Yield Farming - Rocket Fuel Of DeFi Economy
DeFi technology is emerging as a financial revolution to hit the global financial industry. There are a lot of DeFi protocols that have an insane potential to create a major change in financial activities. Cryptocurrencies & tokens are always known for its high yielding ROI. Investors make use of DeFi strategies effectively and getting the price of these digital assets multiplied overnight.
One of the hottest topics in the digital space is Yield Farming. Financial experts have predicted that the adoption of Yield Farming is sky-rocketing nowadays.
Yield Farming strategies have been at the forefront of innovation in the DeFi space. What makes Yield Farming as a new hype? They are the “ultimate killer strategies to generate more crypto with your crypto”.
Interested in DeFi Yield Farming but not sure where to start? Here’s an overview of Yield Farming and how you can get started.
What is DeFi Yield Farming?
Yield Farming in DeFi is an ultimate strategy to generate rewards by investing cryptos in the DeFi market. In simple terms, Yield Farming means holding up digital assets and getting a fixed or variable interest or fees as rewards.
Yield farming in some cases referred to as Liquidity Mining where the liquidity providers add the invested funds to the liquidity pools.
How does Yield Farming work?
Investing in cryptocurrencies, tokens & stablecoins is not Yield farming; lending digital assets in DeFi protocols and thereby creating opportunities to earn interest or rewards is Yield Farming.
Here "Farming" refers to the reaping of high percentage gain generated by providing liquidity for various DeFi protocols.
In the DeFi ecosystem, Yield Farmer plays the role of a bank, lending funds to boost the use of coins & tokens in the DeFi market which in turn generates yield (returns) for the lender.
The lending of funds is based on the liquidity of the funds in the pools, so for lending, you need digital assets in the liquidity pools. This is where you require yield farming to attract investors to invest in liquidity pools.
In a Yield Farming ecosystem, this is carried out by the Blockchain-powered Smart Contracts that connects lenders and borrowers and handles the rewards to be paid for the investors.
Role of Smart Contracts in Yield Farming
Smart Contracts are building blocks of a Yield Farming platform, the entire functioning of the platform is based on the self-executing Smart Contracts developed on the Blockchain network.
Here the Smart Contracts are the indirect connecting bridge between lenders & borrowers and the interest or fees for the investors are generated based on the pre-defined smart contracts codes.
The Yield Farming Smart Contracts will automatically execute transactions if certain conditions are met – offers much more flexibility to the DeFi protocols.
So before launching a Yield Farming platform, you should double-check or audit the smart contracts of your Yield Farming project. A single bug in Yield Farming can disrupt the entire DeFi protocols associated with the Yield Farming platform.
The majority of the DeFi products including Yield Farming make use of Ethereum Blockchain for building Smart Contracts. Ethereum programming language - Solidity, is specifically designed for creating and deploying such smart contracts.
Impact of Yield Farming in DeFi Space
The introduction of Yield Farming in DeFi space has created a new hype in the DeFi adoption among people. There are a lot of DeFi protocols which accelerates the growth of Yield Farming in the DeFi ecosystem. Simply, “The Yield Farming rocket fuels the DeFi economy”.
The launch of DeFi tokens attributed a major contribution to the hype of DeFi Yield Farming.
DeFi Yield Farming Tokens
DeFi Yield Farming Tokens are the programmable assets or digital assets with an economical value managed by Smart contracts on a Blockchain network. DeFi tokens outperforming BTC in 2020 and attracts the global financial investors towards the DeFi Yield Farming ecosystem.
Popular DeFi Tokens in Market
1. Chainlink 6. Dai
2. Uniswap 7. Wrapped Bitcoin
3. Compound 8. Aave
4. SushiSwap 9. UMA
5. Maker 10. Synthetix
Yield Farming Protocols
Yield Farming Protocols are the Yield Farming strategies that have their own rules & regulations coded on the Blockchain smart contracts. The success of the DeFi Yield Farming project is mainly based on Yield Farming Protocols in practice.
Investors always invest funds in the yield farming protocol that yields high returns. So the Yield Famers are more aware of Yield Farming strategies that they use on their DeFi platform.
There are a number of Yield Farming protocols operating on Yield Farming platforms creating its own impact in the DeFi ecosystem.
Popular Yield Farming DeFi Protocols
1. Compound Finance 6. UniSwap
2. Yearn.finance 7. Curve Finance
3. MakerDAO 8. Balancer
4. Synthetix 9. SushiSwap
5. Aave 10. Curve Finance
Yield Farming Provides More Borrowing and Lending Options
DeFi Yield Farming creates easier options for borrowing & lending in the financial sector. More importantly, DeFi operates on the blockchain that is accessible to anyone in the world with the internet.
Here the financial services are completely decentralized, unlike the traditional banking system which is centralized and requires KYC verifications for borrowing & lending.
Based on the liquidity pools in the Yield Farming platform, the borrowing & lending takes place.
Having plans to Kick-Start your Yield Farming Platform but don’t know How to Start, Don’t worry; you are in the right place!
Yield Farming Development Company
Maticz Technologies is the leading DeFi Yield Farming Development Company experts in delivering a complete Yield Farming development & solutions to people across the world. Our DeFi developers are key players on Smart Contract development on all major Blockchain platforms that will make us deliver a complete yield farming platform that supports all major Ethereum, EOS, and TRON based tokens and coins.
It’s the perfect time to launch your Yield Farming Platform that supports all DeFi Protocols & Tokens.