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Yield Farming

Give me the basics

Yield farming is a method of earning cryptocurrency by lending or providing liquidity to a DeFi protocol. It involves locking up funds in a smart contract in exchange for rewards in the form of additional tokens or fees generated by the protocol. Yield farming typically involves higher risk, as the value of the tokens earned may fluctuate, but can also offer higher returns than traditional methods of earning interest on cryptocurrency holdings.

In-depth explanation

Yield farming has emerged as a popular way for crypto investors to earn passive income by staking their assets. It involves locking up cryptocurrencies in smart contracts in exchange for rewards in the form of additional tokens or fees. These rewards are generated by DeFi protocols, such as lending platforms and decentralized exchanges, that use the locked-up funds to generate returns. Yield farming can be risky due to the volatility of crypto prices and smart contract vulnerabilities, so investors should always do their research and use caution when participating in these programs.