◈ crypto
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.
How it works
Key takeaways
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Earn rewards by providing liquidity
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Strategies involve moving between pools
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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.
