Guide
What Is Yield Farming? Earning Yield in DeFi (and the Risks)
Bottom line: putting your crypto to work
Yield farming means depositing crypto into DeFi services to earn a return — interest, reward tokens, or trading fees. The "farming" metaphor is about making assets productive.
Key points
- Common forms: lending, and providing liquidity to pools
- Rewards often combine interest plus governance/reward tokens
- Advertised APY changes constantly and carries real risk
Common approaches
- Lending — lend assets to earn interest
- Liquidity providing — deposit a pair into an AMM pool and earn trading fees
- Staking-style — lock tokens in a protocol for rewards
Risks
High APY is a risk signal
- Impermanent loss when providing liquidity
- Smart-contract bugs and hacks
- Reward-token price falling, crushing real yield
- "Rug pulls" and other scams
Always ask where the yield actually comes from — not just how big the number is.
Not financial advice
This article is for information only and is not investment advice. Crypto assets are volatile and carry risks including hacking. Do your own research and only use money you can afford to lose.
This article is informational only and is not financial, investment, or trading advice. Prices are reference snapshots and may be outdated. Always do your own research.
