What Is Yield farming?

Yield farming is a passive trading strategy in decentralised finance.

Usually yield farming strategies rely on on-chain liquidity pools and liquidity mining token distributions, which where any tokens are immediately sold. Strategies can be auto-compounding.

Yield farms operate solely on smart contracts and their strategies are limited. Often yield is not real yield.

Yield farms almost always aim for risk-free rate against their quote token.

See also

• Passive strategy

• Exposure

• Smart contract

• Decentralised finance

• Trading strategy

• Risk-adjusted return

• Market neutral strategy

• Token distribution

• Liquidity mining

• Mercenary capital

• Real yield