Harvest Finance, represented by the FARM token, is a decentralized finance (DeFi) protocol that aims to provide users with automated exposure to potential returns across select DeFi protocols. It seeks to make yield farming more accessible by automating the process and optimizing the potential returns using the latest farming techniques. FARM is the governance token for Harvest Finance, and holders can vote on proposals for the FARM operational treasury and receive a 5% fee from Harvest operations.

Harvest Finance operates by automatically farming the assets with the potential for high returns and distributing the profits among its users. The protocol's harvesting strategies are flexible and future-proof, meaning that a majority of past and upcoming assets can be farmed through Harvest. New crops with standard implementation can be farmed as they emerge, and non-standard crops will be farmed as soon as respective strategies are developed. In addition to the potential returns from harvesting, the protocol provides incentives to its users for participating. Users of Harvest receive FARM tokens, aligning incentives for Harvest users to govern and hold a stake in its continuous success.

Harvest Finance seeks to make yield farming more accessible to a diverse range of users, regardless of their level of expertise or experience. It aims to create a sustainable community-governed farming cooperative that focuses on maximizing potential returns for its users. By automatically farming the assets with the potential for high returns and distributing the profits among its users, Harvest Finance provides a platform for users to potentially benefit from their cryptocurrency holdings. Additionally, the FARM token allows holders to participate in the governance of the protocol, further enhancing its use case.

Harvest Finance was launched in 2020, during a period when yield farming was becoming an increasingly popular activity within the cryptocurrency space. The protocol was designed to help users automatically farm the assets with the potential for high returns from the latest DeFi protocols. Since its launch, Harvest Finance has evolved to include a wide range of farming strategies and has continued to adapt to the changing DeFi landscape. The total supply of FARM tokens is 5,000,000, which is being distributed over a period of 4 years. The protocol was bootstrapped and does not have any venture capital or investor backing.

Harvest Finance, also known as FARM, aims to optimize yield farming strategies for users. It strives to do this by leveraging various DeFi protocols and integrating multiple yield farming strategies into one platform. Harvest Finance's system automatically reallocates funds to the most active opportunities, aggregating yields from different DeFi platforms. This allows users to receive rewards from various DeFi protocols simultaneously. The platform provides a wide range of farming pools, giving users a diverse selection of cryptocurrencies and DeFi protocols to optimize their yield farming opportunities. Harvest Finance also employs various security measures and aims to safeguard user assets while minimizing the risk of smart contract vulnerabilities.

Harvest Finance strives to enhance the efficiency of its operations for its users by automatically searching for the highest yield farming opportunities. However, it's important to note that Harvest Finance does not directly address the issue of impermanent loss for liquidity providers. Impermanent loss is a risk associated with providing liquidity in automated market maker (AMM) protocols, and it occurs when the price of a token changes after it has been deposited in a liquidity pool. This can lead to a situation where the dollar value of a user's deposited tokens is less than if they had held onto the tokens. Harvest Finance's smart contracts are designed to interact with multiple contracts, and this interaction could potentially create risk if there is a failure in one of the contracts. Therefore, while Harvest Finance seeks to enhance the efficiency of its strategies, it does not eliminate the risks inherent to each strategy, including impermanent loss. It is important for users to thoroughly understand the risks associated with yield farming and providing liquidity in AMMs.

Users may allocate their ERC-20 tokens into one of Harvest's smart-contract-operated vaults. For instance, if a user allocates to a USDC vault, the protocol will give them fUSDC, representing their share of the associated vault. The protocol provides two different pools: a designated pool and a reserve pool. Users receive non-monetary incentives for allocating their crypto assets to the designated pool. For the reserve pool, they receive non-monetary incentives for contributing liquidity to the platform. Harvest Finance seeks to optimize user participation benefits by utilizing the latest and most efficient techniques and strategies in their vaults.

Harvest Finance utilizes its native token, FARM, to encourage engagement in the platform. The total supply of FARM tokens is capped at 690,420, which is set to be distributed over a four-year period from its launch in September 2020. The distribution model of FARM tokens is divided into three categories: 70% is allocated towards liquidity providers, 10% is allocated to the operational treasury, and the remaining 20% is allocated to the Harvest Finance team. This distribution model intends to foster active engagement in the platform and maintain a sustainable community-governed farming cooperative.

Harvest Finance's vaults operate on a performance consideration structure, where a percentage cut is taken from all harvest rewards. These considerations are already incorporated into the non-monetary rewards of each vault and daily rate, so users don't need to calculate them separately. The performance consideration and the structure breakdown are presented inside the Participation and Withdraw module in a vault. The performance consideration on additional yield, i.e., vault rewards, is partly distributed back to $BIFI tokenholders and is one of the ways Harvest Finance's platform operates. Some vaults have a participation consideration, primarily to prevent potential exploits from bad-faith actors. Using tools to enter or exit vaults incurs a 0.05% consideration on your participation. These considerations are returned to the treasury.

Holding FARM tokens in the Harvest Finance governance system provides users with the ability to participate in the decision-making process of the platform. This is achieved through a token-based quorum voting mechanism, where the number of votes a user has corresponds to the number of FARM tokens they hold. For a proposal to pass, a certain number of DAO members must participate in the voting process. If the threshold is met, the decision that receives the majority of votes is implemented. It's important to note that this mechanism associates voting power with token possession, as members with a larger number of tokens have a proportionally larger voting influence. This system aims to encourage active member participation and consider the mass opinion, with the intention to maintain decentralization in voting and governance.

The creation of a new strategy within Harvest Finance involves a meticulous process. Initially, the project's reputation is analyzed, followed by a review of its tokenomics, which includes total value locked (TVL), non-monetary incentives, distribution, fees, and deflation. The smart contract is then checked for safety, and if available, a third-party audit is conducted. Once these steps are completed, a strategy for collecting and auto-compounding non-monetary incentives is created. The strategy is then released and activated, with weekly FARM non-monetary incentives provided. It's important to note that Harvest Finance covers costs related to gas, APY tracking, strategy development, and auditing. The platform does not impose fees for adding or removing assets. However, a fee is charged based on the strategy's effectiveness, which is split between the FARM Protocol non-monetary incentive pool and the Harvest resource pool.

Harvest Finance, along with numerous decentralized finance (DeFi) platforms, employs a governance token system to allocate decision-making power to its community of stakeholders. This system is designed to cultivate a more equitable and decentralized organization. The FARM token, Harvest Finance's governance token, is typically allocated to platform users for their engagement with the protocol. The more the protocol is utilized, the more governance power the token may potentially represent, as it provides protocol users the opportunity to participate in decision-making processes regarding protocol adjustments and resource allocation. The governance process in Harvest Finance involves discussion, improvement proposal, quorum, on-chain vote, and implementation. However, it's important to note that the influence of a user's vote may be influenced by their token allocation. This system is designed to encourage active participation in the governance of the platform, acknowledging those who contribute to the platform's development and progress.