Yield Farming
In DeFi (Decentralized Finance)
Plain English
A way to earn rewards by putting your cryptocurrency to work in different DeFi apps. Like moving money between different high-interest savings accounts to get the best return, yield farmers move assets to wherever they can earn the most rewards.
Technical
Liquidity mining strategy where users optimize returns by providing assets to DeFi protocols in exchange for yield. Farmers may stake LP tokens from AMMs, lend on money markets, or participate in protocol incentives. Returns come from trading fees, lending interest, and protocol token emissions. Strategies often involve compounding returns and moving capital to highest-yielding opportunities, balanced against smart contract risk and impermanent loss.