With the rise of Defi farming websites specifically ones offering a 6 to 7 day lockup period, there seems to be a lot of people who are missing the point of a DeFi farm.
If you are only concerned about buying low and selling high for a quick profit, you are missing the bigger picture!
GOAL: FARM & REINVEST
The main goal of any defi farming websites is to “farm” and “reinvest” the tokens you get from each harvest. The more tokens you have, the more you can reinvest into different farms or pools and the more “profits” you can potentially gain, usually stablecoins like BUSD or BNB.
Tip: In a defi farm the price of the token during the lockup period, is not very important to the farmer. Only farmers looking for short term profits would care about the price being low. (And create Fud)
Below is a sample of what a typical defi farming project would look like:
Before Week 1
Before project starts, and before the 1st harvest lockup, buy as many tokens as you can afford. The lower the price, the more you should buy. Only invest what you can afford to lose!
Stake your tokens in the farm of your choice. You will need to pair it with another stablecoin. I usually choose either BUSD or BNB.
Harvest lockup has started, you now have 6 or 7 days to watch your farm generate tokens. It will start off very quickly and slow down over time as the APY and block size is reduced gradually. This is normal.
Go out and enjoy life. No need to look at the price chart every 5 minutes.
Harvest lockup has finished. Harvest your hard earned tokens and DO NOT sell them, resist the pressure and hold! Normally newbies will try to sell as many tokens as they can for instant profits.
Okay, maybe you can sell a little bit like 10% to cover your initial investment, but you should reinvest it into the pools or farms.
Put in pools to earn stablecoin such as BUSD, BNB or others.
Put back into farms to generate even more tokens.
Week 2 + 24 hours:
The harvest lockup has started again, hopefully you have added more tokens so you can generate even more tokens this week. The APY and block size will have reduced by now, so you will need a much larger staked amount to earn more tokens.
During this time your pool should be earning you stablecoins as well.
Week 3 and onwards:
Harvest your tokens again!
Every defi website is different, but developers will always release new incentives and ways for you to farm more profits as the project runs its course.
How you manage your farm is totally up to you. If you want little amount of instant profit over longer term but larger profit is completely up to you.
Enjoy the game!