The investors keep their coins, but they are now worthless.Ī rug pull is an exit scam, the founders have zero intention of returning to the project. Rug pulls occur when the developers or founders of a cryptocurrency decide to abandon a project, usually unannounced, by pulling the project’s liquidity funded by investors. Yield-farming is done only on Decentralized Exchanges (DEX) which leads to a multitude of potential risks. Like anything in a purely speculative market like cryptocurrency, a higher tolerance for risk than normal is usually required, yield farming is no exception. However, liquidity mining is when the farmer also receives a new token on top of their existing interest as a thank you for participation. Usually, a crypto yield farmer will receive interest for their stake based on the APY. Many crypto yield farms with low impermanent loss risk continue to hold double-digit yearly APYs, with niche coin pairs and riskier farms reaching triple and even quadruple-digit APY returns, unsustainable but profitable in the short term.Īlthough almost all crypto trading is speculation, to consistently profit from yield farming, high-level strategies are usually required and a decent chunk of change is often recommended, even as a beginner. CoinMarketCap simply views this as a resource and investors are recommended to do their own research before dipping their toes into the volatile world of yield farming.
YIELD FARMING BINANCE ACADEMY FULL
You can find a full list of the most used and profitable yield farms, with daily and yearly APY here. We will dive deeper into the risks of yield farming later in the article. Often, the tokens received as rewards from such farms are extremely volatile and prone to rug pulls.
What Are the Potential Rewards for Yield Farming?Ĭrypto yield farming first came available in 2020, and many yield farmers have bragged about triple-digit APY rates, unheard of outside of the crypto space. Liquidity pools essentially keep the ecosystem alive and are where most of the early liquidity will come from in smaller projects. Governance tokens are at the core of any DAO or project which aims to be fully run by its users.
Governance tokens help keep a project decentralized and allow real users to vote on any new legislature. As yield farming is used to reward early investors, often governance tokens of that blockchain will be given out to keep them as a user, and their liquidity in the system.
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