What is Yield Farming?

What you’ll learn:

Yield Farming describes the range of opportunities within DEFI (decentralised finance) to generate a return on your cryptocurrency rather than leave it sitting in a wallet. DEFI is an umbrella term for a new breed of permissionless financial services built on blockchains like Ethereum and Solana.

The cryptocurrency ecosystem consists of thousands of coins and tokens with varying use cases. Some function as money, while others provide utility within a game or a specific service. Their value is constantly changing based on the perception of future adoption. While many people will passively invest – buy and hold – waiting to realise the value in the long term, others want to unlock potential value now. 

DEFI enables this through decentralised versions of traditional financial services, such as lending, borrowing and swapping, as well as opportunities unique to crypto, such as providing liquidity for decentralised exchanges. 

Yield farming is a way to mix and match the opportunities presented by DEFI to actively grow your cryptocurrency portfolio, chasing different levels of return based on risk and complexity.