Passive income What's Yield Farming?

Suba

Moderator
Staff member
What's Yield Farming?
In simple language, Yield Farming is an activity to store and lend cryptocurrencies in smart contracts. People who save funds/crypto in yield farming are called Liquidity Providers (LP). So the Liquidity Pool is a smart contract that contains cryptocurrency, so the Liquidity provider will lend it to other parties who need your crypto. Of course you will get Yield or rewards after the smart contract mission is fulfilled. To date most of Yield Farming is run on the Ethereum ecosystem with the Yield token ETC-20. Although this application can run on any blockchain that can read smart contracts.

How Yield Farming Works
Not every Yield Farming offers the same method, so it has different specifications, so we need to understand the lock period and the rate of return. Although the way yield farming works is almost the same, like we have to lock cryptocurrencies in smart contracts. We can also lock crypto in the Public Pool, so other users can borrow, and we will earn interest.

Risks in Yield Farming
Although it rarely happens, such as an error when entering a smart contract that will create a gap so that your protocol is easily hacked, the risk can also occur when crypto is locked in the smart contract protocol, there is a decline in prices in the market.

Yield Farming Scam
According to the data I obtained, some liquidity pools will provide yields or rewards above 20% per annum. Usually rogue liquidity pool developers will apply very high crypto conversion fees. There are also pools that offer to exchange your crypto for worthless tokens with very high returns. but in reality it didn't happen. Although not all Yield Farming is a scam, but we must have our own way to avoid it, So how do you avoid Yield Farming Scam?
 

Jasmine

VIP Contributor
I don't do Yield Farming and Yield Farming is definitely not a Scam. However, Yield Farming does have high level of risks because of hacking, mistakes in entering details etc. Sometimes Yield Farming also looks like HYIP or Ponzi scheme where old investors are paid with the money from the new investors
 

Mika

VIP Contributor
I have never used yield farming, however, have used a similar service. Nexo.io pride itself as a cryptocurrency bank., it not only provides interest on your crypto deposits but also offers loan by using your cryptos as collateral. Celsius is also another good platform that offers interest on crypto deposits.
 
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