holders to vote on the opened proposals, updates, and fund allocations on specific platforms. ALPHA token holds governing rights not only to the Alpha Homora protocol but also to the suite of DeFi applications created by Alpha Finance Lab. The ALPHA governance tokenomics is broken down into a two-tiered system: Product-level governance and Alpha Finance-level governance.

Product-level governance allows ALPHA token holders to vote on updates and fund allocations on specific platforms. This includes Alpha Homora, Alpha Lending, and soon AlphaX. Alpha Finance-level governance allows holders to vote with their ALPHA tokens on how all Alpha applications will interoperate.

The ERC-20 ALPHA token was the first-ever double launch seen on Binance. ALPHA was introduced into circulation through a Launchpad token sale and Launchpool farming for the token. During the Launchpad token sale, all 100 million ALPHA tokens were sold to participants. Although launched on Ethereum, the ALPHA token integrated with Binance Smart Chain in November 2020 to allow easy cross-chain token transfers.

As the Alpha Homora protocol develops and continues to gain usage, we can expect to see increased utility for the ALPHA token. This includes providing liquidity and staking to receive exclusive interoperable features among Alpha products.

Macro view

Alpha Homora is creating an innovative leveraged yield farming and liquidity application. As with all decentralized financial applications and leveraged trading tools, Alpha Homora comes with inherent risks. Frontrunning can cause high gas fees for bounty hunters when using the protocol, and yield farmers are at risk of being liquidated. Without the correct trading strategy and risk management, this could result in a one-way ticket to Rekt City.

Q4 2020 DEFI REPORT blog  8
Source: homora.alphafinance.io/farm

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