Making sense of some Defi concepts - Yield farming

I am too lazy to explain so I shall just drop a video by Finematics here. They create really good introductory and explanatory videos on various aspect of cryptocurrency.

Below the clip are some quick notes and a few articles for reading pleasure.


Liquidity mining - the process of distribution of tokens to users of the protocol. It's additional incentive for yield farmers (these tokens can be staked for additional reward).

Leverage - Farmers can deposit their coins as collateral to one of the lending protocols to borrow other coins, they can repeat this procedures.

Risks - liquidation risk (from leveraging), smart contract risk, defi specific risks.

Crop rotation can help farmers keep up with changes in yields.

Read also this article for brief descriptions of some popular yield farming protocols.

Yield farming need not be only from liquidity providing, it can be from lending and also staking. There are plenty of resources out there for you to find out more so I shall not elaborate further.

My thoughts:

People input, people borrow, borrowers input again to chase high yields... And this shall go on until a bubble burst. I guess.

Take care of your hot wallet while having fun and swapping crypto around. Don't become a hack or phish victim.

Advice to starters:

1) Learn to differentiate between Cefi and Defi

2) Read the reviews and find out which (platforms) suit you better

3) Follow Twitter and Discord to find out what's hot and what's not, and the generally sentiments (not asking you monkey see money do hor, DYDD)

4) Read about cases of rekt and how to avoid them

5) Don't buy tokens on FOMO, do homework (read whitepaper, assess project viability, liquidity for entering / exiting etc)

Remember, positive reviews stay positive until they don't. Good yields remain good until they don't. 

We all know that some good things do come to an end some day. Everything seems to shine when the sun's shining. Understanding the crypto cycle and capital flow is important.

This article by The Babylonians is a really insightful read - Beginner's Guide to Crypto.

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