Mastering DeFi Yield Farming : Bitdeal's Expert Guide & Development Services

 What is Yield Farming?

In Crypto Globe, the mechanism through which one can earn more cryptocurrencies using cryptocurrencies is known as Yield Farming or Liquidity Mining. This is the process that lets you earn crypto rewards by staking your cryptos on your cryptocurrency wallet.

Yield Farming is similar to the concept of Cryptocurrency Staking, which provides rewards for your crypto capital investments.

Each and every industry and Business become inescapable from the process of evolution. The rate of growth of a sector depends on the rate of new trends and technologies emerging in that field to make them grow and build a better economy.

We are now here to discuss the most intensifying term in DeFi Space - Yield Farming.

With our great grip, let us swoop into the hottest topic in crypto globe "DeFi Yield Farming".

What is DeFi Yield Farming?

Decentralized Finance, shortly termed as DeFi is an open-source protocol that provides permissionless and fast financial services. The process by which users provide liquidity to DeFi open-source protocols and get rewards is termed as DeFi Yield Farming.

In simple terms, the process of yield farming carried out on platforms that are built using DeFi protocols offers native DeFi tokens of that particular platform and this process is known as DeFi Yield Farming.

We already know that DeFi has been a trending business topic from late 2020, and now this DeFi Yield Farming is sparkling as a light in every headline of recent crypto news.

This shows that DeFi Yield Farming has caught sight of crypto wizards and it will make them shift to the next level in the crypto market sooner.

How Does DeFi Yield Farming Works?

Yield farming referred to as Automated Market Maker, is nothing without the involvement of liquidity providers and liquidity pools.

Here let us look at the working process of yield farming.

First and foremost, the liquidity providers deposit or send their assets or funds to the liquidity pool. This liquidity pool provides a marketplace where users or LPs can lend, borrow or exchange their tokens or assets. These platforms collect fees which are then paid back to the liquidity providers based on their share of the liquidity pool.

This is how a yield farming process takes place on any platform.

However, working can vary with different technologies and approaches. The funds deposited are mostly stablecoins pegged to USD. DAI, USDT, BUSD are the most commonly used stablecoins in DeFi yield farming.

How Are Returns Calculated in DeFi Yield Farming?

The Estimated returns in Yield farming are calculated on an annual basis. The most important metrics in the calculation of returns in yield farming are Annual Percentage Rate (APR) and Annual Percentage Yield (APY).

The common difference between both APY and APR is that APY accounts for the effect of compounding while APR does not. Compounding refers to reinvestment profits to generate more returns.

Annual Percentage Yield (APY)

The annual rate of return charged on borrowers and paid to providers subsequently refers to Annual Percentage Yield.

Annual Percentage Rate (APR)

The annual rate of return imposed on borrowers and paid to the investors is termed as Annual Percentage Rate. Since APR and APY come from legacy markets, DeFi should find its own metrics for the calculation of returns in yield farming.

This is how the returns are calculated in the DeFi Yield Farming.

Popular DeFi Yield Farming Platforms

There are many yield farming platforms and protocols available in the DeFi market. Each platform has their own rules and risks with different yield farming strategies.

Listed here are the some of the top DeFi Yield Farming Platforms

Compound Finance

Compound, the core protocol of Yield Farming Ecosystem.Compound is a popular DeFi based protocol that allows users to lend and borrow assets. Any user with an Ethereum wallet can supply assets to liquidity pools of compound and earn the rewards.

Yearn.Finance

A decentralized platform that converts funds to yTokens and rebalances to maximum profit periodically. It is a lending platform that farmers use which automatically chooses the best strategies.

Uniswap

A DeFi based DEX platform offers trustless token swaps due to its frictionless nature and it is used mostly for yield farming. 

Aave

Aave, a heavily used lending platform by yield farmers in which the interest is adjusted based on current market conditions automatically.

Balancer

Balancer is an important liquidity protocol in yield farming strategies, as it provides more flexibility in liquidity pool creation.

There are a lot more DeFi platforms in the market to provide yield farming services. You can also contact the best DeFi Development Company to build your own DeFi platform with Yield Farming.

DeFI Yield Farming Platform Development Company

We Bitdeal - Leading DeFi Yield Farming Platform Development Company offers the best DeFi-based yield farming development services across all borders. By deeply understanding the purpose of DeFi and Yield Farming in the future, our experts started providing the best solutions to launch your own new DeFii yield farming like Compound, Yearn.Finance, Aave, and more or integrate DeFi based yield farming protocols in your existing platform.

Talk To Our Experts

Mail: sales@bitdeal.net

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