Definition of"yield farming" in English
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yield farming
Definitions
Noun
Examples
"Many investors are exploring yield farming opportunities to earn passive income on their stablecoins."
Many investors are exploring yield farming opportunities to earn passive income on their stablecoins.
"To participate in yield farming, users often need to provide liquidity to decentralized exchanges."
To participate in yield farming, users often need to provide liquidity to decentralized exchanges.
"While potentially lucrative, yield farming carries significant risks, including impermanent loss and smart contract vulnerabilities."
While potentially lucrative, yield farming carries significant risks, including impermanent loss and smart contract vulnerabilities.
Synonyms
Etymology
Coined around 2020 with the rapid growth of decentralized finance (DeFi), as participants sought innovative ways to maximize returns on their cryptocurrency holdings. 'Yield' refers to the financial return, and 'farming' metaphorically describes the active cultivation or generation of these returns.
Cultural Notes
Yield farming emerged as a pivotal practice during the 'DeFi Summer' of 2020, revolutionizing how crypto assets could be utilized beyond simple holding ('hodling'). It represents a sophisticated and often high-risk approach to generating income within the crypto ecosystem, attracting users willing to navigate complex smart contracts and volatile market conditions for potentially high returns. The concept is deeply embedded in the culture of active participation and innovation within the DeFi space.