Before we get started, this is not a recommendation or endorsement to buy any token mentioned.
Parallel Finance is a DeFi super DApp built on Polkadot, with a focus on DeFi applications. Parallel includes these popular DeFi applications:
- Liquid staking
- AMM
- Decentralized money market (lending/borrowing)
- Liquid crowdloans
- Streaming payments
- Yield farming
If you imagine Uniswap, Aave, Lido, a browser wallet, a crowdfunding app for loans, a streaming payment app, and a yield aggregator all had a baby, that’s Parallel Finance! It’s a composable DeFi app to act as a one-stop-shop for a newer DeFi ecosystem being built on Polkadot and Kusama. Like the most popular Ethereum DeFi apps, with Parallel Finance on Polkadot, users can earn passive yield on DOT liquid staking and simultaneously lend sDOT or even pair it with another token to create an LP and earn trading fees + farming rewards (PARA). Parallel is governed through a token called PARA, which currently trades at $0.01, and is used to incentivize and reward certain LPs and lenders on Parallel.
Parallel Finance currently hosts over $227M TVL across these different DeFi products.
Today, I’ll show how I can earn >19% APY with liquid staked DOT!
How to Earn 19% APY with DOT Liquid Staking on Parallel Finance
Before we get started, please be aware of these risks.
- Smart contract risk in Parallel Finance
- Systemic risk in DeFi composability
- Pegged assets such as sDOT can trade at a lower discount rate
- Front-end spoof attack on parallel.fi
- Exploits in economic design of Parallel Finance protocol
- Governance attacks or admin key compromise
- Estimated yield can go up or down depending on how much DOT is staked
Here’s how I get started!
- First, I visit the Staking app on Polkadot (not Kusama) for Parallel Finance here.
- Let’s assume I am a long term DOT holder and already have a Polkadot{.js} Extension wallet (similar to MetaMask but compatible with Polkadot). I can connect my wallet in the top right corner.
- Lastly, I specify how much DOT to deposit in exchange for sDOT (the liquid staking token that will accrue staking yield). I click the blue Stake button and follow the prompts to confirm in my Polkadot wallet.
- sDOT acts as a share of the total pool of staked DOT in Parallel. Because this pool accumulates staking rewards, my share (represented by sDOT) enables me to withdraw more DOT each era (1 day) at an APY of approximately 19.15% APY.
- Also, I unchecked the bottom checkbox to ensure I do not supply/lend sDOT to borrowers, since I’m less certain of the health of the money markets on Parallel.
That’s it! I’m earning ample passive yield on my long term DOT position, controlled by my self-custody wallet.
For more DeFi video tutorials and insights, follow me @DeFi_Dad on Twitter and subscribe to DeFi Tutorials with DeFi Dad on YouTube at defidad.com or on my Lenstube channel. If you’re a builder raising capital for the next killer DeFi app, my team and I would love to partner with you at 4RC (Fourth Revolution Capital). Contact me via DMs on Twitter or at contact@fourthrevolution.capital.
Disclaimer & Risks: This is not financial advice or a recommendation/endorsement to buy any token mentioned in this post. You should approach all DeFi applications, wallets, protocols, and tools with caution. Please be aware there is always…
DeFi Dad is one of the earliest power users of DeFi, having worked with early Ethereum startups going back to 2018, including Zapper.
