What is PolyCat Finance: A Simple Explanation

Yield optimization done right

PolyCat Finance is one of the latest DeFi applications to arrive on the Polygon network. Whilst on the face of it it doesn’t appear much different from the other decentralized finance dapps we have observed this year. It does however have a few unique features that make it stand out from the crowd.

PolyCat Finance stands out because it’s one of the first platforms on Polygon to offer IFOs or Initial Farm Offerings. In a similar way to ApeSwaps IAO or Initial Ape Offerings on Binance Smart Chain. In essence, IFOs allow hungry investors to get in at the ground level on new farming opportunities. Although their first IFO hit a few sticky patches after launch Augury Finance raised 198.75% of their initial goal. They successfully raised around 4 million USDC. 

Another key feature is PolyCat’s unique burning mechanism that ensures continual burning of the supply. Labeled as a “Burning Vault”: the platform stakes deposit fees from the farms and pools and uses 100% of those yields to continually burn the platform’s native token FISH. Furthermore, PolyCat also burns 5% of the profits of all other vaults. With a maximum supply of 3 million FISH tokens, FISH is expected to be completely allocated by August 2021. The platform then has plans to make FISH a governance token, and reward FISH holders 5% of vaults’ profits instead of burning FISH when the max supply is reached. At current rates that means $120,000 worth of FISH per day is being burnt. This means the platform will be paying out over $120,000 in dividends once the max FISH supply is reached since they won’t be burning it anymore.

An additional service is Fish Tanks. In short, users can stake FISH to earn GBTS, the native token of GemBites. GemBites is a decentralized casino being developed on the Polygon network. It has some interesting features that set it aside from other casinos such as house stake pools, NFT airdrops, and passive lotteries. In a similar way to an IFO, Fish Tanks allow hungry investors to get in at the ground level on potentially exciting projects and earn at the same time. 

Show me the yields

As with other platforms of this nature, users are coming for the yields and the earning potential offered by PolyCat through its vaults, farms, pools, and tanks. The platform also has a token swapping service but this is currently restricted to SushiSwap, Dfyn, and QuickSwap. In addition, it only exists to service users with the required tokens to earn on the platform. 

Pools on PolyCat Finance allow users to stake already held tokens or purchase FISH in order to stake and earn more FISH tokens. The APY rates are attractive, with an over 780% APY when depositing FISH. Or 1,700% when depositing the native token of the QuickSwap platform QUICK. Importantly, all pools other than FISH have a 4% deposit fee. 

Farms on PolyCat allow users to purchase liquidity provider (LP) tokens and earn through providing liquidity to the platform. Something absolutely vital for a successful DeFi platform. Three options are available through third-party providers. LP farms are serviced by QuickSwap, SushiSwap, and Dfyn. Each has a zero deposit fee with APYs ranging between 9,000 and 11,000%. 

Vaults on PolyCat auto compound every 5 mins and importantly, they do not reward FISH. Instead, they reward the same token that was deposited. It is also important to note that there is a 0.1% withdrawal fee on non-FISH vaults. Currently, vaults on PolyCat contain over $136 million in value locked showing a strong use case.

Unique earning opportunities 

As previously mentioned, the platform’s Fish Tanks initiative provides users with a way to support up-and-coming projects whilst at the same time earn FISH tokens. This function allows PolyCat to partner with projects they feel are worthy and help them grow through token distribution and early investment. In a similar way, Initial Farm Offerings (IFOs) allows users to take part in new project launches with their FISH tokens. The premise is simple, a new project gets funded, PolyCat burns FISH, and investors get new tokens. 

A vital part of the IFO offer on PolyCat is that, unlike other IFOs that exist where only the native token (FISH) is staked causing price fluctuation as the token gets bought and pumped for the IFO, then sold by the IFO project for funds, then dumps. Even with a 50% burn on the sale, the volatility caused by IFOs can still lead to massive price swings. Instead, On PolyCat the sale of a new project’s token will mainly be in USDC, along with a small FISH tax that gets burned.

DeFi on Polygon

PolyCat appears to be planting its flag firmly in the decentralized finance rankings on DappRadar and has quickly amassed users and volume. Helping it to become a top 5 dapp on Polygon and across all networks. The platform’s unique offers help it stand out in an increasingly crowded space.   

There has been plenty of positivity around the Polygon protocol in 2021. Not only did the sidechain deal with the crypto crash without any major issues, but the native MATIC token also kept its value relatively well. Furthermore, recent news of American billionaire Mark Cuban investing in Polygon created an additional wave of interest. It led to an increase in both the token price and total value locked within the DeFi ecosystem. Polygon saw 1,102% growth in its total value locked and ended the month of May around $5.7 billion TVL according to the DappRadar May Industry Report. 

Arguably, low fees and fast transaction times have brought about the observed usage spikes as Ethereum finance apps continue to migrate over to Polygon. A single transaction on an Ethereum DeFi app can cost a user up to $4 in gas fees during good times. Whilst the same transaction on the Polygon network will be under $1 at all times. A general increase in awareness of Ethereum alternatives and heightened education around how to use them is believed to also be adding to the surges.