Yield Farming

Yield Farming is a method for maximizing profits in the cryptocurrency market by lending or staking cryptocurrency assets. In this process, users are rewarded for providing liquidity to decentralized finance (DeFi) protocols. Users put their assets in the liquidity pools and earn rewards in the form of tokens.

Yield farmers can calculate their estimated profits using the annual percentage yield (APY) metric. Yield farming is profitable, but it is also risky. There are multiple risks associated with it, such as liquidity risk, regulatory risk, price volatility, smart contract bugs, and technical risks.