Beanstalk Farms ยท September 28th, 2021

Earn Interest from Beanstalk: Just the Basics

A simplified explanation of earning interest directly from Beanstalk.

The Beanstalk website makes earning interest from Beanstalk as simple as possible. You can start earning interest directly from Beanstalk in a single transaction.

There are two ways to earn interest directly from Beanstalk:

  • Passively by Depositing Beans or LP into the Silo in exchange for Stalk.
  • Actively by Sowing beans in the Field in exchange for Pods (debt).

Rewards

Every Season (1 hour) Beanstalk looks at the time weight average price (TWAP) over the past hour. When the TWAP > 1, Beanstalk mints new Beans. The amount of Beans it mints is determined by the TWAP and number of Beans and ETH in the liquidity pool.

50% of supply increases are distributed to Stalk holders in proportion to their Stalk ownership.

50% of supply increases are distributed to Pod Holders on a first in first out (FIFO) basis. If there are no Pods, 100% of supply increases are distributed to the Silo.

Note that Beanstalk has no fixed APY. Instead, rewards are determined by the TWAP of a Bean each Season.

1. Passively Deposit Assets in the Silo: Stalk Holder

When Beanstalk expands, 50% of new Beans are minted and distributed to Silo Members based on their Stalk ownership. Anyone can become a Silo Member by Depositing Beans or LP tokens in the Silo.

There are several assets Silo Depositors should be familiar with:

  • Stalk: Stalk is the ownership asset of the Beanstalk. When rewards are minted to the Silo, they are distributed in proportion to your Stalk ownership. In the near future, Stalk will be an ERC-20 token.
  • Seeds: Seeds generate 0.0001 Stalk every season. Stalk from Seeds create opportunity cost to Withdraw from the Silo, and therefore incentivize users to keep their assets Deposited in the Silo continuously, even during long debt cycles. In the near future, Seeds will be an ERC-20 token.
  • Grown Stalk: Stalk that Grows from Seeds is Grown Stalk. Grown Stalk is not currently earning interest. In order to start earning interest on your Grown Stalk, you need to Farm your Stalk by hitting the Farm button in the balances section.
  • Deposited Beans / Deposited LP: Deposited assets (Beans or LP) are received when you Deposit an asset into the Silo. Deposits are tied to their Season of Deposit so Beanstalk can track how much Stalk must be burned to Withdraw a particular Deposit. In the future, Deposited assets will be ERC-1155 tokens.
  • Withdrawn Beans / Withdrawn LP: Withdrawn assets (Beans or LP) are are received when you Withdraw a Deposited asset from the Silo. The are frozen for 24 full Seasons upon Withdrawal. After 24 full Seasons, Withdrawn assets become Claimable assets. In the future, Withdrawn assets will be ERC-1155 tokens.
  • Claimable Beans / Claimable LP: Claimable assets (Beans of LP) are Withdrawn assets that were Withdrawn 24 full Seasons or more ago. Claimable assets return to your wallet after you Claim them, at which point they become Circulating.

Depositing

For each Bean you Deposit into the Silo, you receive:

  • 1 Stalk
  • 2 Seeds
  • 1 Deposited Bean specific to the Season of Deposit

When you deposit LP tokens into the Silo, you receive Stalk and Seeds based on the Bean denominated value of the LP at the time of Deposit. The easiest way to calculate the Bean denominated value is by multiplying the # of Beans under the LP by 2. For the below calculation, assume 1 LP is worth 1 Deposited Bean. In practice, this ratio fluctuates over time.

For each Bean denominated value of LP you Deposit into the Silo, you receive:

  • 1 Stalk
  • 4 Seeds
  • 1 Deposited LP

Deposited LP receive twice as many Seeds per Bean as Deposited Beans. Offering LP Deposits a higher rate of return than Bean Deposits encourages higher liquidity in the pool.

Key facts about Deposits:

  • Interest Rate: Unknown, dependent on future Bean mints.
  • Interest Payments: Every Season the Bean supply increases. Interest Payments are immediately Deposited to the Silo and start earning interest as well.
  • Liquidity: Anytime, with a 24 Season freeze upon Withdrawal.

Withdrawing

You can Withdraw your Deposited Beans or Deposited LP from the Silo at any time. When you Withdraw Deposited assets, you burn all the Stalk and Seeds that were generated by the assets you are Withdrawing.

Because Seeds generate more Stalk overtime, the opportunity cost for Withdrawing assets from the Silo increases because the number of Stalk attached to each Deposit, which must be burned, increases each Season.

Upon Withdrawal, you receive Withdrawn Beans or Withdrawn LP. You must then wait 24 full seasons before you are able to Claim them. Upon Claiming the assets, they will be back in your wallet in their ERC-20 form.

2. Actively Sow Beans in the Field: Bean Farmer

When Beanstalk contracts, Beanstalk decreases the Bean supply by offering the opportunity to lend (Sow) Beans to Beanstalk. When Beanstalk expands, 50% of new Beans are minted and used to pay off Bean Farmers.

Sowing

Soil is the pre-approved number of Beans that can be lent to Beanstalk.
Anytime there is Soil in the Field, Beanstalk willing to issue debt.

Anyone can lend Beans to Beanstalk by Sowing Beans in Soil in exchange for Pods. Pods are the debt asset of Beanstalk. Pods are Harvestable (redeemable) for 1 Bean on a first in, first out (FIFO) basis. The number of Pods received for each Sown Bean is determined by the Weather at the time of Sowing.

The Weather is the interest rate of Beanstalk. Beanstalk changes the Weather every Season based on the TWAP, Pod Rate (number of Unharvestable Pods / total number of Beans) and demand for Pods (number of Beans Sown this Season / number of Beans sown last Season).

For each Bean Sown with Weather w, you receive:

  • w + 1 Pods

Sown Beans are immediately burned by Beanstalk. By encouraging Farmers to Sow Beans, Beanstalk can effectively decrease the Bean supply.

Key facts about Pods:

  • Interest Rate: Determined by the Weather at the time of Sowing.
  • Interest Payments: On a FIFO basis.
  • Liquidity: Pods are liquid assets, but cannot be redeemed for Beans until they are Harvestable. Once Harvestable, can be redeemed for 1 Bean each.

Harvesting

50% of Beans minted each Season are used to make Pods Harvestable. The Pods at the front of the line become Harvestable first.

Pods are Harvestable for 1 Bean each. Once a user has Harvestable Pods, they can Harvest (Claim) them in exchange for Beans.

More information

To learn more about Beanstalk you can visit our website: bean.money

You can ask questions and join the community discussion on Discord and Telegram!

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