Tuesday Education: Yield Farming vs. Staking - What’s the Difference?
Although both generate passive income, they are fundamentally different. Staking (e.g., $ETH) involves locking your tokens to help secure the network, usually with lower risks. Yield Farming (e.g., providing liquidity in $CAKE) involves depositing assets in DeFi protocols to earn fees and rewards, with higher risks such as Impermanent Loss (IL). Understanding the difference is crucial to align your investments with your risk profile.
What is your risk profile? Click on ETH (Staking) and CAKE (Farming) to compare the yields and risks of each.