The Beginner’s Guide to Apricot Finance

DeFi protocols are continuing to replace traditional banking by offering a multitude of financial solutions. With DeFi, there is no more dependence on third-party establishments such as banks for money transactions or even taking loans.

Apricot Finance is a decentralized platform that offers over-collateralized loan protocols. Apricot finance was developed with the intention of creating a borrower-friendly lending platform without compromising on lender protection.

As a DeFi application that runs on the Solana blockchain, Apricot gets a tremendous advantage over its competitors on other blockchains. Solana is gaining fame for its lightning-fast transactions and ridiculously low transaction fees.

Here’s everything you need to know about getting started with Apricot Finance.

What is Apricot Finance?

A DeFi protocol built on the Solana network, Apricot finance aims to provide sustainable solutions for bad debt accumulation on lending platforms.

With 100% computerization and liquidity thresholds, lenders’ interests are strongly protected on Apricot’s lending and borrowing platform. Apricot Lend offers high-interest rates for deposits. What sets it apart from its competitors is that this is a borrower-friendly collateralized lending protocol.

Apricot allows its borrowers to set below market collateralization requirements. This significantly reduces liquidation penalties and uncertainties by decreasing liquidation thresholds. This attracts both lenders and borrowers to Apricot.

With Apricot’s X-Farms, you can reap rewards from cross-margin leveraged yield farming without having to own any of the underlying crypto tokens. Wondering how that’s possible? We have devoted an entire section to this below, so keep reading!

With your specific risk profile in mind, Apricot’s automated self-deleveraging assistant decreases your account’s leverage. This enables the Apricot Assist to determine when to redeem or sell your collateral assets as well as which assets and how much of each is to be redeemed or sold.

Apricot Tokenomics: APT Tokens

Apricot Finance is launching its native token APT through a public sale, on November 18th, 2021. The APT price is fixed at $0.3 per token. Only 4% of the total APT supply is being offered at the IDO (initial dex offering).

Apricot has a total of 1 billion APT tokens with token distribution as given below:

Now that we’ve covered a quick introduction to Apricot Finance, let’s get down to some action!

How to Use Apricot

Go to the official website apricot.one

Click on ‘Launch App’. 

A financial disclaimer will pop up.

Click on ‘I agree’.

Connect your Wallet

Click on ‘Connect to Wallet’. You will get a drop-down of various wallet options. 

Click on your wallet. I am choosing a Phantom wallet for the demo. Enter your password and log into your wallet (if not already logged in).

You have to give the approval to connect your chosen wallet to Apricot. Click on the blue ‘Connect’ button.

Now the wallet is connected to the Apricot app and we are ready for business!

Lend, X-Farm, and Assist are the three main products being offered by Apricot.

Apricot Lend

Click on ‘Lend’ in the menu bar.

This is apricot’s base layer protocol for depositing your crypto assets and earning interest. With your deposited assets as collateral, you can borrow more crypto tokens from the platform.

At the top of the Lending page, you have a short dashboard displaying your deposits and loans. You can click on ‘Dashboard’ in the main menu to view a detailed version of your earnings, farming positions, deposit and borrow positions, as well as the apricot bar that shows the borrowing limit used.

Below this section is the lending markets. Here, you can view the tokens supported by Apricot, for lending and borrowing.

Making Deposits on Apricot

If you note the Deposit APYs (Annual Percentage Yields), Raydium is currently the highest with 45.16% returns. So let’s try that one out.

Note: The interest rate is dynamic, it depends on the supply and demand.

You need to have Raydium in your wallet for this. You can buy Raydium from raydium.io.

Read more: The Beginner’s guide to Raydium

Click on ‘Deposit’ for Raydium.

Set the amount of Raydium tokens you wish to supply to this pool.

Now click on Supply’. And it’s done!. You are officially now a lender on Apricot.

Depositing LP Tokens on Apricot

You can create USDT-USDC LP tokens on Saber or Orca and deposit them here to generate interest. Apricot farms these LP tokens to earn you a farming APY. You can use your LP token deposit as collateral for borrowing other tokens and farming with leverage.  

But LP tokens cannot be borrowed like the other tokens, hence there is no ‘Borrow’ button for LP tokens, there is only the ‘Deposit’ option. be deposited as collateral against which users can borrow and farm with leverage.

However, LP tokens cannot be borrowed so there is no deposit or reward APY. Apricot will instead farm LP tokens for you to earn a farming APY.

Once you have made a deposit, you can view it on your dashboard. Below is an image of SOL deposit made in a similar manner.

Borrowing on the Apricot Platform

You can borrow only after making a deposit on Apricot. Your deposits act as the collateral for your loan.

The borrowing procedure is pretty much similar to the lending process described above. Just click on the ‘Borrow’ button for the token you want.

You have to pay the borrow APY, but on the other hand, you are earning a reward APY as well.

Once you click on the ‘Borrow’ button, your wallet pop-up will ask for confirmation of the transaction. After the transaction gets completed, you can view your borrow position on the dashboard.

Withdrawing Deposits & Repaying Loans

To withdraw your funds, go to the lending page. Your deposits and borrow positions are displayed right at the top of the page, on the dashboard.

Withdraw: To take out your deposit, click on the ‘Withdraw’ button. You will get a pop-up where you can specify how much you want to withdraw. Enter the amount and confirm the transaction.

Repay: To repay what you have borrowed, click on the ‘Repay’ button in the dashboard. Specify how much you want to repay. You can repay in parts or the full amount. Confirm the transaction in your wallet.

Apricot X-Farm

Apricot’s Cross Farm, known as X-Farm, offers cross-margin leveraged yield farming. You can begin leveraged yield farming (LYF) without owning the underlying crypto tokens.

To understand this properly, let’s check out what is cross margin.

Read more: Yield farming on Solana

Cross margin is a trading concept that allows you to utilize your available margin balance across all of your accounts. Your margin is backed by all the available funds in your portfolio and shared among all your positions. The combined value of all your assets increases your borrowing power, which in turn, improves capital efficiency.

But the cross margin method is not possible in most yield farming protocols across the DeFi space. Almost every leveraged yield farm out there requires you to own specific tokens to create the required LP tokens for entering farming positions.

For yield farming of a pair such as USDC-USDT, you need to convert your existing crypto-assets (such as BTC, SOL, RAY, etc.) into these specific tokens and add them to the corresponding liquidity pool to collect the USDC-USDT LP tokens needed for farming.

The problem here is that, in order to use these farming protocols, users are being forced into trades they may not want to do. If I am a strong believer in the long-term value of BTC, ETH, or SOL, I’d rather hold onto these assets than swap them to create the farming tokens. This brings up the need for a leveraged yield farming protocol that allows us to hold on to assets of our choice and yet, be able to enter farming positions.

Cross Farming

With X-Farm, you can deposit your crypto assets into the lending pools and use them as collateral to borrow the tokens you need for farming. For example, you deposit SOL and use it as collateral for borrowing ORCA and USDC to create ORCA-USDC LP tokens, or USDC and USDT for creating USDC-USDT LP tokens. You can borrow these coins for up to 3X leverage. The borrowed tokens are auto-pooled and staked for LP tokens which actually offer you 3X farming yield.

Apricot explains this as:

SOL (collateral) -> USDC, USDT (3x) -> USDC-USDT LP tokens (3x)

X-Farm Tutorial

Click on ‘X-Farm’ in the menu to access Leveraged Yield Farms.

Select an X-Farm (liquidity pool) for leveraged farming.

Borrow Power Utilization slider: Every pool has a Borrow Power Utilization slider that offers you a quick overview of the APY breakdown at different leverage levels. if you choose to farm with that amount or at that leverage level. In the image above, the SOL-USDC, the slider is at 100% while in the image below, it is at 71%. You can see that the final net APY changed from 44.13% to 30.58%.

To get started, click on the ‘Farm’ button of your chosen liquidity pool.

You shall now get a pop up as given below:

Max amount of LP tokens you can farm: Based on the borrowing limit of your deposits on the Apricot platform, this displays the value of LP tokens you can use for leveraged farming.

To increase your borrowing power, click on the green plus button next to it, you will be redirected to the deposit page for adding more deposits.

Start Farming: Once you select the farm value and the borrowing limit used, click on ‘Start Stable Farming’ and confirm the transaction. If you use the USDT-USDC farm, then your dashboard will show the USDT-USDC LP tokens as deposits while the individual USDT and USDC will be shown separately as borrowed assets.

Redeem: You can choose to redeem your LP tokens fully or partially by clicking on the Redeem button. They get converted back into the underlying tokens and then your borrowed assets will get repaid. If there are any remaining assets, it goes to your deposit balance.

Apricot Assist

Leveraged yield farming (LYF) offers great returns, provided you know what you are doing. Although the steps seem simple enough to execute, LYF is highly volatile and tricky. It has many risks and plenty of investors have lost their precious assets.

Leveraged yield farming involves taking a position on the individual asset prices, as well as, their relative prices. Prices of individual assets in an LP token pair can change drastically compared to when you deposited them on the farm, leading to impermanent loss.

The story becomes worse when you are playing this game with borrowed funds. The biggest risk with leverage is liquidation.

To reduce such liquidation risks, Apricot offers auto-deleveraging.

Apricot Assist keeps an eye on your account's Borrow Limit Used and when this reaches the ‘Trigger Level’ you have set, the program automatically redeems or sells your deposited tokens (the collateral) and repays the tokens you had borrowed.

Let’s check out how this happens.

How to Enable Apricot Assist

To get started with Apricot Assist, click on ‘Assist’ in the main menu on the left-hand side of the page.

The next step is to enable the Apricot Assistant so that this program can run in the background and continuously monitor the account’s Borrow Limit Used.

Set the target level for the Borrow Limit Used and then decide on a trigger level. 

The trigger level will get ‘triggered’ when the Borrow Limit Used crosses this set mark. Now the Apricot assistant repays your debt by selling off some of your collateral (deposited assets).

It's best to keep the difference between the two around 5 or less. The more the difference between these two levels, the more the assets that Apricot Assist redeems or sells when the trigger level is set off. The sell-off continues till Borrow Limit Used is within the set parameters.

How Apricot Assist 1.0 Works

The Apricot Assist (version 1.0) repays only stablecoin debt. When triggered, Apricot Assist repays stablecoin debt in the following order:

• Redeeming corresponding LP tokens
• Selling stablecoins deposited in the account
• Selling non-stable tokens deposited in the account

Apricot Assist 2.0 is being developed currently to help repay non-stable tokens such as SOL or ETH.

Assist Simulator

A useful feature of Apricot is the Assist simulator. You can set the trigger level and target level and see what operations Apricot Assist will execute when it's triggered. When you change these levels, Apricot Assist will also change its deleveraging strategies accordingly.

Before You Go…

Apricot Finance is a next-generation lending protocol powered by the Solana blockchain. With innovative financial products such as Apricot Lend, X-Farm, and Apricot Assist, this DeFi application helps to maximize your profits with minimum risk.

Apricot’s main attractions are its X-Farms, cross-margin leveraged yield farming with downside protection while Apricot Assist offers auto-deleveraging and minimizes liquidation risk.

Although this brand new protocol was launched recently in October 2021, it has already garnered plenty of investor interest. Do your own research and get in early if you are convinced Apricot’s headed to the moon!