STRATEGIES
Yield Farming
Definition
Yield farming is the practice of maximizing yield on a given asset, usually by staking sources. Farmers typically provide liquidity, lend assets, or (re)stake tokens to earn yields in the form of interest, fees, or reward tokens.
Example
Example
A yield farmer might provide ETH/USDC liquidity on Uniswap, stake the LP tokens on a rewards platform, and use the earned tokens in another protocol for additional yields.
Risks to Consider
Risks
- Smart contract risk
- Impermanent loss
- Token price volatility
- Rug pulls
Common Questions
Is yield farming profitable?
Yield farming can be profitable but involves significant risks including smart contract vulnerabilities, impermanent loss, and high gas fees. Success requires careful research and risk management.
