The Beginner’s Guide to Belt.fi

The world of Decentralized Finance (DeFi) is changing. This change has been largely unavoidable due to the increasing problems developers are facing with the Ethereum network.

We’re talking about the shift from Ethereum to alternate blockchains that we’re seeing these days. An increasing number of developers have started dumping the Ethereum blockchain for greener pastures.

A lot of these developers have ended up on the Binance Smart Chain (BSC). After all, it does provide them with faster network speeds and low fees.

But this article isn’t about BSC at all. It is about one of the most important products built on BSC that is garnering quite a lot of attention these days - due to its claim of having almost no slippage.

With the use of multiple strategies for optimizing yield on Binance Smart Chain (BSC) and the HECO Chain, Belt.fi claims to provide what most of us seek in the DeFi space - better yield!

But before we talk about Belt.fi in detail, here’s everything you would find in this article. Feel free to skip to any section you like!

1. What is Belt.fi?
2. How does Belt.fi provide maximum yield with minimal risk?
3. What is the BELT token?
4. What is the 4Belt BLP Pool?

And with that out of the way, let’s dive right into it!

What is Belt.fi?

Belt.fi is an AMM protocol that makes use of multiple strategies for optimizing yield on Binance Smart Chain (BSC) and the HECO Chain. 

The stableswap AMM protocol has low fees/slippage and is more than equipped to provide aggregation. For aggregation, it uses a profitable blend of vault compounding, yield generation, and lending to provide the users with maximum returns.

What makes the platform especially popular is the fact that it provides the users with one of the most efficient ways to swap their stablecoins. If you compare the slippage of Belt.fi with the other swap protocols in the industry, you would see that it is significantly lower.

Moving on to the yield that the platform provides, Belt.fi focuses on maximizing it as best as it can. The stableswap AMM protocol uses a combination of its multi-strategy optimization vault system and trading fee rewards to achieve that.

When it uses different strategies at the same time, what Belt.fi is actually doing is reducing its dependence on a single protocol. And it does that while generating the best yield rates possible in the DeFi space for its users. This prevents low-liquidity withdrawal issues from happening, thus protecting users from it.

Belt Finance vaults take care of moving the assets of the users around between protocols for producing the maximum yield. This gives the users the highest reliable yield without actively moving their assets around. And the reason why it is reliable is that it makes use of different products from the DeFi space to improve the yield.

The best part of all of this is the fact that the platform is still growing. So you can expect to see many more strategies coming into play later on. In addition to the strategies, you can expect to see more assets and chains being added to the platform.

The benefits of the platform don’t end there. With the help of vault compounding, Belt.fi delivers convenience to the users and helps them save up on gas fees. This helps people have little to no impermanent loss on the platform.

Being non-custodial, the platform leaves the responsibility of your crypto assets with you. This essentially means that you are the only person who can transfer your assets (or withdraw them).

How does Belt.fi provide maximum yield with minimal risk?

Belt.fi uses a combination of three strategies to achieve this seemingly impossible result:

Automated vault compounding

If you’re enjoying the convenience of getting the best yield on your crypto investments with the help of Belt.fi, you can thank this strategy for it. By strategically using different vaults and compounding them multiple times every day, the platform ensures that you receive the maximum yield returns.

Strategy modifying yield optimization 

Since the platform happens to be connected to a number of strategies, it shifts between the available strategies and chooses the most optimal one to provide you with the one that generates the best possible yield.

Low-slippage AMM

Impermanent loss has been a problem in the world of DeFi for a very long time now. But Belt.fi is working toward removing it as much as possible on its platform. It allows you to participate in AMM using an assortment of bTokens having negligible and almost no price volatility with respect to each other.

This gives you the assurance that your token position would remain more or less the same while you have it locked in a pool. So even when you are getting yield on your tokens, you don’t have to worry about impermanent loss. And it’s all because the pools have quite a lot of tokens having similar origins and values.

The platform’s AMM functionality is beneficial for both Makers as well as Takers. In case you’re wondering, in this case, Makers are liquidity providers and the Takers are the users that are doing token swaps on the platform. 

As you might have guessed already, Makers are rewarded with the highest yield for their deposits. Their yield comes from multiple sources: compounding, BELT token, and the platform’s strategy yield optimization. 

Takers shouldn’t get disheartened since there’s something for them as well. As a taker, you can reap the benefits of the low trading fees on Belt.fi, as well as the low price impact and slippage.

What is the BELT token?

The BELT token is the governance token of the Belt.fi platform. So, it basically does and is used for everything you’d expect a typical governance token to do or be used for.

But to make things more interesting, the platform has implemented cross-chain BELT mining. It does that with the help of Orbit Chain and the cross-chain of the network, masterchef.

What happens, essentially, is that some part of the total BELT token emissions is bridged over to the HECO chain. Out there, on HECO Belt, it is used for liquidity mining.

It is important for you to remember that hBELT is BELT bridged over to HECO Chain and not a separate BELT token on its own. It is basically the same asset (BELT token) on a different chain (HECO Chain).

Now, you might be thinking about the implications of hBELT on the tokenomics of BELT. Well, on BSC, hBELT is emitted as BELT and it locked with the help of smart contracts. So, at the end of the day, it has more or less no effect on the BELT tokenomics. Even the circulating supply inflation sees no change.

The only change is that users now have a new way to engage with the Belt.fi ecosystem. 

What is the 4Belt BLP Pool?

The 4Belt BLP Pool is a liquidity pool consisting of USDT, USDC, BUSD, and DAI tokens. These tokens are present in the pool in the form of beltUSDT, beltUSDC, beltBUSD, and beltDAI respectively. These beltTokens are strategy tokens consisting of beltSingleToken along with beltStrategy for every protocol.

Owing to the modular design of the architecture of beltToken, it is highly scalable. This enables adding strategies and making changes to them at later stages for improving their APR.

The team has also decided upon an idle ratio between the strategies that can be used for handling bigger amounts of assets and those that can be used for preparing for temporarily pending strategies.

As of now, the team is trying to make beltTokens and 4Belt independent assets to be traded and swapped on other DEXes and BSC-based DeFi protocols. Since 4Belt has been created using stableswaps, it has quite a few characteristics that you would see in the system.

Providing liquidity to the 4Belt pool is pretty simple and straightforward as well. Unlike most AMMs, you don’t need to add an equal value of the tokens making up a token pair. In this case, you would’ve had to add 4 different tokens if it were a regular AMM. But the 4Belt pool gives you the option to deposit any number of stablecoins you want to.

Depositing a stablecoin would send it to the strategy that the system selects to be the one for the idle ratio. So, when you deposit USDC, for example, it would be sent as USDC, USDT, BUSD, or DAI to the strategy set by the system. The system keeps changing the values because of the people trading between the different tokens making the ratio of the pool change.

The returns you get on your investment would not be affected by the number of coins you deposit. However, you need to keep the deposit bonus system in mind.

So what is the system all about?

If you add liquidity to the pool with a token that is low in quantity in the pool, you get a bonus for it. And that’s because the pool is constantly trying to achieve a ratio of 1:1:1:1 for all the tokens in the pool. When you help the pool get closer to achieving this ratio by providing liquidity in the form of the tokens it needs to balance out, you’re rewarded.

There’s a similar system for withdrawals as well. When you withdraw the stablecoin that is present in abundance in the pool, you get a bonus. This is for the same reason you get a bonus for providing tokens that the pool is running low on—maintaining balance.

That said, you are free to withdraw and deposit whatever token you intend to. 

Talking about the APR, it is auto-compounded every 6 hours to the value of the 4Belt BLP tokens you’re holding. The Trading Fee APR, on the other hand, is auto-compounded with every trading transaction.

Before you go…

The Belt.fi ecosystem looks quite promising with a lot of innovative features. But will it stand the test of time? I guess we’ll have to stick around to get to know that.

But if the current state and progress rate of the platform is to be seen as an indication of what is yet to come, it looks like Belt.fi has a bright future. After all, it knows the pain points of its users and has developed a system that fixes most of them.