The world of cryptocurrencies, blockchain and DeFi is one filled with all sorts of opportunities to earn an income. While many would prefer to simply hold on to dear life when it comes to various crypto assets (also known as ‘hodling’), there are nonetheless those that actively seek out new ways through which these digital assets can be utilised to earn a source of income. One of these ways is through yield farming, but as is the case with any investment strategy, it is imperative to understand what this method actually entails and how traders can get involved with it.
What is yield farming?
The concept of yield farming is not new by any means, and it has become fairly commonplace in this industry. In simple terms, yield farming can best be understood as a viable investing method in the DeFi sector. It involves staking or lending various cryptocurrency assets in exchange for certain incentives pertaining to interest or transaction fees. Many have often said that yield farming is quite similar to staking primarily due to the fact that both would normally require users to hold a certain amount of tokens or coins in order to earn substantial profits. A sizable portion of investors therefore view staking to be a key component of yield farming.
Of course, there are all sorts of exchanges through which traders can participate in yield farming, with some of the more popular choices including but not limited to Uniswap, 1inch, SushiSwap, PancakeSwap, and Bitrue which actually introduced a new yield farming hub on its platform not too long ago.
Can yield farming really be profitable?
In the end, whether or not investors are able to take advantage of the various features and opportunities provided by yield farming really depends on their respective abilities, knowledge, risk appetite, budget and overall expertise. As it is with nearly all aspects related to the crypto industry, the traders with the most experience and appetite for risk are usually the ones who reap the most benefits.
With that being said however, one thing is clear and that is the fact that yield farming is not going anywhere for the time being nor is its popularity decreasing any time soon. The aforementioned new yield farming hub provided by Bitrue is a prime example of this, as it offers staking opportunities with APYs of over 150% as well as capabilities regarding loans, futures, voting rights, lockups and more. Needless to say however, no investment strategy is without risk and so investors are always encouraged to conduct their own research beforehand in order to mitigate the chances of incurring a loss.
David is a crypto enthusiast and an expert in personal finance. He has created numerous publications for different platforms. He loves to explore new things, and that’s how he discovered blockchain in the first place.