Yield farming là gì asideway.com năm 2024
Yield farming is one of the most popular yield-generating opportunities in the global DeFi markets, enabling you to potentially earn above-average yields by depositing crypto in yield farming protocols. Show Read on to learn more about yield farming and how it works. This is partner content sourced from Laura Shin’s Unchained and published by CoinDesk. Yield farming refers to depositing tokens into a liquidity pool on a DeFi protocol to earn rewards, typically paid out in the protocol’s governance token. There are different ways to yield farm, but the most common involve depositing crypto assets in either a decentralized lending or trading pool to provide liquidity. In exchange for providing liquidity to these platforms, liquidity providers (LPs) earn a certain annual percentage yield (APY), which is usually paid out in real-time. DeFi projects enable yield farming to incentivize the use of their platforms and reward their community for contributing liquidity, which is the lifeblood of most DeFi platforms. How Does Yield Farming Work?While the yield farming process varies from protocol to protocol, it generally involves liquidity providers, also called yield farmers, depositing tokens in a DeFi application. In exchange, they earn rewards paid out in the protocol’s token. Yield farming rewards are expressed as APY. These tokens are locked in a smart contract, which programmatically rewards users with tokens as they fulfill certain conditions. Generally, the yield farming process works as follows:
Many DeFi protocols reward yield farmers with governance tokens, which can be used to vote on decisions related to that platform and can also be traded on exchanges. Benefits and Risks of Yield FarmingYield farming offers an opportunity for individuals to earn passive income. However, the potentially high returns also come with substantial risk. Let’s take a look at the benefits and risks of yield farming. Benefits of Yield Farming
Risks of Yield Farming
Is Yield Farming Worth It?While yield farming can be a lucrative way to earn yields in the crypto market, it is also one of the riskiest activities you can engage in. Even if you are yield farming on reputable DeFi protocols, smart contract risk, and hacks could still lead to a complete loss of funds. Moreover, your potential yield farming profits are highly dependent on the price of the protocol token you receive as your yield farming reward. Should the value of the protocol token drop, your yield farming returns could easily dwindle. Finally, the yield you receive today may not be the yield you receive tomorrow. High yields tend to compress as more yield farmers start to move funds into a high-yielding farm, affecting your returns. If you can stomach the risk, yield farming can be an exciting way to earn yield on your crypto. However, you should conduct your own research and never invest more than you can afford to lose. |