What is yield farming?

Farming took off in June 2020, when Compound started paying its COMP token to lenders and borrowers and other protocols copied the idea within weeks. Farmers parked assets wherever interest plus rewards paid the most, often borrowing against one deposit to fund the next.

Farm yield comes from two places. Fees paid by traders or borrowers are the steady part. Emissions, new tokens a protocol prints to attract deposits, can look huge at launch, but they are paid in a token many farmers dump as soon as it lands. Leverage scales both, and it scales the losses the same way.

A new pool might advertise 300 percent APR, 20 points from fees and 280 from rewards. If the reward token loses 80 percent in a month, the real return is a fraction of the headline, and impermanent loss can push it below zero.

Every hop adds risk as well. Borrowed money brings liquidation risk, and hopping chains adds bridge risk and fees on top. Where a yield comes from tells you more than how big it is.

Also called: liquidity mining, farming.

Raydium pools sorts by APR and splits fee APR from farm rewards, so you can see how much of a number is emissions. Solana yields puts Sanctum and Marinade staking APYs and Kamino lending rates on the same board. Depositing and harvesting happen in the protocol's own app, not here.

• Raydium pools
• Solana yields

• APY vs APR
• Liquidity pool
• Impermanent loss
• Lending market
• DeFi