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A spotlight article on Alpaca Finance with its features, financials, & security record.
Alpaca Finance is a popular decentralized protocol that allows leveraged yield farming on the BNB chain. It lets LPs (liquidity providers) supply liquidity to liquidity pools by borrowing undercollateralized loans from the platform. As a result, the LPs receive optimized yield when users swap tokens from the liquidity pools.
The Alpaca Finance Protocol makes yield farming more profitable for LPs. It lends you the funds in multiples of your capital, which you can invest in the pool. So obviously, the yield will be much higher than that of your original capital.
The launch of Alpaca Finance 2.0 has brought some significant improvements to the protocol. Firstly, version 2 supports over-collateralized lending, which enables lenders to borrow against their lending deposits.
Moreover, AF2.0 will enable users to use lending pools for additional uses beyond lending and leveraged yield farming (LYF). Other innovations of the V2 include asset tiers in lending, permissionless listing in lending, the ability to use any whitelisted token for collateral, and so on. This will serve Alpaca Finance users with better user experience, risk management, and capital efficiency.
Alpaca Finance is significant in the DeFi landscape mainly due to its maximized yield capabilities. In addition to that, other aspects of the project including governance, security measures, tokenomics, NFTs, etc. have contributed towards its growth and success to date. Let’s see some of its unique features:
Lending: Though Alpaca Finance is known for its ability to let users borrow funds, you should also know that it also lets you lend your assets. This means you can yield a much safer and steadier yield by investing your funds on the platform. The assets you lend are what is actually borrowed by other users. On that note, you can say Alpaca Finance is a platform that connects lenders and borrowers.
Increased Leverage: You might have understood that Alpaca Finance lets you borrow from the platform and multiply your funds. To be exact, you can get leverage of up to eight times.
Built on the BNB Chain: Many decentralized lending and borrowing platforms like Compound Finance are built on Ethereum, which comes with high gas fees. Alpaca Finance has been built on the BNB chain and offers the same features with lower gas fees to a different audience.
Tokenomics: “ALPACA'' is the native token of Alpaca Finance, which is offered to the users who participate in their ecosystem. Being a fair launch project, there’s no token pre-mining, pre-sale, or allocation of tokens to investors and team members. This makes Alpaca Finance more decentralized and fair to all of the users, as it prevents token accumulation by early investors.
Governance: Alpaca Finance has applied a similar governance structure to Curve Finance, but with their own implementation. You can lock your ALPACA token in the governance vault for a minimum of 1 week to a maximum of 1 year. In return, you’ll receive xALPACA, which represents your voting power in the reward pool. The longer you lock up the token, the more voting rights you receive.
NFTs: The Alpaca Finance NFTs “Alpies” are hand-drawn artworks that are released in two parts: first in the BNB chain and then in Ethereum. The NFTs on both the chains can be bridged back and forth, so you can trade them on OpenSea or other NFT marketplaces. Having Alpies has an actual application in the ecosystem as it lets you access higher leverage on yield farming pools.
Alpaca Finance emits their native token ALPACA as a way to reward the users of their ecosystem, which is helpful for many things like voting and governance.
With the emission of tokens, the supply increases and thus, the token price is bound to go down. However, the protocol has employed a mechanism called “buyback and burn”, where a portion of the trading fees collected is used to buy the tokens back. The bought tokens are then burned, creating a decrease in supply, which consequently maintains the token’s value at a steady price.
Alpaca Finance announced that it would have 188 million ALPACA that would be released with a decaying emission schedule over a period of two years.
All funding details for Alpaca Finance are not publicly available. However, it was announced that TrueUSD will be deploying around 20 million TUSD tokens in the project as a vote of confidence.
As of August 2023, the product, Alpaca Leveraged Yield Farming, has a market cap of nearly $24 million. This signifies that the project has a strong position in the decentralized lending and borrowing space.
Alpaca Finance has an active presence on several social media platforms, which serves as a way to communicate, educate prospects, answer questions, and understand the community.
You can visit their Twitter (X) account to get the quickest insights on their announcements, launches, reports, and recent developments. In addition, their Discord, Reddit, and Telegram channels provide a hub for users to engage in discussions and communicate with the team.
You can also read about the protocol’s developments and updates in detail on their Medium blog. Whereas the YouTube channel is rich with informative videos, tutorials, and Twitter Space recordings where you can visually learn how to use the platform.
Like every DeFi project, Alpaca Finance is also attentive to its security. It has gone through approximately 23 security audits from top firms like Certik, Peckshield, Slowmist, etc. since the launch.
In June 2021, Alpaca Finance received the highest safety score: 94% on BNB Chain from DeFi Safety. Similarly, it got a score of 90 from Certik, which is the third highest code security score on the BNB chain.
In conclusion, Alpaca Finance has established itself as a prominent decentralized lending platform on the BNB chain, attracting users with leveraged yield farming and strong security measures.
Despite its robust security record, you should acknowledge that no platform is 100% immune to hacks or exploits, especially within the constantly evolving DeFi landscape.
To ensure the protection of users' funds, Alpaca Finance has taken proactive steps by creating a coverage pool in the Neptune Mutual marketplace. If you're an Alpaca Finance user, you can access our marketplace, select the BNB Smart Chain, and easily purchase coverage for your funds.
Or, if you have DeFi, CeFi, or Metaverse projects and want to create similar cover pools in our marketplace, you can reach our team through the contact page. Or, you can also connect to us through Twitter, Discord, or Telegram.
We have been offering projects to create cover pools in Ethereum and Arbitrum and have recently launched our marketplace on the BNB Smart Chain.