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What Is Yield Farming?

One of the new concepts that has emerged is yield farming. It’s a new way to earn rewards with cryptocurrency holdings using permissionless liquidity protocols. It allows anyone to earn passive income using the decentralized ecosystem of “money legos” built on Ethereum.

Yield farming, also referred to as liquidity mining, is a way to generate rewards with cryptocurrency holdings. In simple terms, it means locking up cryptocurrencies and getting rewards.

In some sense, yield farming can be paralleled with staking. However, there’s a lot of complexity going on in the background. In many cases, it works with users called liquidity providers (LP) that add funds to liquidity pools.



Yield Farming on DeFi: Beginner’s Guide to Earning Interest on Your Crypto

Yield farming is the process of earning a return on capital by putting it to productive use…
Money markets offer the simplest way to earn reliable yields on your crypto…
Liquidity pools have better yields than money markets, but there is additional market risk…
Incentive schemes can sweeten the deal, giving yield farmers an added reward…



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