Yield Farming
a.k.a. Liquidity mining, Farming
Moving crypto between DeFi apps to earn the highest rewards from lending, providing liquidity or collecting bonus tokens.
Yield farming means putting your crypto to work in DeFi to earn more of it. You might deposit tokens into a liquidity pool to earn trading fees, lend them out for interest, and collect extra reward tokens the protocol hands out to attract deposits. Farmers hop between apps chasing the best rate.
Advertised yields can look enormous, but they're often paid in a project's own token, which can crash as farmers sell it. Add in smart contract bugs, rug pulls, the hidden cost of pool price swings and stacked money legos, and a juicy percentage can turn into a loss fast.
Comparing yields by the headline percentage alone. A 300% yield paid in a token that falls 90% is a loss.
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