If you’ve been following the cryptocurrency trend, you might have heard of yield farming. It lets people earn more cryptos but without the hassle of mining. Still, this method poses many risks, especially if you don’t know what you’re doing.

We’ll start by talking about the details of yield farming, specifically how it works. Then, we will explore its potential upsides and downsides. We will also compare it to staking and see how else you can profit from crypto.

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First, we had mining, then staking, and now we have yield farming. Many people promise these to be great ways to earn passive income from cryptocurrency. Yet, you must be careful of their potential risks or lose a lot of money.

What is yield farming?

What is yield farming?

Have you ever used a crypto exchange platform? As the name suggests, it’s made up of two cryptos. You can choose from various trading pairs. Examples include BTC/USDT and DOT/ETH.

The crypto platform needs to have a ready supply of these coins at all times. When you buy or sell, it has to give you a corresponding amount of a specific coin.

Where does it get the supply? It comes from a liquidity pool or LP. Decentralized exchanges (DEXs) allow people to deposit cryptos in them. In return, the investors get more of that crypto.

This is the gist of how yield farming
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