Yield farming: simple definition

 

https://play.google.com/store/apps/details?id=io.birdchainapp.app

A real alternative to the traditional financial system, DeFi (decentralized finance) is very popular.

 Its interest is partly explained by the emergence of a new trend in the world of cryptocurrencies: Yield farming. 

What is Yield farming?

Yield farming, literally "yield farming", is an approach that uses several strategies to optimize the returns generated by cryptocurrencies.

This is a process in which users provide liquidity to DeFi protocols, and are rewarded with a return, in the form of tokens. 

The Yield farming phenomenon is explained by the growing interest in DeFi, and the massive influx of liquidity in money markets such as Compund. 

The initial idea of ​​the protocol was very simple: to connect lenders and borrowers. 

The platforms use a liquidity pool system allowing lenders to provide assets to the market, and users to borrow in this market. 

Related: The Bird ads platform allows you to runs target ads and only pay when you get clicks.

Get started today: https://blog.birdchainapp.com/birdchain-ad-platform/

In addition to the interest rate and commission charged on each transaction, liquidity providers are remunerated in tokens. Tokens are valued by the market, and can be sold or kept. 

The returns are so large that they prompt users to provide liquidity in order to prime the financial resources of a new decentralized finance protocol. It is this double reward that gave birth to the term Yield farming. 

The Yield farming trend then became more democratic with the creation of new DeFi protocols and the evolution of strategies.

 Now, users are trying to take advantage of the interweaving of different DeFi applications, with the goal of accumulating rewards.

What is farming in the crypto world?

In cryptocurrencies, farming, or agriculture, consists of depositing units of virtual currency in a liquidity pool on a DeFi protocol, in order to benefit from rewards. Lenders are rewarded in the form of tokens, governance tokens. 

Related: A great app that allows you to engage with content and get rewarded

These tokens give their holders the right to take part in decisions relating to the protocol through votes.

 The most well-known platforms to have offered a native token to liquidity providers are Compund with its COMP token, and Balancer with its BAL token. Yields are often very attractive to liquidity providers, as DeFi protocols need resources to grow.

The concept of farming is fueled by Liquidity Mining's incentive strategy, cash mining.

 The users, the "farmers", then find clever ways to cultivate these tokens, by borrowing less used tokens and lending them to the platform. The exploitation of these tokens makes it possible to obtain a better return than the only interest rate. 

In order to maximize returns, users repeat this process on other DeFi applications.

 
Other articles

Diffrence between,token,altcoin,cryptocurency

which crypto to invest in 

A selection of games that pay crypto

Comments

Post a Comment

Popular posts from this blog

Selection of games using cryptocurrencies or blockchain

Image
    Introduction What is the point of using the blockchain to play a video game ? There are many reasons: Accumulate cryptos Have full possession of your assets Use the same object in several games A certain level of immutability These arguments are those put forward by the concept of “ Play to earn ”, where the goal of the game is to be able to be rewarded by playing. Interested? Not so fast… To avoid confusion, it is important to understand the difference between a “Crypto” and a game “Blockchain” game . Crypto or Blockchain game? Because words matter, knowing how to assess the level of decentralization of the games that I will present below is fundamental. The definition I give is purely arbitrary, but will allow you to make a distinction and not fall into the trap of deceptive marketing. A “Crypto” game is a game that will reward you directly in cryptocurrencies during or after your game. Very often in a wallet directly integrated into the game, sometimes b...
Read more

5 best cryptocurrencies to buy for long-term returns

Image
  Investors are always on the lookout for the best cryptocurrency to buy for long term returns. In this article, we take a look at the assets that can generate maximum returns if you buy them now. Our review consists of heavyweights such as Bitcoin and Binance Coin and Birdchain . Let's get right to the point.    1. Birdchain (BIRD) Birdchain is based in the era of sharing Economy allowing users to benefit greatly by using blockchain technology. #Birdchain has multiple products coming up such as DEFI, NFT, etc. The Birdchain BIRD token is seeing steady rise as markets recover.  It definitely a token you should keep an eye one Birdchain has currently built an incentivized App for the sharing economy era. It revolves around an easy-to-use, high engagement, marketing & content platform where users engage with content and get rewarded. Installing #BirdChain App is very easy. Search For #Birdchain on playstore or use the link below. https://play.goo...
Read more