Yield Farming
defi · strategy
Actively moving crypto capital across protocols to earn incentives, fees, interest, or other on-chain rewards.
Yield farming is a DeFi strategy that seeks returns by supplying liquidity, staking LP tokens, lending assets, borrowing against collateral, or combining protocols. Strategies often change as incentives and risks change.
Farming returns can be offset by impermanent loss, liquidation, smart contract exploits, bridge risk, reward dilution, and gas costs. The advertised APY may change quickly as more capital enters the strategy.
Related terms
DeFi
→DeFi uses smart contracts to provide permissionless financial services such as trading, lending, borrowing, and asset issuance.
blockchain · finance · concept
Decentralized Exchange
→A decentralized exchange (DEX) lets users trade digital assets from their wallets through smart contracts or peer-to-peer settlement.
trading · exchange · blockchain
Liquidity
→How easily an asset can be bought or sold in size without causing a large price move.
finance · trading