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Yield Farming

Earning rewards by providing liquidity to DeFi

What is Yield Farming?

Lending or staking crypto in DeFi protocols to earn returns, tokens, interest, or trading fees. High APRs attract capital but often come with high risk. For marketers, yield farming programs are essentially user acquisition campaigns with a financial incentive attached.

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In plain words

"Planting seeds in multiple fields — move your capital wherever the harvest is richest. High reward, high attention required."

How it works

Key takeaways

  • Earn rewards by providing liquidity

  • Strategies involve moving between pools

  • Impermanent loss is the main risk

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Real-world example

You provide DOT/USDC to a pool on Acala. You earn trading fees + ACA incentives. You stake those rewards into another pool to compound.

Related terms

DeFi

Decentralized Finance

Liquidity

How easily an asset can be bought or sold

Staking

Locking tokens to earn rewards and secure networks

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