Yield Farmers – Big Rewards And Huge Risks – A Cautious Guide To Yield Farming

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On paper, huge rewards look spectacular. Deposit some crypto, and in exchange, get a reward after a set period. Yield farming is basically locking up funds using a decentralized application (dApp), which will, in turn, lend that crypto for a return rate.
Of course, there are all kinds of risks involved, as the smart contract might have a breach, the pricing oracle might be tricked, or the operation itself goes bust because of a design flaw. Generally, the higher the risks, the bigger the returns.
Decentralized Finance (DeFi) has grown to a $100 billion mammoth, up from $15 billion by the beginning of 2021. Yield farming became an integrated part of this ecosystem, as almost every application needs depositors to provide liquidity or trade those funds on other platforms.
Staking is the most simple and popular form to generate a yield. For example, most Proof-of-Stake chains offer a reward for users that lock up their coins and delegate a validator. That includes Cardano, Solana, Polkadot, and EOS, to name a few.Source