LJ Articles| 11/09/2021 | #18
The Humble Farmer
by Lorimer Jenkins, y.at/⌛🚀💎🙌
What is yield farming ?
Yield farming is the practice of staking or lending crypto assets in order to generate high returns or rewards in the form of additional cryptocurrency. In short, yield farming protocols incentivize liquidity providers (LP) to stake or lock up their crypto assets in a smart contract based liquidity pool.
What is a liquidity pool ?
In Decentralized Finance (DeFi), liquidity pools are pools of tokens that are locked into a smart contract and that facilitate efficient asset trading while allowing investors to earn a return on their holdings. They allow automated market makers (AMM) to give the best swaps.
This can provide huge returns if executed correctly, from a 3 percent yield they can usually gain 9 percent returns. How ? Well you can borrow around 3 x what you add to the liquidity pool, giving you 3 times the return.
Although this adds to the volatility of crypto due to practically the whole market being leveraged, this is a very good way of earning interest.
How can you Yield Farm ?
Woah slow down there young farmer, you have only just learnt what yield farming is.
I think the safest way to get a taste of some of these returns is to check out defipulse.
Here are the APY’s you can get on USDT, beats a bank right ;)
You can also stake your regular crypto here and earn interest on top of the money you are getting from that crypto !
Still interested in how to leverage money to earn crazy yields ?
Check out these videos : Yield farming explained, Maximize gains and Aave staking
by Lorimer Jenkins
Disclaimer : I am not a financial advisor these articles for education purposes, new articles released by 12pm BST every day.
