Yield Farming

Definition:

A phenomenon that appeared during DeFi summer, took the crypto world by storm and continues to this day. It is all based around liquidity. Lock up your funds and receive what in tradfi would be called interest, here we call it yield. The protocol uses your locked funds, you get yield in the form of “worthless governance tokens” or some other type of token benefit. But with the composability of Ethereum DeFi, this escalated quickly. Tokens deposited in one protocol received rewards that could be in turn deposited, yielding further rewards and in single transactions enormous yield could be generated. Decentralised management services popped up, the most famous being Yearn finance that provided managed, optimised yield strategies, moving your tokens between multiple protocols to generate the highest yield. Of course being the wild west of crypto.. scams and exploits abound in parallel to the “genuine” yield farms. Yet always the question arises… where is the yield coming from? A famous person who we cannot remember once said.. “If you can’t explain where the yield is coming from, you are probably the yield”. Just like pimping and many of life’s pleasures, yield farming ain’t easy… but it sure is fun.

Degen Chat

Degen 1: “I just deposited ETH into LIDO, got stETH, deposited in Curve for LP tokens, getting yield from those. And of course got stables working for me in some degen protocols.”

Degen 2: “You lost me, this is some serious @Andre Cronje level shit you got going on!”