It's another exciting day today, as the week is gradually coming to a close we all must be exhaused and eagerly waiting for the weekends.
Today on my blog I would be treating a very unique topic which would interest all those who are business minded and want to make some easy money on crypto.
Yeild farming is gotten from two common words which are
Yeild :this is the situation were by we are able to generate revenue from our existing capital
Farming :this is the process of growing something from little to maturity although in agricultural term farming means growing crops.
Yeild farming
The word yeild farming is a terminology used in the crypto environment for the ability of holders of crypto currencies to make a few extra money by holding Thier crypto tokens.
Normally holding of crypto tokens we are only entitled to receiving interest when the price of such token rises and we sell.
They are other ways in which we can make money through the holding of crypto tokens and this is simply what yeild farming is. " The process whereby you let your crypto tokens make money for you"
Yeild farming offers an alternative method of earning revenue by simply holding tokens the same way you would have ordinarily, the only difference is now your tokens are being kept in strategic locations in which they can work for you rather than laying domant in your account.
It follows the same principles as investing money in you account only that this time you would be investing your crypto in various attractive opportunity which all exist because of crypto trading.
Below are some of the ways you can earn money through yeild farming.
Lending
This is a situation whereby we lend our crypto tokens out to other individuals through a lending platform.
By lending our crypto token we as lenders would receive a percentage interest on the lent out value of crypto, so rather than just keeping our crypto tokens in our wallet we earn as high as 10% interest when we lend our tokens using smart contract.
Staking
Staking is a process where by we lock up our liquid tokens for a period of time so as to receive attractive rewards from the block chain network.
This rewards could vary based on the block chain you choose to stake your token, on block chain such as steemit staking your token gives you voting power while on block chain such as Tron staking gives you either energy or bandwidth which are used for especially all transactions on the block chain.
Providing liquiity pool
Exchanges need to have crypto tokens in other to function efficiently is it only by having this would they be able to attend to buy and sell orders, in other words individuals can decide to loan out Thier tokens to exchanges mostly DCEX for a reward.
This reward is gotten when individuals want to swap one token for another they are being charged a small service fee and part of this services fees goes to this who provided the liquidity pool.
Borrowing
Amongst all the forms of yeild farming this is one which is high risk high reward and it goes like this.
Individuals use the tokens in which they own to obtain loans of another token which they feel would be more profitable and trade it and when they make money they pay back the loan, while retaining the profit they made and the internet from the price increase or Thier initial tokens.
Yeild farming is a form of investments which entails us using our crypto tokens as a sort of capital rather than actually money and like all investment, it also comes with Alot of risk attached to it some of them are as follows.
Volatility
Like we are all aware the crypto market is very volatile and any investment invoked a certain percentage of risk, this risk could come as a result of market conditions or economic conditions which could cause the market to react in strange patterns and lead to asset lose
smart contract bugs
They could be bugs in the smart contracts which are used in lending our tokens and this primarily would result in lose or funds.
Bad debt
They us always the issue of repayment when it comes to crypto for example those who you loan your crypto assets to might default on payment.
Rug pulls
There is always that risk of being caught in a rug pool when you venture into yeild minding as most of this tokens involved in rug pulls often offered attractive offers for those who stake in the token, this offer could include additional tokenfoe tjsoe who hold the token for a certain duration of time.