🌾 “What is Yield Farming?” Understand it like this: it's like depositing money to earn interest, but it’s “growing money” on the blockchain!
You’ve probably deposited savings in a bank to receive monthly interest, right?
In the world of crypto, you can also “deposit money” into DeFi protocols to receive rewards. This action is called Yield Farming, or “growing profits.”
💡 Simply put:
Yield Farming = putting tokens into a “field” (DeFi protocol) → receiving other tokens as rewards.
For example:
You deposit USDT and BNB into Uniswap → providing liquidity for others to trade.
You will be rewarded with the project’s tokens (e.g., UNI, CAKE...).
You can reinvest those tokens → “farm on top of farm” → maximize profits.
💰 Some popular forms:
Liquidity Providing
→ Deposit tokens into a pool for others to swap → receive fees + rewards.
Staking tokens for interest
→ Lock tokens up, earn rewards over time.
Farming in pairs
→ Deposit two types of tokens (e.g., ETH/USDC) to receive reward tokens.
⚠️ Be careful:
Impermanent loss: Temporary loss of value when the price ratio of two tokens fluctuates sharply.
Scam farm: Many projects “bait” with high APY but are scams.
High gas fees: Some blockchains charge very high fees for farming (especially native Ethereum).
✅ In summary:
Yield Farming is a way to “grow money” on the blockchain where you deposit tokens into the DeFi system to “harvest” rewards, similar to saving but with much higher profits (and risks)!
