What Is Yield Farming? And How we can take advantage of yield farming opportunities on the hive blockchain
Hello Cent platform! It's a sublime Sunday to everyone on the hive blockchain and I hope you're enjoying your Sunday. Good afternoon!
One of the side-hustling that have evolved from blockchain technology and the Web 3 ecosystems is yield farming. It's really grown in lips and bounds and have seen the influx of investors into the different ecosystem.
What is yield farming?
Yield farming is the practice of staking or lending crypto assets in order to generate high returns or rewards in the form of additional cryptocurrency. This innovative yet risky and volatile application of decentralized finance (DeFi) has skyrocketed in popularity recently thanks to further innovations like liquidity mining.
On the DeFi front, yield farming occurs in smart contracts that are linked to liquidity provision platforms and rewards are given to investors as incentives in exchange of their locked or staked crypto assets.
Yield farming is the catalyst that triggers the growth of the DeFiverse and as at 2020 it has a market cap of about $500 million to $10 billion and with the rise of decentralized ecosystem and the DeFiverse, it must have increased beyond $100 billion. Although my statistics is an assumption not the actual fact.
In short, yield farming protocols incentivize liquidity providers (LP) to stake or lock up their crypto assets in a smart contract-based liquidity pool. These incentives can be a percentage of transaction fees, interest from lenders or a governance token (see liquidity mining below). These returns are expressed as an annual percentage yield (APY). As more investors add funds to the related liquidity pool, the value of the issued returns decrease accordingly.
Liquidity mining occurs when a yield farming participant earns token rewards as additional compensation, and came to prominence after Compound started issuing the skyrocketing COMP, its governance token, to its platform users.
How to take advantage of yield farming on the hive blockchain
The hive blockchain offers investors opportunities to farm through its Hive-Engine Side-chain platform.
There are over 100 liquidity pairs available on the Hive-Engine platform.
We have token pairs such as Swap.Hive:Leo, swap.HBD:Cent, Swap.Hive:Bee, Cent:CentG, SPS:Dec, Swap.Hive:Pob and many others.
You can also farm on the CubFinance Multi-Token Bridges platform and earn amazing rewards on APRs and APYs
Just visit the Hive-Engine platform to choose the liquidity pools you want to invest in.
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