From 11 to 100 million dollars
The decentralized finance protocol Alpha Homora has grown into a popular lending platform for leveraging positions in liquidity pools, seeing transaction volume grow ninefold. Within one month the number of daily active wallets doubled, while the transaction volume skyrocketed from 11 million dollar in daily transactions to 100 million on Monday. Alpha Homora allows users to lend ETH, or borrow money to leverage positions in liquidity mining pools.
The DeFi platform allows users to increase their position in liquidity pools by borrowing money. Despite the risk involved in these trading techniques, Alpha Homora has seen consistent growth since its launch late last year. They have provided more than $600 million in loans, and in the last week they’ve been proving to be real competitors for Aave.
The growth and popularity of Alpha Homora happens alongside the increase in value of cryptocurrencies in general and the native ALPHA token. The token is up from $0.15 late December to a peak of $1.73 on January 27th. However, even when not considering token prices and looking at the adjusted trading volume (aTVL), there’s clearly growth taking place.
Alpha Homora explained
Alpha Homora is a platform made by Alpha Finance. It’s a protocol that allows users to leverage their position in yield farming pools. Lenders providing ETH can earn interest, while yield farming can increase their annual percentage yield (APY) on their positions. People can provide liquidity for a trading pool, for example ETH-LINK, on Uniswap or Sushi Swap. Alpha Finance has created Alpha Homora on the Ethereum blockchain and is now getting ready to launch an improved version of their product.
In essence Alpha Homora allows users to boost their rewards from yield farming. Users are able to get up to 2.5 times the rewards from their regular yield farming operations. However, it’s important to note that yield farming and especially borrowing money is always risky. Alpha Homora allows yield farmers to borrow ETH from lenders, and as a result yield farmers can boost their rewards. As always, borrowing money costs money, and a yield farming position can get liquidated. Therefore these trading activities, also called leveraging, are not without risk. Alpha Homora will migrate their ibETH/ALPHA liquidity mining pool to Sushi Swap on January 28th. They also wrote an extensive blog about yield farming in Alpha Homora v2.