GlossaryAdvanced
Yield Farming
Actively moving crypto between DeFi protocols to try to maximize returns.
Yield farming refers to actively moving crypto assets between different DeFi protocols, such as lending platforms or liquidity pools, in an effort to earn the highest available return.
Because returns and risks can change quickly and vary widely between protocols, yield farming generally requires closely evaluating each protocol's risks, not just the advertised return. See Kaavon's "Liquidity Pool," "Liquidity Provider," and "Lending Protocol" glossary definitions for the specific DeFi building blocks a yield farmer actually moves funds between.
Examples
- A yield farmer might move funds between several lending protocols as available rates change.
- Higher advertised yields in DeFi often come with correspondingly higher underlying risk.