Yield farming is one of the most popular activities in the world of decentralized finance (DeFi). It involves staking or lending cryptocurrencies to a decentralized platform and earning interest or rewards in exchange.
Yield farming is one of the most popular and lucrative ways to put cryptocurrency holdings to work and generate passive income. The process involves finding the most rewarding opportunities by lending liquidity to popular token pairs in exchange for yield or rewards measured in APYs (annual percentage yields).
Some of the most popular yield farming protocols or platforms in the DeFi market include Aave, Uniswap, PancakeSwap, Curve Finance, and Venus. The lucrative investment strategy of yield farming does carry significant risks, however.
Investors could experience losses while performing such operations in the event of extreme market volatility, rug pull scams, smart contract vulnerabilities or even face the risk of impermanent loss. One way to limit exposure to such threats is to stay updated about the constantly evolving farming techniques to find the best opportunities to offer the highest APYs in the market.