Folks Finance Liquid Governance: Strategies for gALGO
One of the many benefits of using gALGO and Liquid Governance on Folks Finance is the flexibility and potential to optimize profits. However, it may be difficult to figure out some effective strategies, so let’s dive into different methods of how to use your gALGO.
🔹 Liquidity pool
A liquidity pool is essentially the supply used for swaps and trades in DeFi. Users supply assets to liquidity pools through smart contracts on different platforms, like Tinyman, Pact, Algofi, and Humble.
In return for supplying assets, you receive a percentage of fees generated from transactions by adding gALGO and ALGO to the liquidity pools on one of the platforms mentioned above.
At the end of the governance period, you could remove your gALGO and ALGO from the liquidity pool, collect your rewards, and redeem your gALGO for ALGO on Folks Finance.
Typically when adding liquidity, the Dapp will automatically add an equivalent amount of both assets at the market rate. If not, check the dollar value of both assets when adding liquidity and make sure they are within the same range as each other.
🔹 Swap gALGO for ASAs and NFTs
After committing to Liquid Governance, you can choose to sell your gALGO for other ASAs or Non-Fungible Tokens (NFTs).
There are many risks with investing in speculative assets, and those risks apply here. Anyone can create an ASA or an NFT, so be sure to know what you are investing in before you swap your tokens.
With that being said, the Algorand ecosystem is full of artists, entrepreneurs, developers, and investors who are building unique products and communities. The potential upside on ASAs and NFTs are much higher, but the downside is potentially much lower as well.
Different markets, exchanges, and wallets all have processes to verify and validate the trustworthiness of projects. Pera Wallet and AlgoExplorer have a verification process that many different sites recognize. When investing, be sure to research the token or NFT project thoroughly.
The way to invest in ASAs is through a DEX, or decentralized exchange. There are a number of popular exchanges, like Vestige, Defly, Tinyman, and Algofi.
For NFTs, there are a number of reputable marketplaces such as Rand Gallery, Exa Market, and AlgoxNFT.
🔹 Deposit gALGO to Another Protocol
The final option is to deposit your gALGO into another lending protocol. Currently Gard and xBacked both support depositing gALGO into their platforms, where you can use gALGO to mint decentralized stablecoins.
These protocols work by creating over-collateralized loans using ALGO and gALGO to minimize the risk of minting a stablecoin.
Once you’ve received your stablecoins, you can use them to trade, pay, or stake. The use cases of these ASAs are increasing every day, and it’s up to you to find your preferred strategy.
We hope you learned a little about Folks Finance, Algorand, and DeFi today. There’s a lot of ways to earn rewards using your gALGO and ALGO on Folks Finance and across the Algorand DeFi ecosystem. It’s up to you to manage your gALGO and optimize your returns, and hopefully this guide was a good place to start. Thanks for reading!
About Folks Finance:
Folks Finance is a DeFi platform that provides lending, borrowing, trading, and managing crypto — all in one place. Get started with Folks Finance!