What is the difference between Staking and Yield Farming? Which is better?
Both concepts aim to achieve passive income from cryptocurrencies, but the mechanism of action differs:
🔹 Staking:
It involves locking your coins in a network that relies on Proof of Stake (PoS), such as Ethereum or BNB Chain, to help secure the network.
You receive fixed rewards for your participation.
🔹 Yield Farming:
It requires depositing your assets in decentralized finance protocols to provide liquidity.
The rewards are often higher, but they are more volatile.
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📊 Comparison:
Item Staking Yield Farming
Risk Relatively low Relatively high
Return Fixed or variable Variable and can be high
Duration Flexible or fixed Often short or according to the protocol
Technique Simpler More complex
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✅ Summary:
🔹 Staking is suitable for beginners
🔹 Yield Farming requires experience and risk tolerance
📌 In the next lesson: What are digital wallets? What is the difference between hot and cold wallets?