Profitable farming allows you to earn fixed or variable interest by investing cryptocurrency in the DeFi yield farming.
Profitable farming is a process in which cryptocurrency holders freeze their assets in order to receive a reward. Farmers who :grow corps” fix their cryptocurrency on Ethereum smart contracts or lend it to other users using DeFi services.
Farming is usually done using ERC-20 tokens, and the reward also comes in the form of ERC-20 tokens.
How does profitable yield farming cryptowork?
The first step in growing a crop is adding funds to the liquidity pool (dedicated smart contract). These pools provide a marketplace where users can exchange, borrow or borrow tokens. Once you have added your funds to the pool, you officially become a liquidity provider.
Depending on the blocked amount (liquidity delivered), you receive a certain reward. Reward tokens can also be deposited into liquidity pools. Users usually transfer their funds between different protocols in order to achieve higher returns.
Deposited funds are usually stablecoins pegged to the US dollar such as DAI, USDT, USDC and others. The returns depend on the amount you invest and the rules on which the protocol is based.
Advantages and Disadvantages of Profitable Farming
The main advantage of crop farming is passive income.
Currently, DeFi farming can provide more lucrative interest than a traditional bank, but of course there are risks. Interest rates can be volatile, making it difficult to predict remuneration.
DeFi represents a more lucrative but also riskier environment for placing your money.
Where can you make money on profitable farming?
There are currently a number of Crop-related DeFi projects in existence.
Total Supply: 16,000,000 AAVE
Aave is one of the lending protocols that uses its own AAVE token to secure all the protocols and participate in governance without any failure. Aave is currently migrating from LEND to AAVE at a rate of 100: 1. AAVE can be delivered via the AAVE Rewards Security Module.
Total Supply: 30,000 YFI
yEarn is an automated liquidity DeFi yield farming aggregator offering a range of different crop growing options. This Profitable Farming protocol is governed by its own YFI token, which was initiated without premining and did not pursue the original DEX offering. Users can place bets on YFI to participate in governance and claim a prorated share of the protocol fee.
Uniswap – UNI
Total supply: 1,000,000,000 UNI
Uniswap is also a leading DeFi decentralized crypto yield farming exchange. In September to mid-october Uniswap transferred a total 15% of its supply to former users through a program called Universal Basic Income. Today UNI can be earned by providing liquidity to select pools.
Total supply: 10,000,000 COMP
As the proprietary governance token underlying the leading lending protocol, COMP is used to lend or borrow assets. COMP is also used to manage critical decisions within the network, which can be voted on or delegated to in the Compound Governance Dashboard.
COMP is distributed across markets in relation to the amount of interest accrued, that is, the assets that bring the highest interest will bring the most profit per day.
Profitable farming allows you to freeze funds while providing a reward. It includes issuing cryptocurrencies through DeFi protocols to receive a fixed or variable percentage.
The rewards can be much higher than with traditional investments, but higher rewards come with higher risks, especially in such a volatile market.
Farmers with high yields have earned up to 100% per annum on popular stablecoins using a variety of different strategies.
For now, crop farming remains a high-risk, high-return practice that might be worth following if the necessary research and risk assessments have been done in advance.