Winding Up

Understanding the Process of Winding Up in DeFi

Winding up is a crucial concept in the world of decentralized finance (DeFi) that involves wrapping crypto tokens across different projects to maximize yield. This practice is especially relevant for wrapped tokens, which are tokens that exist on a different blockchain, like Ethereum, and enable seamless interaction within the DeFi ecosystem. Initially, wrapped tokens were introduced through Ethereum’s ERC-20 token standard. However, today there are numerous wrapped tokens available, including the widely used wrapped Bitcoin (wBTC) that originated from Bitcoin and is now extensively utilized in various DeFi applications on Ethereum.

To achieve the highest possible yield for their tokens, crypto holders must navigate through a series of intricate steps. For instance, if a crypto holder possesses wBTC and wants to obtain Interest-Bearing BTC (ibBTC), they must first deposit their wBTC on Curve Finance. As a result, the user will receive an LP token, which can then be taken to Badger DAO to mint the desired ibBTC.

Similarly, if a user starts with USDC and aims to acquire $SNOW, they need to deposit their USDC on Harvest Finance, an automated yield farming protocol. Harvest Finance will then provide fUSDC as proof of deposit. Finally, the user can deposit their fUSDC on Snowswap in exchange for $fSNOW.

This essentially summarizes the concept of winding up in DeFi.

Author: Harvest Collective.

Harvest Finance is a cooperative yield farming protocol that is at the forefront of the decentralized finance movement. By continuously developing innovative farming strategies and pooling deposits to reduce gas costs for individual users, Harvest Finance automatically farms the highest available yields.