What is farming?
Yield farming is one of the currently popular ways of making money on crypto that has arisen from just as popular DeFi market.
By farming, yield farming or liquidity mining we mean a complicated concept that combines loans, staking and storage of crypto assets in protocols of various DeFi projects in exchange for getting passive income in project tokens.
💵Users (liquidity suppliers) can place their assets in project liquidity pools in order to get the reward generated by the chosen DeFi project.
Many DeFi projects issue tokens which define user’s stake in the liquidity pool.
🔐 TVL, or the total value locked, is the value in crypto blocked in smart contracts of various DeFi projects. Essentially, TVL is similar to capitalization when it comes to ordinary cryptos, but its goal is to track the total value locked in DeFi.
😐Today the TVL is $72,1B (over 5 trillion roubles)
Unlike other ways of making profit, farming can maximise the income of certain investors who hold large amounts in crypto by lending a related to DeFi projects.
Still, unlike staking, bonding and other ways of passive income, farming requires the deep understanding of DeFi principles and knowledge in smart contracts, their characteristics and the methods of programming they apply.