A Guide to Yield Farming on Ethereum Yield Farming.

What is ethereum yield farming. Ethereum has been the poster child of DeFi or decentralized finance where more than 60-billion in total liquidity is locked at the time of writing in the many services and platforms that are built and powered by its blockchain. Yield farming is built upon Ethereum. The hot new term in crypto is yield farming a shorthand for clever strategies where putting crypto temporarily at the disposal of some startups application earns its owner more.

The term got popularized by the DeFi community in the summer of 2020 through the launch of various different projects such as Yearn Sushiswap and Yam Finance. While this might change in future. To start yield farming your checklist is pretty simple.

Why is it generating so much buzz. Essentially youre adding liquidity to a platform and earning rewards in the form of interest for doing so. What is yield farming.

In yield farming campaigns governance tokens are rewarded to users who supply and use these protocols. Yield farming is a popular topic in the DeFi space for some time now. This innovative yet risky and volatile application of decentralized finance DeFi has skyrocketed in popularity recently thanks to further innovations like liquidity mining.

Lets start with a simple statistic. With yield farming the concept is the same. Yield farmers have several ways of earning income including staking lending and providing liquidity.

In return for your service you earn fees in the form of cryptocurrencies. Yield farming is normally carried out using ERC-20 tokens on Ethereum with the rewards being a form of ERC-20 token. Yield farming rewards are calculated annually meaning theyre displayed as the returns that you could expect over a year.