Yield farming is a practice in decentralized finance (DeFi) where cryptocurrency holders can maximize their returns by utilizing various DeFi protocols. It emerged from the Ethereum blockchain and has changed how investors interact with DeFi products. Yield farming enables investors not just to hold cryptocurrencies but also to participate in liquidity provision and governance.
Yield Farming and DeFi go hand in hand, as the concept of liquidity pools and automated market makers (AMMs) represents a shift from traditional financial systems to a more decentralized and user-centric economic model. Although Yield Farming was initially a niche practice, it quickly gained the attention of the broader crypto community.
This article dives deeper into the significance of Yield Farming and how it fits into the DeFi ecosystem.
Before getting into the article, here are a couple of key concepts that will help navigate the main fundamentals around Yield Farming:
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