Moving capital between protocols to maximize on-chain returns from incentives, fees, and interest.
Yield farming often involves providing liquidity, staking LP tokens, or looping collateral to earn token incentives. Risks include impermanent loss, smart contract bugs, and incentive dilution.
"They provided liquidity to a DEX and staked the LP token to farm additional rewards, monitoring APR as incentives decayed."
All terms and definitions may update as the Cryptionary improves.