X-Farm: A Closer Look
X-Farm (Cross-Farm) stands for cross-margin leveraged yield farming (LYF). Today, we take a closer look at how Apricot X-Farm works and differs from other LYF products.
What is Cross Margin? ⛏
Cross margin is a concept in trading, representing a margin method that is shared among all positions and backed by all available funds in a user’s portfolio. Cross margin improves capital efficiency as all assets can provide value and increase borrowing power.
When it comes to LYF, cross margin is not the norm as almost all LYF protocols on market today require users to supply certain type of tokens or own the LP constituents in order to enter a farming position (i.e. supply USDC/USDT first to farm USDC-USDT LP).
However, this is not ideal. Users may be forced into trades or exposures they would otherwise not want to take on in order to use these LYF platforms.
For example, if you hold abundant SOL or BTC because you are a strong believer in their long-term value, imagine your frustration when you have to either swap or borrow (usually done on another protocol btw) against your SOL or BTC to obtain the required token type.
There has to be a way for these users to forgo selling their long positions or risk their principal holdings in order to access the LYF yields.
How does X-Farm Help?🌱🌱🌱
At Apricot, X-Farm enables users to supply any tokens (as long as Apricot supports it) to farm directly. You do not have to own the LP constituents in order to enter a position. In fact, you can even deposit the LP tokens you already own in order to farm another LP token you want!
It is precisely because LYF with X-Farm is cross-margin — any assets you deposit within your Apricot account could back your LYF positions.
So, in the simple example above, you can deposit SOL or BTC with Apricot to generate more yields through X-Farm while earning deposit interest at the same time!
How does leverage work with X-Farm?
New ways to farm call for new ways to calculate leverage. Unlike other LYF protocols, Apricot calculates leverage at a portfolio level since cross-margin means all your positions act as collective collateral.
Portfolio_Leverage = Total_Borrowed_Value / Net_DepositUsers’ borrowing power is governed by the following factors
- LTV (loan-to-value) thresholds of deposited tokens
- Platform-wide safe_borrow_factor: 90% currently
How do your funds actually flow with X-Farm? 💰
There are two primary ways:
- The conventional approach that requires underlying LP constituents (for which Apricot X-Farm also supports)
1. User supplies $500 USDC & $500 USDT2. Apricot supplies additional $1,000 USDC and $1,000 USDT3. Funds from step 1&2 go to AMMs in exchange for $3,000 worth of USDC-USDT LP token4. The LP token goes back to Apricot DepositAt the end, the user's Apricot Account has:
- Deposit: $3,000 LP token
- Borrow: $1,000 USDC and $1,000 USDT
- X-Farm approach
1. User deposits $1,000 SOL2. Apricot supplies additional $1,500 USDC and $1,500 USDT3. Funds from step 2 go to AMMs in exchange for $3,000 worth of USDC-USDT LP token4. The LP token goes back to Apricot DepositAt the end, the user's Apricot Account has
- Deposit: $1,000 SOL + $3,000 LP token
- Borrow: $1,500 USDC and $1,500 USDT
The X-Farm approach is different and superior because:
- You can farm without owning the LP constituents
- You do not need to trade your principal assets (e.g. SOL) as they can all be utilized as collateral
To make it even better 💖…
To help you farm without worrying about liquidation 24x7, you can enable Apricot Assist, which will help you automatically deleverage and reduce your liquidation risk.
We’ll dive into greater details on this in our next article.
About us: Apricot Finance is a next-generation lending protocol on Solana, offering cross-margin leveraged yield farming and an automated self-deleveraging mechanism that enables users to maximize returns while maintaining downside protection. In the future, Apricot plans to tap into the concept of securitization in traditional finance to explore sustainable solutions for bad debt processing.
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Website: https://apricot.one/#/
