🔍 What is Yield Farming?
Yield farming is a process where crypto holders stake or lend their assets in DeFi platforms to earn rewards — usually in the form of additional tokens.
It’s like earning interest at a bank, but instead of a traditional bank, you’re using decentralized protocols like Uniswap, PancakeSwap, or Aave.
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⚙️ How Does It Work?
Here’s a step-by-step breakdown:
1. You deposit your crypto into a liquidity pool.
2. The pool is used to facilitate decentralized trading, lending, or borrowing.
3. In return, you earn fees or token rewards from the protocol.
For example:
You add BNB and USDT to a PancakeSwap pool. Every time someone trades using your liquidity, you earn a small fee.
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💸 Why Do People Use Yield Farming?
• Passive income: Make your crypto work for you.
• Token rewards: Some protocols give you governance or utility tokens.
• APY (Annual Percentage Yield): Some pools offer very high returns (but be careful, those can be risky).
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⚠️ Risks to Know About
• Impermanent Loss: When token prices change drastically, your pool value may decrease.
• Scams: Some projects are not legit, so always DYOR (Do Your Own Research).
• Smart Contract Risks: Bugs in code can be exploited and funds stolen.
