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What is Yield Farming?
Yield farming is earning rewards by providing your crypto to DeFi protocols — through lending, liquidity provision, or staking. APYs can range from 5% to 100%+ but carry significant risk.
Full Explanation
Yield farming (or liquidity mining) involves depositing cryptocurrency into DeFi protocols to earn rewards. Methods include: providing liquidity to DEXs (earn trading fees + token rewards), lending on platforms like Aave (earn interest), or staking in various protocols. Rewards are often paid in the protocol's native token. Higher APYs usually mean higher risk — impermanent loss, smart contract exploits, token price dumps. "Degen farming" refers to chasing extremely high APYs on unaudited protocols.
Example
Providing ETH/USDC liquidity on Uniswap earns you a share of trading fees. But if ETH price changes significantly, you face impermanent loss.
Related Terms
Last updated: 2026-03-21