Yield farming is an investment strategy, which investors use to generate passive income on their cryptocurrencies. DeFi yield farming is becoming an everyday discussion among investors who are looking to earn a lot more cryptocurrency in the Decentralized Finance space due to the percentage yield that it provides.
How investors get benefited through yield farming?
It involves lending or staking your cryptocurrency coins or tokens to get rewards in the form of transaction fees or interest. This is somewhat similar to earning interest from a bank account. Here, Investors get interest through APR method. (Annual Percentage Rate).
APR = [(Fees + Interest)/Principal] x (Number of Years) x 100.
This yield will typically be paid out in crypto.
Get to know about top DeFi yield farming options
Best Yield farming platforms will return High APR for longer-term investments in fee-earning. Every investing platform has its own advantages and risks.
PancakeSwap (CAKE) is a decentralized exchange launched in 2020 and is based on the Binance Smart Chain.
PancakeSwap has several yield farms, and all of them require you to stake two tokens in order to get LP tokens that correspond to that farm.
Through the LP tokens you collect from depositing tokens into your liquidity pool, you can earn rewards in the form of CAKE tokens.
Uniswap is one of the largest decentralized cryptocurrency exchanges and DeFi platform, which allows users to earn interest on their crypto holdings by using its liquidity pools.
It is Ethereum-based and allows users to swap ERC-20 tokens. Its gas fees can be high because it is Ethereum based, but it does not require any identity verification or sign-ups to use the app. Various platforms are working to improve the protection factor for Uniswap Yield Farming.
Hayden Adams who is Inventor of the @Uniswap Protocol tagged Announcement of the launch of @eulerfinance Uniswap Oracle Attack Simulator! “The Euler devs are excited to debut a new tool for users to simulate and quantify attack risks on @Uniswap V3 TWAP price oracles. -”
Curve Finance is a decentralized exchange built on top of the Ethereum blockchain and is specifically designed to provide efficient trading between cryptocurrencies of the same value and provide high annual interest returns on any cryptocurrency funds deposited by liquidity providers.
There are columns within the platform that will show you different APY you can gain by providing liquidity to each pool, alongside the assets you will get in return, assuming you do get any.
Aave is a cryptocurrency-based lending protocol which permits users to earn interest on deposits and borrow assets. Users will be able to deposit stable coins into Aave and collect yield ranging from 4.78% up to 13.49%, which can be added to their current earnings in the form of staked AAVE. The DeFi lending pool is open-source and enables customization for developers.
Sushi Swap is a decentralized exchange which makes use of the automated market maker (AMM) model to make it possible for users to trade cryptocurrency tokens. Liquidity providers are provided Sushi Swap Liquidity Pool Tokens (SLP tokens). There are also other sushi-based incentives, such as swapping, liquidity pools, staking, and more.