Yield Farming - or how to generate passive crypto income - Crypto in Plain English – Episode 28 - by cryptohunt.it

Welcome to the cryptohunt jam where we spend one minute a day to explain crypto. In plain english.

Today we explain what Yield Farming is or how to generate passive income with crypto.

Yield farming is a popular term these days, and it simply means trying to maximize passive income from crypto.

But what ways to generate interest with crypto are there to begin with?

First, there is “staking”, which we talked about in a previous episode. In summary, you get a return for locking your token into a blockchain to validate transactions.

Then there are “liquidity pools”, where you provide tokens for others to enable swapping, and get a cut of the transaction fee. We explained that last time.

And then there is simple “lending”, where you lend someone else your crypto for an interest rate.

Yield farmers will try to use all these methods to squeeze out maximum profit. They constantly move tokens around to where returns are the highest, or even combine methods. For example, you could add tokens to a liquidity pool, get the pool’s token in exchange, and lend that to others.

Now that you understand yield farming, always remember: This may sound tempting, but do your own research. This is not investment advice.

And next time we’ll talk about what a DAO is.

Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.