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Enhancing Algorand Governance Rewards

I have previously shared my Governance Period 10 DeFi strategy. In this post I’m going to discuss how I plan to earn extra rewards from Algos I purchase/rewards earned during the governance period. During the governance period you’re unable to increase your commitment and your wallet balance of Algos or committed LP tokens must remain above your committed balance; essentially soft-locking your assets.

Strategy Overview

Below is a basic breakdown of my strategy to earn extra Algos from Algo rewards or Algo purchases made once a Governance period starts. This strategy assumes you followed my Governance Period 10 DeFi strategy.

Important note: Ensure you understand your Governance committed balance and that your wallet balance doesn’t fall below your committed Algo or LP commitments.

  1. Claim Algo rewards from farming programs on Tinyman.
  2. Swap Algo to gAlgo. Depending on the rate you can expect to lock in a 2-3% return based on the conversion rate. We want to swap roughly half of our Algo rewards. Again, don’t swap too much Algo you fall below your committed Algo balance in Governance Period 10.
  3. Add equal gAlgo (you just swapped for) and Algo (the remaining Algo reward balance) to a Folks Finance lending pool; fAlgo/fgAlgo.
  4. Farm your lending pool LP tokens on Tinyman.

Lending Pool LP tokens can’t participate in Governance even if the window were open. Making them a great strategy to earn some extra rewards during the Governance Period.

What is a Lending Pool?

These lending pools are innovative collaborations with PactFi and Tinyman, offering a dual yield mechanism. By depositing assets into Lending Pools, participants stand to gain interest from Folks Finance’s lending pools and liquidity pools on a DEX, along with swap fees from the associated pool. This synergistic approach fosters deeper liquidity, a higher Total Value Locked (TVL), and ultimately, elevated yields.

The Tinyman lending pools are earning an 11.16% APY currently, as of February 4, 2024. This is why this strategy is a great way to earn extra rewards during a governance period.

Folks Finance Lending Pool APY

This pool is hosted by Folks Finance and gives out extra rewards. Your assets will be converted to fAssets and will be held by Folks Finance.

Tinyman Pool

You will see the following warning message and it is important to consider when participating in this strategy.

Please be aware that the new LendingPool Adapter smart contract has not been subjected to an independent third-party security audit. This adapter simplifies transactions by integrating Folks Finance’s audited lending market smart contracts with Tinyman V2 AMM Liquidity Pools. Note that it does not hold user funds.

However, the lack of a formal audit implies potential risks. High activity on Folks Finance might occasionally restrict liquidity withdrawals from Tinyman. We advise conducting personal research and due diligence. Using this feature indicates your understanding and acceptance of these risks.

Tinyman Pool
Tinyman Pool

By navigating the governance period eligibility requirements and employing a well-balanced strategy, you can claim additional Algo rewards through Folks Finance and Tinyman farming programs and gAlgo swaps. Leveraging Folks Finance lending pools with dual-yield mechanisms further enhances your returns, especially with an 11.16% APY on Tinyman lending pools as of February 4, 2024. While participating in this strategy, it’s crucial to be mindful of the associated risks and conduct thorough research to ensure informed decision-making.