ent of which is Yield Farming, a highly profitable form of cryptocurrency lending. Yield farming explained it (yield mining) is a way to earn more cryptocurrency from the cryptocurrency itself. Specifically, it’s you lending your money to others through computer programs called smart contracts. In return, you can earn interest in the form of cryptocurrency. Pretty simple right? However, there is much more we can learn.
Those who want to do Yield farming will use very complex strategies. They move their cryptocurrencies between different lending markets to maximize their profits. They will also keep the best yield mining strategies secret. The reason why? The more people know about a strategy, the less effective it becomes. Increasing yields is the fertile ground of the decentralized finance (DeFi) sector, where farmers compete for the chance to grow the best crops.
However, many people are still wondering whether to play Yield Farming? Are there any risks?
Yield Farming, abbreviated as YF, or more commonly known as liquidity mining. Imagine, your cryptocurrency is an asset, a farmer’s seed. Thanks to existing assets, you will provide liquidity for Defi protocols to generate profits.
Specifically, you will lock crypto assets in an instrument and get rewarded. Because the terms in the crypto investing world are figurative. So Yield Farming users refer to each other as “Farmer”.
With traditional finance, when investors deposit money in a bank, they lend the deposit to the bank and receive a percentage interest based on the amount deposited. With Yield Farming, investors will lend their own cryptocurrency, in return they will receive fees and interest.
However, in the crypto world, fees and interest are not as important as the fact that investors are involved in lending/lending transactions with newly issued cryptocurrencies.
This is to say that for Yield Farming, investors get high returns if the cryptocurrency they lend rises in price. So it is not difficult to understand why Yield Farming attracts so many investors.
Is it good to invest in Yield Farming?
In general, yield farming is any attempt to put crypto-assets to work and generate the highest possible return on assets.
At the simplest level, the yield farmer moves assets in the Compound, continuously chasing whichever pool is providing the best APY from week to week. That means they sometimes run into riskier pools, but the yield farmer has the ability to handle the risk. Maya Zehavi, a blockchain consultant said: “Farming brings new arbitrage that can spread to other protocols that have tokens in the pool.”
Running a bank won’t take a lot of money? Well, you don’t read that wrong because DeFi can do that. In DeFi, money is mainly provided by strangers on the internet. That’s why the startups behind the decentralized banking app come up with smart ways to attract HOLDers with idle assets.
Yield farming Ethereum-based credit markets are offering new strategies for crypto owners to earn incredibly attractive returns on their cryptocurrency, at least a hundred times higher than a traditional bank would offer. Yield farming also offers higher profits than almost any other traditional investment channel, from real estate to stocks and bonds.
Yield farmers can also turbo-charge their returns with liquidity mining. They receive tokens from the company borrowing their funds, in addition to the high interest on their loan.
How to effectively exploit liquidity?
Yield Farming is closely related to the Automated Creation Market (AMM). Liquidity providers deposit funds into pools to earn rewards. Therefore, LPs should choose reputable exchanges with diverse user networks.
For the most part, the prominent stable coins and top cryptocurrencies are the assets used to deposit into the pool. The second piece of advice, you should choose a broker with multiple liquidity pools. Typically Uniswap, 1Inch, Pancakeswap, etc.
In addition, all distribution rules will depend on the specific implementation of the protocol. The bottom line is that LPs get rewarded based on the amount of liquidity they are providing to the team. Therefore, it will also be important to consider transaction fees and how rewards are distributed.
In addition, you also need to learn the risks when Yield Farming in a pool to avoid losing money. One big risk comes from smart contracts with limited budgets. This can increase the risk of smart contract failure.
A second risk is vulnerabilities in protocols. We think you should not deposit all the money you have. Think of it as an investment and manage your capital in the worst-case scenario.
Yield farming list potential
Uniswap is a DEX exchange that makes headlines in 2020. LPs stake an equivalent value of two tokens to create a pool. With its diverse pools, Uniswap is a popular choice for many liquidity providers.
Maker is a decentralized credit platform whose native token is DAI. Liquidity providers use Maker to mint DAI or use it in Yield farming strategies.
Recently, Aave yield farming seems to be quite interesting when it is chosen by many “farmers”. Aave is a decentralized protocol for lending and borrowing. By offering a wide selection of pools, Aave is also a name of interest when it comes to farming.
PancakeSwap is an AMM-based exchange that runs on the Binance Smart Chain. The decentralized exchange protocol has surged to the top in the DeFi space. The current 24 hours trading volume is 400 million USD, LPs can provide liquidity to get CAKE.
Curve Finance is a decentralized exchange protocol. It is specifically designed for efficient stable coin swaps. Pool Curve is an important part of the platform’s infrastructure.
Venus is a decentralized lending and borrowing marketplace that runs on BSC. A special feature is that the interest earned can be used as collateral to borrow more properties or to mint VAI.
Deposit crypto to get more crypto with crazy growth potential x100 x1000. This attractive profit caused a massive influx of money outside the market.
Try to imagine just buying coins to farm, the coins will increase, take it to the farm and have new Tokens, the value of the Tokens will increase continuously, compound interest, etc. Then no matter who you are, you can’t just stand by looking OK. This attraction makes YF hotter than ever. Yield Farming is a popular protocol that makes you profitable. However, you need to carefully study the pools of each platform to avoid the risk of losing money. Consider the Yield farming list to choose the right platform for you.
THE BASIC FARM PROCESS AS FOLLOWS:
Preparation: Must have a Defi wallet created with Defi Wallet apps such as Coin98 Wallet, Metamask, Trustwallet…
B1: Buy 1 pair of coins you want to farm in that system (BSC, Solana, Heco, Polygon…)
B2: Go to liquidity add that coin pair to get IP token
B3: Go to the farm and click add the newly received lp token above and you’re done
B5: when not farm anymore, withdraw lp token, then sell that token through liquidity.