31 May What Is Yield Farming?
Yield farming is one of the elaborations of the digital currency ecosystem, and specifically, the Decentralised Finance (DeFi) world. Yield farming entails depositing one’s funds into a smart contract address where it is locked up and deployed for various DeFi activities, including lending, borrowing, or staking, to generate revenue or rewards.
Typically, the returns from yield farming are paid through other digital currencies or tokens. So, in the cases when the prices of the locked tokens and the tokens in which the rewards are earned increase, the entire yield farming venture becomes extremely profitable. Yet, yield farming is surrounded by controversies. Particularly, the issues related to its sustainability are beginning to weigh in on the entire narrative surrounding this offshoot of DeFi.
Published by Adam O’Neill in Finance Monthly.