Since the emergence of Ethereum's smart contract ecosystem in 2017, decentralized finance (DeFi) has become one of the most revolutionary applications of blockchain technology. By eliminating traditional financial intermediaries (such as banks and brokers), DeFi provides global users with open, transparent, and permissionless financial services. As of March 2025, the total value locked (TVL) in the DeFi ecosystem has exceeded $100 billion, covering areas such as lending, trading, derivatives, and yield farming. The core of DeFi lies in leveraging blockchain and smart contracts to enable automated and efficient financial operations while giving users full control over their assets.

Yield Farming, one of the core mechanisms of DeFi, was first introduced by Compound in 2020, distributing governance tokens to liquidity providers as incentives. Subsequently, projects like Uniswap and Curve further advanced this model. However, traditional Yield Farming typically requires users to stake assets (such as ETH or other tokens) into liquidity pools to earn returns. While this model offers high yields, it also comes with significant risks, including impermanent loss, smart contract vulnerabilities, and market volatility.

This project—USDC Liquidity Farming—aims to revolutionize the traditional Yield Farming model by introducing a non-custodial, USDC-based yield farming mechanism. Users retain their assets in their own wallets, ensuring full control over their funds, while the platform interacts with external protocols via smart contracts to generate stable yields. By lowering the barrier to entry, eliminating impermanent loss risks, and ensuring liquidity and security, we aim to provide users with a simple, efficient, and stable way to earn yields. USDC, a USD-pegged stablecoin issued by Circle, is an ideal choice for this project due to its high liquidity and widespread acceptance.

• •Reduce Risk: By not requiring asset staking, we eliminate impermanent loss and lock-up risks.
• •Enhance Flexibility: Users keep USDC in their own wallets, maintaining full control and liquidity.
• •Stable Yields: Leverage the stability of USDC to provide predictable yield sources.
• •Expand Participation: Attract more traditional finance users into the DeFi ecosystem.

Traditional Yield Farming typically requires users to deposit assets (such as ETH and USDT) into liquidity pools to support decentralized exchange (DEX) trading. These assets need to be paired in specific ratios, but when market prices fluctuate, the value of assets in the pool may be lower than if held individually, a phenomenon known as impermanent loss. For example, if a user provides ETH/USDT liquidity on Uniswap and the price of ETH surges, they may lose some potential gains. This risk is particularly threatening to novice users.

Many DeFi protocols require users to lock their assets for a period (e.g., 30 days or more) to earn higher annual percentage yields (APY). This not only limits liquidity but also makes it difficult for users to respond to sudden market events. For example, during the Terra/LUNA collapse in 2022, many users with locked assets were unable to withdraw in time, resulting in significant losses.

Traditional Yield Farming involves complex processes, including wallet connections, token pairing, staking, and token swaps. For non-technical users, understanding APY, APR, liquidity pool rules, and the value of governance tokens is a significant challenge. Additionally, frequent high gas fees (transaction costs on the Ethereum network) further increase participation costs.

DeFi protocols rely on smart contracts, and code vulnerabilities can lead to funds being stolen by hackers. For example, the Poly Network hack in 2021, which resulted in over $600 million being stolen, highlighted the fragility of smart contract security. Additionally, if the underlying blockchain (such as Ethereum) experiences congestion or forks, user assets and yields may also be affected.

Traditional Farming yields are often tied to market supply and demand and token prices, resulting in high volatility. For example, some protocols initially offer APYs as high as 1000%, but as more users join and tokens inflate, yields quickly decline. This unpredictability makes it difficult for users to plan long-term investments.

USDC Liquidity Farming is an innovative DeFi yield farming model where users do not need to stake or deposit assets into the platform. Instead, they simply hold USDC in their own wallets, and the platform interacts with external protocols via smart contracts to generate yields, which are directly returned to the user's wallet. The platform employs diversified strategies (such as lending, arbitrage, and stablecoin pool optimization) to provide users with stable and predictable returns.

USDC Liquidity Farming operates on the Ethereum network, leveraging its mature smart contract ecosystem and widespread support for USDC. Future plans include integrating multi-chain architectures (such as Polygon, BSC, and Arbitrum) to reduce transaction costs and improve efficiency.

The platform's smart contracts are divided into the following modules:

The platform employs the following diversified strategies to generate yields while ensuring user funds remain in their wallets and are not transferred:

USDC Liquidity Farming addresses the pain points of traditional Yield Farming through its innovative "non-custodial, funds-in-wallet" model, providing users with a low-risk, highly liquid, and stable way to participate in DeFi.

As the DeFi ecosystem continues to evolve, USDC Liquidity Farming aims to become a leader in the stable yield sector. We plan to enhance the platform's yield capabilities and user experience through technological upgrades, product optimization, and multi-chain support.