Yield Farming is a way to make money on existing cryptocurrencies. This process is often confused with mining, but it is worth noting that they are different from each other. Yield Farming implies such a transition of the cryptocurrency already owned by the trader in order to ensure the emergence of new units. To this end, participants in the cryptocurrency market implement many processes that allow the most productive use of cryptocurrency, and not just buy and sell it. Some cryptocurrency market experts call Yield Farming liquidity mining. It should be noted that Yield Farming is one of the most profitable and liquid sources of income when compared with other areas of the financial market.
It is no secret to anyone that cryptocurrencies and earnings on them are one of the most interesting and relevant areas of the future. Let’s take a closer look at what Yield Farming is and how to make money on it.
How does Yield Farming work?
It all started with the fact that crypto traders were offered a small percentage of the commission for each transaction in order to increase the liquidity of this or that application (for example, Uniswap or Balancer). But the method of mining tokens using DeFi applications has become the most popular. In fact, with the help of Yield Farming, you can earn money by investing in certain projects, receiving cryptocurrency in return.
Yield Farming boomed in the summer of 2020, and Compound has figured in this process. Its management has announced plans to issue an application governance token called COMP for use by program borrowers and lenders. It was this news that enabled the company to rise to the top in the DeFi rankings. The more complex the strategy for placing tokens in the application protocol chain for the farmer, the more profit he receives.
Today, traders from the Yield Farming chain choose virtual currencies such as Tether, Dai, USD Coin or Ether. Experts justify this choice by saying that using these stablecoins and tokens allows you to track profits in the easiest and most profitable way.
What will Bolide bring to the Yield Farming market?
The blockchain industry is expanding exponentially. An increasing number of fundamental projects are emerging, each of which immediately creates many DeFi solutions. Landing protocols and decentralized exchanges need staked crypto and therefore offer excellent annual interest to attract investors. We at Bolide have come up with a neural network-based algorithm that analyzes similar projects in several blockchain networks, choosing the most reliable options with high profitability. This allows us to offer a competitive APY without putting our users at risk.
Conclusion
Yield farming and automated strategies created by yield aggregator protocols are complex topics that involve many risks because of the number of protocol layers users interact with when depositing their tokens on a vault. If proper research and management of vaults are done, one can get pretty good returns on their money, which traditional finance platforms simply do not offer.
