Yield farming to mitigate your losses
Yield farming or literally yield farming is a type of crypto investment with which investors can make profit regardless of the direction the market is taking.
This is particularly effective during market downturns where your tokens lose value.
The obligations are regulated financial products that allow investors to generate passive income. Yield farming, on the other hand, allows investors to use their crypto-assets to produce higher returns by using them to support activities within protocols.
Often, it’s about leveraging your cryptocurrencies for traders in providing liquidity with DeFi protocols.
Investors can earn money by placing their money in liquidity pools, which provide the funds needed for the millions of transactions that take place every day.
In return, investors receive a portion of the transaction fees.
Yield farmers are rewarded with fixed income, the rate of return of which may vary from one period to another depending on the demand of the protocol in question.
Staking and lending (crypto loan)
Yield farming can also be staking. Yes we can consider staking as yield farming. Here too you put your cryptos into play within a network for a fixed period in order to participate in its security and in return generate returns regardless of the price performance of your tokens.
Yield farming can also be done in the form of crypto loans. By joining a crypto-lending platform, crypto-asset holders can participate in financing other players in the ecosystem.
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Lending platforms manage loan pools which bring together all of the investors’ deposits. They then grant loans using the investors’ assets and pay them a significant share of the interest earned on these loans.
Many of them contain interest rate stabilization mechanisms, which guarantee reliable returns.
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