Cryptocurrency investors are growing in number by the day in anticipation of making as much money as possible in the space. Over the years, many facets of this space have been explained and among them are yield farming, ICOs, etc.
What is yield Farming?
Yield farming is a process of utilizing decentralized finance (DeFi) to maximize returns. Users lend or borrow crypto on a DeFi platform. This allows them to earn cryptocurrency in return for their services. Yield farming has many benefits, such as increased liquidity. There are many DeFi platforms out there, so it’s important to find the right one for you.
Financial experts believe that by diversifying your holdings, you increase your chances of getting a higher positive return on investment (ROI) than investing in single assets. While yield farming does possess its own risks, most of which are largely due to price volatility, it can be a profitable investment strategy for those who are daring enough to take the risk. However, it is important you’re well informed about the risks associated with DeFi yield farming before investing.
TYPES OF YIELD FARMING
- Liquidity Provider: In DeFi, participants provide their cryptocurrencies to the liquidity pool. The usage of these DeFi platforms incurs fees from the users, and the fees are used to pay liquidity providers for staking their own tokens in the pool.
- Lending: This type of yield farming is done by people who have tokens to lend; they borrow out their crypto to borrowers by means of a smart contract to earn yields from interest paid on the loan.
- Borrowing: Literally, this sounds like a synonym for lending. However in the crypto sphere this is quite different. In yield farming, farmers can use a particular token as collateral to get another coin.
- Staking: There are basically two types of staking, first is the proof-of-stake on the Blockchain. In this type of staking, users are paid interest when they pledge their token to a blockchain to provide security. The second form of staking is when you stake tokens profited from supplying a DEX with liquidity.
WHERE TO INVEST IN YIELD FARMING
Numerous decentralized exchanges provide options for earning by operating dApps. Examples include; Uniswap, Pancake swap, Sushiswap, 1inch Network, AAVE. DeFi trading platforms require more expertise from users because they are not as user-friendly as centralized platforms. Before picking a platform, be certain to do your research so you know what to do in case of difficulty.
When considering investing in yield farming, one has to have some degree of technical knowledge to set up investment portfolios. However, some companies have fine-tuned this process for investors. They help investors create investment portfolios, such a company is Reliq Holdings.
In the field of cryptocurrency investment, Reliq Holdings has long been one of the most well-respected and directed firms. From reviews by clients and insights from industry trends, this excellent firm has been favorably reviewed as one of the best destinations for crypto investment. Reliq holdings offer a wide variety of investment options for investors seeking to maximize their profits. The most efficient approach to begin DeFi yield farming is by signing up with a firm like Reliq Holdings.