How The Nerdlings Farm Works (And Why It’s Superior To Most Yield Farms)
At a first glance, Nerdlings might look like another yield farming clone, but it actually utilizes one of the most brilliant DeFi yield-farming features: the “drain” function.
Nerdlings was inspired by the Dracula Protocol which is an essential yield-farm that farms other yield farms and uses the rewards to buy back its own token.
Confused? Here’s how it works:
Nerdlings allows you to farm with LP tokens from 6 different DEX’s:
- Uniswap
- Sushiswap
- Pickle
- Luaswap
- SashimiSwap
- YFValue
What this means is you provide liquidity for a pair on one of these 6 protocols.
Then you stake your LP tokens in Nerdlings.
This means Nerdlings has temporary ownership over your LP tokens, which makes it eligible to receive the rewards on these protocols.
Then when someone calls the “drain” feature, it randomly sells these rewards for NERDLINGS, which adds more buy pressure on the NERDLINGS to support the price. This prevents the price from nuking to 0, which is what usually happens with many yield farming projects.
That might be a lot to take in, so let’s walkthrough with a real example.
Let’s say you stake you provide liquidity for USDT/WETH on SushiSwap and stake your LP tokens on SushiSwap. You would normally earn the SUSHI governance token as a reward.
Now if you provide liquidity for USDT/WETH on SushiSwap but stake your LP tokens on Nerdlings, the Sushi rewards would go to the Nerdlings master contract.
Now what’s special about the master NERDLINGS contract is it takes those Sushi rewards and sells them for ETH, and uses that ETH to buy more NERDLINGS (similar to CORE’s buy-back mechanism). The nerdlings are then burned forever.
The buy-back mechanism (known as the drain feature) is important because it adds ETH into the NERDLINGS liquidity pool. This supports the price so it doesn’t dump to 0 within a few hours.
Now imagine this happening across 6 different DEXs and hundreds of pools. The buy backs can really start to add up.
The Drain Feature
Now the drain feature can sound scary because of the name but there’s nothing to be worried about.
When it’s activated, it simply means that rewards from the OTHER Dex’s you’re farming (like Uniswap, Sushi, etc) will be sold and used to market-buy NERDLINGS. All your tokens are safe and won’t be affected.
This unique feature is what makes Dracula and NERDLINGS special and different from other yield farming projects.
Improving Dracula
One big difference with NERDLING is that the drain function is activated randomly and not as soon as it’s called, this makes it really hard for flash loaners to try and exploit the function. We have also reviewed the contract logic and the protocol can now run Crysis at 120FPs. You’re welcome.
This is a highly experimental project. STAY SAFE.
