In the world of cryptocurrency (crypto), since the appearance of DeFi, there has emerged another term called “Yield farming”.
Nowadays, the buzzword “Yield farming” is being widely used as a term, a new trend in response to the “madness” of the DeFi world. Users are “planting” native assets to “harvest” DeFi tokens of increasing value.
So, What is yield farming, and how you can profit from it? Let’s find out!
What Is Yield Farming?
In crypto “agriculture”, for farmers, “yield” means crop yield, which is a measure of the total amount of agricultural products they harvest. Here, “farmer” is the user, “yield” is the interest they earn on the principal assets they deposit on the base assets such as Dai, USDC, and USDT as they are put into the exchanges. DeFi platforms like Compound, Aave…
Yield Farming is the term for those who generate as much return as possible from their invested assets by providing liquidity for DeFi (Decentralized Finance) protocols.
To be more specific, Yield Farming is a method of earning interest and transaction fees on the DeFi platform. Investors who deposit into the liquidity fund of a coin pair will receive a portion of the fee when the user converts those two units.
Why Are Investors Attracted To Yield Farming?
With traditional finance, when investors deposit money in a bank, they lend the deposit to the bank and receive a percentage interest based on the amount deposited. With Yield Farming, investors will lend their own cryptocurrency, in return they will receive fees and