Yield Farming
The practice of moving assets between DeFi protocols to maximize returns from incentives and rewards.
In-Depth Explanation
Yield farmers chase the highest APYs by providing liquidity wherever incentives are richest, often stacking multiple reward sources (LP fees + token emissions + additional farming). While potentially lucrative, yield farming requires active management, incurs gas costs, and carries smart contract risk across multiple protocols. The term is sometimes used interchangeably with liquidity mining.
Related Terms
Liquidity Mining
Earning token rewards by providing liquidity to a DeFi protocol.
Annual Percentage Yield
APYThe annualized return on an investment accounting for compound interest.
Mercenary Capital
Capital that moves between protocols purely to chase the highest incentives, with no loyalty or long-term commitment.
More in Yield
View all →Mercenary Capital
Capital that moves between protocols purely to chase the highest incentives, with no loyalty or long-term commitment.
Annual Percentage Yield
APYThe annualized return on an investment accounting for compound interest.
Annual Percentage Rate
APRThe annualized return on an investment without accounting for compounding.
Real Yield
Yield derived from actual protocol revenue and economic activity, not token emissions or inflation.