Yield farming is a way of using your crypto to make more crypto out of it,
It includes using the power of Smart Contracts to lend funds to others. You will receive payments in the form of crypto in exchange for your service. Just pretty simple, huh? Ah, not so easy. Yield farmers use very complicated strategies. They always move their cryptos between various lending marketplaces to maximize their returns. They will also be very discreet about the best methods for farming yields.
Why? For what? The more people know about a strategy, the less it may become significant. Yield farming is the wild west of decentralized finance, where farmers are competing to have the opportunity to grow the best crops.
If you follow DeFi, you’ve probably noticed that the idea of yield farming seems to be all around us lately. And some of the most original memes in the ethereum network to conventional news sources such as Forbes, crop rotation has been one of the defining practices on Defi by 2020 to optimize yield through protocols.
Yield farming utilizes various DeFi protocols and goods to earn a yield or return on their properties, often achieving returns well above 100 percent APY through a mix of borrowing interest and token rewards. The latest crop yield boom has made total value Locked to new all-time highs on Defi, zooming well past $2B.
Yield farming seems to have enormously affected protocols such as Compound, Balancer, Curve, MCDEX, and Uniswap V3 because Defi users are trying to cash in on the trend. That frenzy brought to light some critical questions. Will short-term experimental use of the Ethereum Network be considered an indication of long-term adoption?
In agriculture, yield (also known as “agricultural productivity” or “agricultural output”) is a measurement of the quantity of a crop produced or commodity produced, such as wool, meat, or milk, per unit of land. One other way to calculate agricultural productivity is by seed ratio.
New technology, such as fertilizer use, better farming tools, modern farming methods, and crop improvement variations, have boosted yields. The higher the yield and the more intensive use of the farmland, the higher a farmer’s productivity and profitability; this increases farming families’ well-being.
Selling or bartering surplus crops not needed to feed the family is possible based on subsistence farming when a farmer grows grain or feeds the more draught animals, such as horses and oxen, that can be supported and utilized for employment and manure manufacturing.
Increasing crop yields also necessitate fewer hands-on farms, freeing them for industry and trade. This, in turn, resulted in the establishment and growth of cities, resulting in higher prices for food or other agricultural products.
Lending and borrowing protocols
Compound and Aave are the critical protocols for lending and borrowing at DeFi. The two next to each other represent $1.1 billion in loans and $390 million in borrowing. The best way to profit in Defi is by lending funds to financial markets.
Deposit a stablecoin to one of the two, and you’ll instantly begin earning returns. Aave usually has better prices than Compound, allowing borrowers to select a fixed interest rate rather than a variable rate. For borrowers, the fixed rate appears to be higher than the variable rate, raising the lenders’ marginal return.
Make Money on Defi?
The way people communicate with their money is shifting with decentralized finance (DeFi). We do know, and it could be a lot to process. Don’t panic; we’ve brought this short guide article together to boost you quickly.
By following those top 4 steps, you can make some money on Defi. If you are familiar with Ethereum, those steps will take just a few minutes. And when everything is said and done, you’ll earn interest in DAI every block.
But if you’re new to Ethereum, you might also want to check out Zero to Defi, a beginner’s guide that breaks down the whole process of having a wallet, acquiring ETH, and renting out your DAI.
Here are 4 steps to follow:
- Get ETH into an address that you own
- Head to DEX.AG and sell most of that ETH for DAI
- Go to Defi Pulse’s Earn Income page
- Pick a lending protocol, and start earning interest
And then later if you are prepared to withdraw money. Hit back to your chosen lending protocol and use your private key to unlock the DAI plus interest generated whenever you want to.
You wouldn’t have to wait for any “lock-in” period before you earn interest. Every block of your DAI makes interest until you choose to stop.
- Learn more about Smart Contracts and the tool used to build them.
- See how blockchain is disrupting traditional industries.
- Check how Cardano performs as a Smart Contract platform
Warning and Disclaimer
The information provided in this post is for general advice only. please, take into consideration your objectives, financial situation, or needs. The information on this website is not a substitute for financial advice. Use the information contained in this post at your own risk.