How did we go from Bitcoin miner to farmer in DeFi?

I'm preparing a little ebook soon, I think, on this whole story, but before I get to it (will I have the time or will procrastination spare me?) We'll see... Until then, don't worry. Don't worry, here's a short summary of this wonderful story, here.

(And then I also told it in a short video that you can watch here)

This story of decentralized finance is fascinating if we understand the issues. A story that begins with the bitcoin miner and ends (and it doesn't end) with the farmer in his field of tokens.

The image of the bitcoin miner in his room seems very distant to us, right? Even though it has turned into a real business with real mining farms, bitcoin mining is still lucrative. Finally, if you have the means to provide yourself with powerful ASICs and, above all, enough to pay the bills.

In short, in any case, with the arrival of new cryptocurrencies on the market, we were able to mine other cryptocurrencies in their early stages, without requiring large machines.

Then came the blessed time when we began to rethink the Proof-of-work consensus, saying to ourselves that it was still not great for ecology. And little by little, the staking consensus appeared. Among the other types of consensus, this is certainly the one that most satisfied the miners.

Finally, a system that is easy to set up and which is also profitable. Profitable if you choose to stack the right crypto, let's get along, eh^.

And, then, we tested different consensuses and carried out different experiments.

At the same time, we slowly became interested in the big problem of liquidity that we inevitably encountered in decentralized platforms.

We all wanted to use DEXs but we couldn't because as soon as we tried, it ended in failure. There weren't enough people; neither enough buyers nor enough sellers... Impossible to trade in these conditions. In short, the DEXs were empty and it was the image of the snake biting its tail….

Then, thanks to Ethereum, we were able to implement the idea of AMM (Automated Market Makers), and we have seen revolutionary protocols come into their own like Uniswap for example.

It was the spearhead and the DeFi machine began to take off and gain independence. As much as until then, the Defi had only imitated classic finance, now it has gone far beyond it! The student had surpassed the master, that had become obvious.

In short, with Uniswap, we finally discovered the pleasure of being able to exchange tokens between them, without an intermediary, and in a completely decentralized way!

What happiness! What satisfaction my dear friends! We could finally be totally decentralized without it being only theoretical.

And, to run these protocols, it was necessary to attract liquidity providers. To attract them and encourage them to deposit capital in the liquidity pools, they were offered commissions on each transaction carried out.

Awesome, isn't it?

Liquidity Mining had just taken shape.

But, it didn't stop there!

When a liquidity provider deposits tokens into the pool, it receives a Liquidity Provider Token. This LP token is mathematical proof that the person has deposited it in the pool. It is also proportional to the amount given in the pool as a whole.

And, it is the desire to make these Liquidity Provider Tokens grow in other protocols that slowly but surely led us to talk about Yield Farming.

Today, it is a real ecosystem with real mining farms as is Harvest Finance for example.

Some tokens that we cultivate have good nutrients and some are useless or even poisonous… We will come back to this in more detail in another article because there are really several things to say on the subject. The excesses of DeFi are very interesting, from a theoretical point of view.

Finally, we are still writing the future as I write these lines. Obviously, we cannot predict the future but we can think that there will be other new forms of remuneration.

But, who knows, after the miner, after the farmer, who will create new tokens?